15 Sep A Crash Course in Financial Matter Management
A Crash Course in
Financial Matter Management:
What, Why, & How
15 September 2021 · 4 min read
Today, 80% of legal clients say their biggest focus when looking to hire law firms is flexibility and transparency in matter budgets. Simply put, clients want predictability and the knowledge their money is being well spent — not just the best or easiest deal.
You may be surprised then to learn that firms are still delivering 86% of matters on an hourly basis. This can leave a bad taste in the mouth of a client and even ward off future business. Firms that stick to the conventional “billable hour” model not only risk losing forward-thinking clients, but create stagnating profit margins as well.
As your matter budgets remain exorbitant and unpredictable, clients will take their business to firms that value their concerns or even keep it in house. That’s why it’s crucial for your firm to establish a proper financial matter management process to keep costs predictable and clients happy.
But what is financial matter management and how does it work? Read our blog to learn more.
What is Financial Matter Management? Why Should Your Firm Care?
Financial Matter Management is a process or solution which involves gathering, analyzing, and reporting on matter data such as budgets, number of attorneys involved, the type of work performed, and more over the course of the matter lifecycle. This process has many stakeholders, including partners, Legal Project Management, and Pricing departments.
By leveraging these datapoints, firms can monitor expenses and better understand where their money is being allocated. Not only does this make it easier to come up with a reasonable matter cost, but it also allows clients to understand what they’re paying for as well.
This all seems straightforward enough, but consider a scenario in which a firm isn’t relying on a financial matter management solution. At most firms, pricing and LPM departments use scattered spreadsheets, most likely Excel, to plan, monitor, and report on matters. This makes data spread out and difficult to consolidate in a way that generates insights that can be used in future matter plans.
With partners on the frontline of client communication, they could benefit greatly from having technology that allows them to properly quote matter budgets. But, without such data, they can quote unrealistic prices to clients – often with the sole intention of winning new business and generating revenue — forcing the firm to complete matters within the quoted budget or face write-downs. This can create work crunches, with associates working more hours than they had budgeted for, which results in further write-downs before a matter is delivered to a client.
Before you know it, your firm is overworked and your clients are unhappy as you failed to deliver a matter at the agreed upon cost or at the budget the client expected you to.
With a proper financial matter management solution, your firm can utilize all available datapoints to create a realistic, flexible, and transparent budget, thus avoiding the headaches and unforeseen costs of the billable hour.
Partners can easily communicate the value and cost of each matter to the client, and gain the ability to monitor and report on matters, ensuring they are delivered within scope and budget. Through financial matter management, partners and the rest of the firm, can easily:
- Plan matter budgets with proper phases, tasks, resources, an expenses
- Test different scenarios with What-If analysis and other tools
- Set up email alerts to monitor matter progress
- Generate relevant reports for clients and internal stakeholders
You may be wondering how your firm can implement effective financial matter management. Luckily, many software platforms, like Prosperoware Umbria, exist for easy implementation and integration with your existing Time & Billing and Practice Management Systems. With 40% of firms now leveraging technology and software to boost efficiency, transparency, and client value, there has never been a better time to find the financial matter management solution that works for your firm.
How Prosperoware Helps
Prosperoware Umbria is the financial matter management platform for law firms. It enables partners, legal project management, and pricing departments to plan, alert, monitor, and report on matters, allowing firms to deliver matters within scope and expected budget.
Umbria’s data-driven approach ensures that firms are planning and delivering matters profitably, all while improving client value, transparency, and predictability.
Key Umbria features include:
- Flexible Planning: Plan matters accurately and in any way you want. Whether it’s top-down, bottom-up, mixed fee, and more, Umbria offers more than “40” different ways of planning. Use historical matter data, map phases to eBilling codes, plan with multiple currencies, and more.
- Decision Support Tools: Understand the impact of alternative fee arrangements, write-downs, discounts, and rate & cost increases on matter profitability.
- Monitoring & Alerting: Set up threshold alerts to monitor WIP, Billable, Billed, Collected, Write-Offs, and more. Use alerts to monitor recurring values and escalations. Schedule alerts and notifications to always stay on top of your matters.
- Reporting & Dashboards: Tailor reports the way they best work for you with a widget-based dashboard interface. Report on the KPIs that matter most to your firm or client by monitoring multiple budgets at once with customizable KPIs. Schedule regular real-time reports so you never get another report request.