15 Mar Partner Dashboards and BI: Why Bother to Monitor Your Matters?
Partner Dashboards and BI: Why Bother to Monitor Your Matters?
With pressure on profitability and realisation, management information (or ‘MI’) has become mission critical for law firms looking to improve their performance, and firms have been investing in business intelligence for the last several years to support that reporting. Dashboards have been created for a variety of audiences: management boards, practice group leaders, partners, etc. Unfortunately, many don’t recognise that there are two distinct methodologies for reporting on their data – firm-centric and client-centric – and they can show very different results. The choice of MI reporting methodology can easily affect management understanding of performance.
One significant difference between the two reporting methods is date grouping: accounting period for firmcentric reporting versus actual transaction dates for client-centric. This difference can be readily demonstrated in something as common as time entries. If time entries must be submitted by the third day of each month for the prior month’s work, any late time entry entered after that third day would end-up in the next accounting period for the firm; however, the transaction date would not be part of that accounting period. Thus, in this simple example, a report on utilisation for that accounting period would be adversely impacted while a report based on transaction dates would not.
Why does this matter and how does it affect your firm? Let’s look more closely at the methodologies.
Firm Centric reports are used to measure internal firm performance and have been common in legal for a long time. Reports tend to focus on firm, department/ practice group, partner, or other feeearner class. For partners, these reports usually include performance across a multitude of dimensions including origination, delivery, and working. These reports typically focus on the firm’s fiscal year. Such reports are useful to management boards.
Client-centric reporting is a newer concept which has developed with the recent change in the legal business model. Clients are now expecting firms to deliver work at an agreed price, and firms now recognise the need for more appropriate reporting. To avoid write-downs from ‘over-working’ a matter and going out of scope, lawyers today need to plan (i.e. budget), monitor, and bill (to the agreed plan). This reports need to be timely – ideally, in real time.
With the right technology in place, matter monitoring should enable partners and associates responsible for matters to actively manage delivery. Proper monitoring also would alert billing lawyers, practice managers, and practice group leaders when a matter goes ‘wrong’, such as by exceeding scope. Additionally, proper matter monitoring would be sufficiently flexible to accommodate each firm’s specific needs, business model, and internal capabilities.
Critical features of a proper matter monitoring system would include the ability to:
- Report on matters regardless of whether they have a defined budget
- Provide high-level key performance indicators (e.g. value at standard rate, realisation, leverage, margin, write downs, etc.) to help firms understand the current state of matters based on transaction date reporting
- Provide flexibility to support various budgeting methods at matter, phase, or task level
- Review time entry narratives to quickly identify inefficient and out-of-scope work
- Adjust work-in-progress when ‘bottom of the bill’ discounts are applied
- Deliver real-time alerts when KPIs are no longer within an acceptable range
Most importantly, regardless of a system’s design and capability, it’s only going to add value and benefit the firm if it’s adopted – used by the fee earners. As compared to the once-a-month sufficiency of a firm centric dashboard, client centric dashboards can add immediate value if used regularly – ideally, daily.
Impact and Usage
We’ve worked with many firms to help them understand their data. The value of client-centric financials can far outweigh the value from firm centric financials. This is for an obvious reason: the firm-centric approach measures how the firm or individual is doing and does not change on a daily basis, whereas with a client-centric focus on a busy matter, daily matter monitoring could catch out-of-scope work quickly enough to avoid the consequential write-down.
Our experience has been that firms who provide their partners a way to actively monitor their matters have seen dramatic reductions in write-downs and significant improvements in partner profitability.
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