Aderant: How analytics boosts billing performance
Trey Ruello, director of data services at Aderant, explains how data analytics accelerates a law firm’s billing lifecycle, improves realisation, and delivers a better client experience
With some of the world’s top law firms now embracing data analytics, its popularity across the broader legal community has skyrocketed. Forward-thinking firms are discovering that by leveraging the data available to them, they can simultaneously satisfy client demand and operate their business with greater efficiency and profitability.
The growth of legal data analysis in recent years has been driven in no small part by corporate clients, who are closely examining and ranking firm billing processes, as well as overall performance. Today’s clients evaluate their legal providers to determine which deliver the most advantageous combination of optimal rates, favourable terms, ease of interaction, and superior results. Business intelligence (BI) tools and other technology solutions are assisting in this endeavour.
And alongside addressing client pressure to minimise costs while outperforming competitors, firms are increasingly capturing data for their own internal benchmarking – specifically regarding their revenue and client satisfaction. Billing analytics is gaining importance as firms look beyond simple realisation rates and examine their performance in greater detail. Historically, they may not have had substantial billing performance data, but this is changing.
Doing more with data
However, while firms may be able to compare their rates to other firms through rate reporting subscriptions and anecdotal information, many still lack real insight into billing performance. Once firms have billed a client, what happens next? And what does that mean for revenue?
Visibility into billing performance and revenue realisation offers a reliable way to gauge present and future financial health.
Exposing revenue leaks
Data analytics can reveal billing errors – such as deductions, discounts, and write-offs – that reduce overall revenue. By examining where these leaks occur, and the errors that are driving them, firms can detect where money is being lost. With billing data in hand, they can analyse it to isolate areas of concern and compare their figures with those of other firms to take action.
Many are just getting their proverbial feet wet with data analytics and billing KPIs – and they may be discouraged if initial metrics are not favourable. Perhaps their gut feeling had been that the existing billing process was performing adequately, although their numbers told a different story.
Law firms looking to optimise billing performance should begin by examining the following data:
- Time between invoice and payment
What is the average length of time between sending out the initial invoice and receiving payment from the client? Billing departments can use this information to identify specific areas that could be improved to accelerate the overall payment process.
- Billing reductions
Discounts, write-offs, and deductions are all major causes of unrealised revenue for law firms. Learning more about where these elements arise, and gaining visibility into the primary drivers, can help to mitigate their negative impact on cashflow. Understanding how metrics like these compare to competitors can also help firms to be more strategic with their billing, as well as in discussions with clients.
- Rule sets and adherence to guidelines
Clients provide rules to firms about how to bill, but lawyers are not always thoroughly informed. If the guidelines provided are continually being violated, this reflects poorly on a firm and strains the client relationship. Data technology offerings such as eBilling, data intelligence and BI solutions, and client guideline enforcement solutions, can help firms to understand and enhance adherence to guidelines, as well as track improvement efforts.
Many are just getting their proverbial feet wet with data analytics and billing KPIs – and they may be discouraged if initial metrics are not favourable. Perhaps their gut feeling had been that the existing billing process was performing adequately, although their numbers told a different story. But intuition like this is only valuable when it is correct and backed up by data.
Data intelligence shows firms where they are succeeding, but it also spotlights weaknesses and areas for improvement. Firms may be surprised to see that competitors are outperforming them in certain areas, and that they have some catching up to do. Data can provide tremendous motivation to improve billing processes dramatically, which ultimately benefits a firm as well as its clients.
Today’s corporate clients are demanding a higher level of accountability and more visibility from their legal services providers, and they are not only judging based on rates and performance, but also on their time and billing proficiency. By leveraging data analytics, BI, and measurement technology, law firms can improve their internal practices and policies – leading to a more efficient and profitable organisation in the round.
