Iridium Technology: Understanding profitability in the age of Covid-19
In our most recent blog post, we addressed a few examples of knowledge gaps that can impede law firms’ ability to understand their levels of profitability. It covered a few best practices that can help your firm collect the right data and make more informed decisions about clients and matters—and do so quickly. In this post, we will dive deeper into the information your firm should be tracking in real-time to potentially avoid painful decisions later, and the technology needed to provide the information.
Many law firms lack the necessary technology to react as quickly as they should in turbulent times. Four in ten circulate profitability data in hard copy, which makes the reports slow and expensive to deliver to attorneys working from home. Almost two-thirds distribute reports electronically, which, while timely, creates a lengthy process; attorneys request information, wait for the reports to arrive, ask follow-up questions, and wait again. Less than a third use interactive dashboards, which provide data and make it easy for attorneys to analyze that data in real time.
Timeliness may not even matter much for the 42% of firms who cannot perform forward projections on profitability anyway. These firms have little ability to predict how their firm will succeed even in stable times. Making matters even worse, only 6% can fully perform a “what-if” analysis on profitability, which is critical when the variables can shift so quickly. Too many firms lack the advanced profitability capabilities that can help them to truly understand their data and predict their firm’s performance.
Achieve your goals
Even before the pandemic hit, law firms had set some lofty goals for improving financial performance. Almost two-thirds were looking to improve rate performance and half were looking to create new performance or profit metrics. More than 40% were looking to do more alternative fee arrangements, and the same number were looking to implement more project management; both are initiatives clients are clamoring for.
Furthermore, even before anyone had heard of George Floyd, more than 39% of firms were looking to improve their talent position on laterals or diversity. All of these objectives will help the firm succeed in the long run—and, in some cases, may help the firm survive in the short run. But firms can only execute on these objectives if they have the right business intelligence.
The right technology
The legal technology marketplace can be daunting and choosing the best tools for your firm can leave you with option fatigue. The right solution for your firm can help improve overall performance, both during and after the downturn.
To learn more about law firm best practices, and how to improve profitability post-COVID-19, download our Profitability Survey Snapshot. This report offers the most crucial insights from the 100+ law firms surveyed in February.
For firms looking for the right technology for understanding, projecting, and distributing profitability data, we can of course help there, too. If you have questions about how to effectively manage your firm’s profitability, we’re happy to provide guidance and offer our knowledge. Reach out to us online, or call us at (610) 981-2199, we’re here to support you.