By Brian Taaffe, manager of BI, Prosperoware
Law firms want to understand their businesses but suffer strategic blind spots. With the increased complexity of unique arrangements, most firms have more than 80% of matters at risk of being non-profitable. Write-offs continue to bleed out profitability to the tune of 11% of firms’ revenue. Productivity is draining $74,100 per year per lawyer, per year. The list goes on.
Business Intelligence (BI) surfaced as a solution to strategic blind spots; however, these trends make evident BI is not enough. BI solutions are engineered to pull data from existing source systems—but our source systems were built for a different era, one pre-dating the era where every client arrangement is unique and complex, for instance.
What is needed is BI that captures and engineers structure around the data that we don’t have but that’s required of this new era in the business of law. We need to get beyond the limitations of source systems and create the missing data that’s not been required until now. This is not BI, but better BI. It’s better, for one, because it makes law firm data better, and we need better data. Here’s more detailed discussion of the difference.
What BI is Not
Business Intelligence (BI) is not reporting from billing systems. Billing systems were proven unable to provide meaningful, business-worthy BI for law firms: they could record and store data, but these billing systems fell short when it came to management, strategic reporting, or configurable dashboards and reports. This was always left to another party to develop, and that’s what ultimately gave rise to the Legal BI market.
Unique client arrangements, however, have proliferated to the point of becoming the standard. Thus, more pricing teams and more value officers are engaging in pitch meetings to customise arrangements that include special rates, bottom of the bill discounts, fee type–including fixed, cap, partial contingency, or by phase or time frame, phase and task code–outside counsel guidelines, AFAs, and unofficial fee caps.
Current BI systems were not built for this complexity. Much of the critical data that describes a client arrangement is not actionable, such as the discounts and invoicing rules contained in billers’ notes. Firms, for instance, often struggle to distinguish between what was a ‘bottom of the bill’ discount or an unplanned write-down. Firms also face data quality issues, especially about matters (e.g. type, process, area of law, players, etc.). Further, as competitive pressure today is high, firms need clarity on their pipelines of incoming work. Quality data is crucial to accurately measuring performance and making data-driven decisions.
This means current BI systems are either serving incomplete or inappropriate data to its constituents—or both. Incomplete, incorrect, or inappropriate data and computations lead to bad decisions—and the thing firms can most not afford is bad decision making.
So, What is Better BI?
‘Better BI,’ means we go beyond the limitations of source systems and engineer new structure around data–effectively new data–in order to gain the right insights for the new era in the business of law. Rather than using only financial data to report on the status quo, Better BI needs to enable firms to incorporate data from Experience, Pricing, Profit & Compensation, Time & Billing, HR, CRM, and other firm databases to gain a richer and more accurate understanding of performance. This more holistic view empowers key stakeholders across the firm to make better decisions based on actionable intelligence.
In essence, Better BI, from the same data, gives all the firm’s constituents the information they need, when they need it to more effectively price, pitch staff, deliver on price, strategise their cases, compensate, and plan growth.
It is simply logical that the same data be made actionable in a multitude of outputs to help firms understand the complexity of modern arrangements, make them actionable, and therefore profitably evolve their businesses—but as is often the case, what sounds simple is often very complex behind the curtain. The architecture of Better BI requires a combination of data strategy, workflow to capture it, a legal-specific schema, and powerful reporting.
‘Better BI’ can then enable partners to monitor the tactical, day-to-day activities of their clients and matters; but it can also enable the Client Value/Pricing team the ability to create and monitor against budgets and complex fee arrangements; and it also enables Business Development and Knowledge Management to leverage past experience to pitch and win new business.
Better BI enables management to quickly and easily view trends, top/bottom performances, growth potential, and understand flight risk attorneys to make better, more informed decisions. BI systems should feature business logic at their core: organising data based on how users analyse business. Measures and dimensions could be configured to a firm’s specific needs, so that end-users can report on and analyse the life cycle of a transaction to make more informed strategic decisions.
To do all of this from the same data, a single source of truth, will require an unmatched configurability and a new kind of firm-driven dashboard that enables the secure creation of innumerable, custom visualisations. Here are five of the core features of what this ‘better BI’ system has that traditional BI does not:
1. A first-class warehouse that stores the necessary data at the required granularity
Business changes, and the BI system should be able to adapt. The system should allow not just the importing of data from key systems, but also the ability to record, modify, and transform data based on the current legal landscape. Right out of the box, it should support the real ways firms do business today, such as phase and task-based billing, and alternative arrangements including: fixed fee per matter or in a given area, blended rate, fixed fee with a collar or a cap, budget based monthly billing, risk sharing, contingencies, etc.
2. An extendable framework that understands that as business evolves, so does your BI system
Your system should evolve in step with the industry. As new metrics and metadata are tracked within your source systems, it should easily incorporate that information into its reporting and BI tools for end-user consumption.
3. A flexible reporting tools that allows both technical writers and non-technical analysts to build firm-specific reports, with their configured security model
A reporting tool should support all the major reporting languages – SQL, MDX, DAX, R – and incorporate key business logic, such as planned vs unplanned discounts, reduced WIP levels based on arrangements, and risk logic that identifies the “true” value of profit given historical trends. Ideally, the system would have user-friendly features such as drag-and-drop creation of report queries, dashboards, and alerts. All types of end-users should have the ability to configure and build role-based, user-specific reporting from their UI.
4. Configurable dashboard tools that allow end-users to report and visualise data from multiple sources
A dashboard needs to give lawyers and staff access to the most critical information to perform their jobs efficiently, but this data may not always come from a single source. A capable system must create visualisations from multiple sources, allow actions to be performed (for example, creating invoices or recording time), and give access to business-driven reports and pages. The integration of information across products and systems, so users have a single, seamless experience accessing key information, is essential.
5. An analytic tool that allows users to analyse and build ad-hoc reporting – from firm-level to a single day analysis
Management needs to quickly and easily view trends, top/bottom performances, growth potential, and understand flight risk attorneys to make better, more informed decisions. BI systems should feature business logic at their core: organising data based on how users analyse business. Measures and dimensions could be configured to a firm’s specific needs, so that end-users can report on and analyse the life cycle of a transaction to make more informed strategic decisions.
The only way for a firm to thrive in a market that demands more from a law firm, while offering less, is to utilise technology to help it run its business. A robust BI platform that provides data analytics and a comprehensive matter management solution for all users in the business is a key element in that equation.
Brian has been with Prosperoware since March 2017, prior to which was he was at Wilson Legal Solutions as a product manager. Between 2013-15 he was a product manager for LexisOne, having joined as a result of LexisNexis’ acquisition of Redwood Analytics.
We do not charge for editorial comments, which are published on merit only.