Law firm profitability – you spent how much on IT ?
Intelliteach, a US-based provider of business management and IT services to law firms, has just published its Guru’s Guide to Law Firm Profitability, a 12 page guide featuring unique benchmark data including most requested billing statistics, collection metrics, revenue recovery ratios, and analysis of industry collection realization by firm size.
The Guru Guide to Law Firm Profitability, based on the collection and analysis of more than one billion law firm accounting transactions, provides insight into financial metrics and benchmarks that law firm managers can use to make better decisions about how their firms operate, including billing statistics, collection statistics, and revenue recovery ratios in the industry; and analysis of industry collection realization by firm size. Some key findings include:
• Law firms spend just over 11% of revenue on non-secretarial & non-occupancy staff functions (back office).
• Finance, Administration & Office and Information Technology represent 69% of total back-office expenditures
• Small firms excell at billing quickly (less ‘days of unbilled’) as well as getting high billing realization
• Within the past five years, Recovery Rates (as measured as a collection percentage from the Total Open A/R Balance Pool) have decreased from 83.08% in 2008 to 78.08% in 2012
• The industry averages just 44.1% collection rate when invoices pass the 180 days old mark
• Moving up collections activities by 30 days, from say 90 to 60 days, increases the likelihood of collections by 15%
• The average firm has 73 days of A/R in inventory, an increase of three days over the last 12 months.
You can download the full report here as a 2Mb PDF http://cloudbox.legaltechnology.com/2013-Gurus-Guide.pdf