KPIs and Improving Profitability with Business Intelligence SCOTT RANDALL ADVANCED LEGAL

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1 KPIs and Improving Profitability with Business Intelligence SCOTT RANDALL ADVANCED LEGAL

2 The Business of Law Has Changed

3 Law Firm Growth is Flat

4 Realized Rates are Declining

5 Competition Between Law Firms Has Increased The Supply of Lawyers Exceeds Demand and the Gap is Widening Alternative Fee Arrangements Continue to Increase Rising and Loyalty to a Single Firm is Falling The Road to Partner is No Longer Certain for the Associate Rank and File

6 Financial Metrics for Benchmarking Revenue per Employee :: $150,000 Revenue per Attorney :: $500,000 Salaries :: 65% of Cash Receipts Marketing :: 8% of Cash Receipts Rent :: 6% of Cash Receipts Source: How to Evaluate Law Firm Financials, Inc. 1/22/2014

7 Success In The Business of Law Requires Extreme Efficiency and Real-Time Management

8 What Is Business Intelligence? Measurable Insights Into Business Performance What Is Measurable? What Is An Insight?

9 BI Realities Business Intelligence provides information to act upon. Business Intelligence does not ensure actions are taken. Actionable Information will only make a difference when acted upon. Business Intelligence is a Starting Point for Extreme Efficiency and Real-Time Management.

10 Key Performance Indicators (KPIs) Identify and Act Upon Key Indicators of Firm Performance Identify and Ignore the Numerous Non-Essential Information Indicators Fully Integrate KPIs through All Levels of the Law Firm Structure (i.e., do not lock away information at the top management levels)

11 The Seven Essential KPIs And Three Focal Points For Law Firm Success

12 Daily Focus Law Firm Billing

13 KPI 1 Work In Progress Current Information Updated Daily Firm-Wide Office Location Areas of Law Assigned Professional (Originating, Responsible) Working Professional Client, Matter, Value, Age, Billing Speed

14 KPI 2 Billing vs. Projection Current Information Updated Daily Firm-Wide Office Location Areas of Law Assigned Professional (Originating, Responsible) Working Professional Client, Matter, Working Professional, Actual Billings, Projected Billings

15 Weekly Focus Law Firm Collections

16 KPI 3 Accounts Receivable Current Information Updated Daily Firm-Wide Office Location Areas of Law Assigned Professional (Originating, Responsible) Working Professional Client, Matter, Value, Age, Collection Speed

17 KPI 4 Cash Receipts Current Information Updated Daily Firm-Wide Office Location Areas of Law Assigned Professional (Originating, Responsible) Working Professional Client, Matter, Working Professional, Actual Collections, Projected Collections

18 KPI 5 Client Advances Current Information Updated Daily Firm-Wide Office Location Areas of Law Assigned Professional (Originating, Responsible) Working Professional Client, Matter, Balance, Age, Collection Speed, Billing Status

19 Monthly Focus Line of Business

20 KPI 6 New Business New Matters by Time Period Client (New / Existing) Area of Law Assigned Professionals Office Location Projected Staffing

21 KPI 7 Client Distribution Current Information Updated Daily Client Matter Area of Law Cash Receipts Contribution Percentage Used to Determine Core Practice Areas

22 Reporting Analytics

23 Effective Rate Trends

24 Inventory Lifecycle

25 Profitability by Professional Direct Expenses Indirect Expenses Professional Weight Billing Actuals Cash Receipt Actuals

26 Profitability by Matter Baseline Profitability by Professional Professional Contribution to Matter Billings to Matter Cash Receipts to Matter Extrapolate Matters to Area of Law, Assigned Professional, Office Location

27 Matter Lifecycle Metrics Days from Start Date to Completion Date Professional Type Hours Needed During Timeframe Optimization of Hourly Requirements to Appropriate Professional Type Cash Receipts by Timeframe

28 Visual Dashboards Engage Firm Wide ProLaw Native Visual Report

29 Visual Dashboards Engage Firm Wide

30 Visual Dashboards Engage Firm Wide ProLaw Native Visual Report

31 Inquiries Into Business Process Management

32 What area(s) of law should our firm be focused on growing?

33 How should we price Fixed Fee / AFA matters?

34 matter, what resources will be required, how quickly and will the matter be profitable to the firm?

35 Which professionals are most effective in the following roles: Origination, Leverage, Efficiency?

36 by working professional by inventory speed?

37 What are the value and time requirements of docketing events yet to be completed?

38 How do we mentor associates on business management and guide them to a successful future?

39 Can we utilize metrics to assist with professional retention (increased write-offs and decreased utilization leading up to termination date)?

40

41 Roadmap to Improving Profitability The Seven KPIs Law Firm Billing Daily Work In Progress Billing vs. Projection Law Firm Collections Weekly Accounts Receivable Cash Receipts Client Advances Line of Business Monthly New Business Client Distribution Reporting Analytics Business Process Management

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