Best Practices for Managing Firm Growth

Transcription

1 Best Practices for Managing Firm Growth Daniel Ronesi Senior Consultant, Business of Law 2012 Redwood Analytics User Conference Analysis. Insight. Action.

2 Objectives Industry trends impacting growth strategies Defining business intelligence, competitive intelligence and your firm s profit model Using technology and data to support your profit model and identify growth strategies 2012 Redwood Analytics User Conference Analysis. Insight. Action.

3 Industry Trends 2012 Redwood Analytics User Conference Analysis. Insight. Action.

4 Recent Trends Strategy is largely driven by: Economic Conditions Customer Pressures Client Behavior Economic Pressures Resources Technological Improvements Approach and Goals 3

5 Recent Trends - Survey Responses Clients want: To be heard and understood A reduction in legal expenditures Their budget expectations met Engagements with alternative structures and project management * Copyright 2011 ALM Media Properties 4

6 Recent Trends - Survey Responses Law Firms are: Not formally meeting with key clients to discuss overall satisfaction Raising bill rates Not invested in changing fee structures Not aligning partner compensation to meet new initiatives * Copyright 2011 ALM Media Properties 5

7 Defining Business and Competitive Intelligence 2012 Redwood Analytics User Conference Analysis. Insight. Action.

8 What is Business Intelligence? Tools that gather internal firm data and translate that data into clear meaningful information Enables reporting and analytics for non-technical types Used for better decision making Ideally used by firms who compete on analytics, making analytics and fact-based decisions a key element of strategy *Thomas H. Davenport, 2008 Competing on Analytics 7

9 What is Competitive Intelligence? Tools that gather external firm data and translate that data into clear meaningful information Systematic and ethical program Gathers, analyzes and manages information about the external business environment This information can impact change and affect a firm s plans, decisions and operations 8

10 Defining Your Profit Model Developing an internal profit methodology which: Gives partners visibility to what is happening Allows action to improve current situation Monitors actions against budgeted/expected results Gives partners a common goal Encourages the right behavior!!!!! 9

11 Defining Your Profit Model Is Firm Strategy determined by profitability (and thus an existing profit model) or does Profitability drive the Firm Strategy? 10

12 Defining Your Profit Model Strategic Map What is the Firms Direction? Setting KPI s Budgeting/Planning Involves several key decision makers Profitability What impacts our bottom line profits? Educate the Lawyer Client Intake = Matter Planning Monitor actual results vs. plan 11

13 Defining Your Profit Model Monitor Setting Strategic Goals Measure Manage Did we achieve our Goals? Data is just data unless it is used as part of the decision making process. 12

14 Defining Your Profit Model Visibility into the Data Delivering tailored financial intelligence Distributing reports, dashboards and key performance indicators with firm goals with flexibility to personalize to each person s preferred format Delivering easy-to-understand, customized insights to partners and attorneys when and where they need them Quickly access detail on performance, opportunities and goals using flexible tools 13

15 Visibility into the Data 14

16 Visibility into the Data 15

17 Visibility into the Data Event triggers, bursting, and mobile devices 16

18 Using Client Data to Support Growth Initiatives 2012 Redwood Analytics User Conference Analysis. Insight. Action.

19 Using Client Data to Support Growth Initiatives Clients and Firms Behaving Badly How accurate has your timekeeping and invoicing been over the last decade? How efficient have your processes been? Are attorneys appropriately assigning task or project codes? What about your clients data? Do you have access to the data you need? 18

20 Using Client Data to Support Growth Initiatives Gaining Buy-In Commitment from leadership Must be in it for the long term Establish basis for moving forward what will we measure, and how? Implement achievable business processes to build information base Start small and higher level Track results, and create a feedback loop 19

21 Scenario 1: Using Historic Data to Create Budgets Automatically pull data from your billing system to use historic performance as a template for future work Track variance between actual and budget on a daily basis (early warning) Better manage staff and matters with insight into historical drivers of profitability 20

22 Track Actual Results Against Budgets Model fee arrangements, including alternative fees, at the client, matter, and phase/task level Perform what-if analysis comparing various pricing and staffing models Generate fast cash flow and income reports using monthly forecasting and variance analysis Reward right behavior that delivers optimal profitability 21

23 Using Client Data to Support Growth Initiatives There is a growing demand within law firms for: Comprehensive client relationship intelligence Practice area and industry footprint intelligence Effective identification of the RIGHT business development opportunities. Marketing and business development professionals in the legal industry are moving from more customary communications and relationship-building roles to strategic targeting and prospecting experts. 22

24 Scenario 2: Cross Selling Business Intelligence: Identify clients who are under penetrated and you would like to cross sell Competitive Intelligence: Identify alternative types of work being done as well as the firms that are performing that work 23

25 Attrition Rate (%) Attrition Rate (%) Client Attrition Decile Areas of Law Client Age # of Partners Involved >20 Nov *Redwood Analytics Think Tank 24

26 Scenario 3: Client Prospecting Business Intelligence: Identify clients or areas that are profitable Competitive Intelligence: Identify clients or industries that are similar to create a prospecting list 25

27 # of Cases Filed Scenario 3: Client Prospecting 600 Case Count by Type (excl. asbestos cases) Client ABCD All Others Labor Litigation Personal Injury Commerce Patent Antitrust Other Civil Rights ERISA Employment Other Statutory Actions Other Contract Calendar Year 26

28 Share of Wallet Analysis 27

29 # of Cases Filed Share of Wallet Analysis 600 Your Law Firm Federal Litigation Share (excl. Asbestos cases) Client ABCD 2.7% 2.4% 1.7% 0.9% 0.8% 0.0% Your Law Firm Other Law Firms Calendar Year 28

30 Scenario 4: Expansion Business Intelligence: Identify areas of your practice that are declining that you may want to strengthen Competitive Intelligence: Identify client prospects Look for merger or lateral possibilities 29

31 Using Client Data to Support Growth Initiatives Bringing it all together Example Client Profiling Business Intelligence Lifetime Value Analysis Competitive Intelligence Aggregated Client Share Trends Relationship Intelligence Connection Analysis 30

32 Using Client Data to Support Growth Initiatives Understanding the Strategy All Clients Ability to come up with actionable lists that feed into the firm strategy Allow the firm to EMULATE past success Allow the firm to learn from past failures Provide information that will lead to opportunities Lifetime Value Assessment Focus Client Group External Trends Target Growth Clients Low Opportunity Clients 31

33 Scenario 5: Lifecycle of Average Client Linking clients together based on client year is central to Client Profiling analysis 32

34 Scenario 6: Market Segmentation Understanding your client base is the first step to growing that base Understand the type of work you are doing Identify similarities 33

35 Review Business intelligence is an excellent tool to analyze your internal operations to identify key areas of focus Competitive intelligence enables firms to look externally to help isolate a course of action for those key areas of focus Combined BI and CI can provide critical insight and help direct a firm s business development efforts profoundly 34

36 Best Practices for Managing Firm Growth Daniel Ronesi Senior Consultant, Business of Law 2012 Redwood Analytics User Conference Analysis. Insight. Action.