Why is business intelligence important for legal firms and why should you care?
Gone are the days where being a successful and profitable law firm simply meant hanging a shingle above your front door and waiting for work to walk right in… The legal profession in Australia is more competitive than it has ever been. Since 2011 there has been a 45% increase in the number of solicitors practising in Australia. There are now 83,643 solicitors nationally, 26,066 more than in 2011.
As of October 2020, there were 16,393 private law practices in Australia. Most were sole practices or law practices with one principal (82%), followed by law practices with two to four principals (10%). Across Australia, there were only 71 law practices with 21 or more principals. Almost half of these were based in New South Wales.
With the Australian legal market now exceeding $27 billion per annum if ever there was a time to get a handle on how effectively your business is operating, it is now.
As the age-old adage goes; “if you can't measure it you can't manage it”. In the absence of reliable data, firms are flying blind and effectively making decisions on a whim. The most successful businesses - law firms or otherwise - have sophisticated Business Intelligence (BI) tools for measuring and analysing performance. Gartner defines Business Intelligence as an “umbrella term that includes the applications, infrastructure, tools and best practices that enable access to and analysis of information to approve and optimise decisions and performance”.
So, the question for your business is: what data is driving your decisions and performance?
The problem for most legal practices (is that they are too busy to think about these things or make sense of the data that may be put in front of them. The problem in the modern age of business is the sheer volume of that data. There is simply so much information available that it is hard to know where to begin – let alone establish a pathway to success. The main issue lies in identifying what is relevant to you and getting information that is meaningful.
This last point is particularly pertinent. Legal professionals are singularly focused on their primary task, which is interpreting and actioning law. While it is imperative to run a profitable and efficient business, present most lawyers with a page full of figures and their eyes are likely to glaze over. Therefore, presenting information in a clear, visual manner makes it digestible and fundamentally easier to action.
Fast, clean data
Data is great, so long as it is current and relevant and not subject to human error. The problem for most firms is that they rely upon reports from their accounting systems for business information. The issues are that reading and understanding a report is not straightforward and you need multiple reports to get all the information you need. Worse than that the report is out of date the instant it is created.
Systems that will assist you making effective decisions must be able to action, process and provide data that is current. They must be easy to access and easy to understand.
This is another important point – the vast majority of organisations already have the data they NEED to help make better business decisions – it is just a matter of harnessing that data in a way that makes it accessible in order to make it work for the firm. Mining existing data doesn't have to be particularly complex – it is really a matter of putting financial figures into a system that is designed to help people visualise – and turn an existing asset into something more tangible and ultimately useful to the business.
Businesses that can properly leverage BI will have better control over their processes, profitability and cashflow. They will have stronger visibility into what's going on within their organisations and can standardise procedures that eliminate inefficiencies and improve effectiveness. This also helps businesses to be proactive rather than reactive. For example, if you can understand where the delays are in your service delivery you can focus on improving those areas more quickly and effectively than the competitors – thus providing the business with a competitive advantage.
Having figures presented in a clear, concise and easily digestible manner also leads to efficiencies down the line. Rather than ‘flying blind' or devoting countless hours to collating and interpreting figures, a BI solution captures relevant information according to pre-set parameters, and effectively automates specific financial processes.
This frees up time for legal professionals to focus on other tasks – as well as effectively saving the firm staffing costs associated with creating reports.
On top of that, giving lawyers information about their personal performance, in a manner that they can easily understand, means that they become aware and learn about the financial aspects of their practice. This improves responsibility and accountability.
Do what your competitors aren't
Being intelligent is hard work but having great BI is doesn't have to be. It takes time, effort and focus but with the assistance of some advanced applications it is within reach and a budget, even for smaller firms. Effort in the short term saves time, provides deep insights into the business and, ultimately, helps the business make money – resulting in a win-win situation for the firm and its employees. A competitive advantage can be critical in today's ultra-connected world. Business Intelligence can provide that advantage, and literally be the difference between being a leader and being part of the pack.