Business Intelligence (BI) allows law firms to sift through important data and information to not only monitor current items in the firm, but also find new opportunities to drive more profitable business. Just a couple of the ways you can do so is by sorting, manipulating, and analyzing law firm data to uncover opportunities the firm hadn’t previously considered or may have not been brought to their attention.
The right BI solution gives an attorney insight into their business with data that they can quickly analyze in order to identify the health of potential opportunities within segments of the firm. To think like a lawyer, in terms of Law Firm BI, means that you can easily compare profitability related metrics against key firm dimensions to learn more about: clients, matters, practice groups, departments, offices, timekeepers, matter arrangements, titles, and more.
Let's break this into four levels
Many different components mesh together at each firm with respect to BI: the quality of data, culture of the firm, view on technology, the list goes on. While you can use legal BI for everything from complex decisions and analyzation of data or a simple task, many firms are stuck at the preliminary phases and have a lot of room to grow! We find most law firms can be grouped into one of the four groups. This chart will give you the ability to see what level you fall at and begin taking those steps to climb the ladder and create a course for improvement.
Law firm BI Level 1: Descriptive -- What happened?
For most firms, finding what happened is mostly coming from a reporting function. Reports are a great snapshot in time, but one day, or even one hour later from when the report was published, it is now out of date.
In our experience, law firms tend to have a TON of reports. They are emailed, or in some cases printed and passed along the firm to which there may or may not be feedback. The caution here is that these reports aren’t always actionable, and in terms of being legal BI savvy, it’s a level one, bottom of the ladder activity.
Law Firm BI Level 2: Diagnostic -- Why did it happen?
Law firm reporting tells us something happened while a diagnosis tells us the cause or why it happened. This level starts to build more activity into the report which is where you can understand "the why" behind a report.
Often we see law firms at this level with a business intelligence dashboard reporting system. The intent? Providing a self-service "reporting tool" to everyone in the firm. This means anyone from an individual attorney all the way up to Managing Partner or CFO can get the information they need without relying on that reporting or analyst team to create that single snapshot report.
Legal BI Dashboards are a great way to get your firm access to real time data that can be easily manipulated to view relevant and important information within a few clicks! Having the dashboard is a rung higher than level one, but there is still room to grow by using that dashboard to it's fullest potential and rising to the top.
Law Firm BI Level 3: Predictive -- What will happen?
From reactive to proactive. The predictive level of BI is where many firms are headed. It shares with the firm, practice group or individual partner "if you continue how you have been, this is how your year will end up." Obviously the more data and larger data set that your law firm has, the more valuable your BI predictions can be and more robust that BI dashboard can get. For example, based on the last four years of data, predictive BI has the ability to tell a firm what percentage of AR or WIP they are likely to collect for this year. That intelligence is actionable! Firm management has the ability to see those predictions and then react and give guidance to his/her team so they can influence the year-end outcome.
At this level of BI analysts are no longer creating reports, but they are able to understand the why behind it.
Law Firm BI Level 4: Prescriptive -- How do we make it happen?
Level four, the top of the ladder, the ultimate goal for legal BI. At this point, it’s no longer just about what you think will happen based on the data trends you are looking at in the dashboard, but also revealing a way for the firm to make it happen. Firms are using data to help drive decision making in their firm.
If improving BI savvy can lead to new opportunities for profitable growth, what can a firm do to step forward? Check back on the BigSquare Blog Spot this month for part two where we share "How Law Firms Can Move Up the BI Levels"
BigSquare is the leading provider of Business Intelligence for law firms and professional service organizations. We focus exclusively on law firm reporting, law firm BI, law firm profitability and law firm analytics.