Many top law firms in the AM 100, Global 200, and NLJ 500 have realized the importance of profitability. They have people, products, and processes in place to help paint a more detailed picture of revenue and expenses, and ultimately profitability. New staff and software help calculate and analyze the firm's profitability to allow more informed business decisions to be made.
Profitability has been a concept in the legal industry for some time, but in more recent years it has become an area of increasing focus for firm leadership. Many firms have started developing skills, techniques, and protocols around what it means to be profitable at their firm. The firms that continue to build out their capabilities to analyze performance and contributions on various levels will be the ones that push ahead. And it is not just profit margins, but also items like matters, clients, practice groups, offices, partner's book of business, etc. From new financial pricing and analysis teams, to profitability software like BigSquare's Profitability application and Matter Management pricing tool. Both avenues allow firms to utilize strong analytics to help determine profitability.
So what truly helps your firm push to be more profitable?
There are legal specific tools that were created for a reason: to help law firms in this arena. Rather than having your finance team or analysts spend hours creating a tool or mocking up spreadsheets, why not use a tool that was already created for law firms? This frees them up to actually analyze the data and make informed decisions for the firm. Some tools we know help with profitability:
Firms are choosing specific metrics and tracking those through reports to review patterns and trends. By keeping a constant eye on the financial well-being of the firm then you can gauge the performance through your Key Performance Indicators (KPIs). We compiled some KPI's that your firm may want to consider: Key Profitability Metrics for Law Firms.
Billing is an essential aspect of running a successful law firm which is why it is vital to implement and execute effective billing practices to be sure your law firm is most profitable. Your bills and invoices are a vital communication tool between your firm and your clients. These 5 tips are some of the Best Billing Practices for Profitable Law Firms.
- The Business of Law: Law Firm Profitability
- Why is law firm profitability so important?
- How to dramatically increase law firm profitability
- 7 mistakes made with law firm finance and profitability
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.