Background
A well-established New York small-medium law firm, employing approximately 60 lawyers, faced challenges in effectively managing its operations and improving profitability. Despite the firm’s strong reputation, equity partner compensation remained low, leading to persistent frustration. Following an outdated model, the finance department worked diligently but focused primarily on basic tasks such as bookkeeping, billing, collections, and profit distribution calculation among partners.
Solution
During a managing partners seminar meeting, the firm’s managing partner was introduced to FirmInsights’ BI analysis system, a unique management and analysis system for law firms developed by Precise. The system enables in-depth analysis of almost every relevant parameter in law firm management, including work hours, invoices, receivables, profitability, client intake, write-off, WIP, and more. The system allows for viewing data across all possible dimensions of the firm – employees, managers, departments, etc. Unlike standard BI systems, FirmInsights is designed specifically for unique management and analysis processes of law firms. The user feels as if the system has already done the analysis for them and presents them with the conclusion.
FirmInsights implementation was carried out on three levels
- Partner Module – Each partner received access to interactive dashboards displaying real-time information on their performance against defined goals. This module allowed partners to ensure timely invoicing, analyse the profitability of clients and employees, optimize collection processes, and Increase department productivity.
- Firm Management Module – management meetings became structured and data-driven. The managing partner, assisted by the controller, used Firm Insights to track and present progress towards annual goals, analyse performance at the department level, examine WIP, write-offs, collections, and analysis of specific clients or employees that the managing partner decided should be brought up for discussion at the meeting. The use of FirmInsights provides immediate answers to questions that previously required the finance team to conduct analyses for several days.
- Scheduled Reports – Weekly reports on topics such as work hours, collections, WIP, and goal tracking were sent to assist partners who did not use the system regularly.
Results
In the year following FirmInsights implementation, the firm’s performance significantly improved – firm revenue increased from $35 million to $41 million raising profit by $6 million. Equity partners experienced a significant increase in compensation.
The partners attribute the improvement directly to FirmInsights implementation. Employees logged more work hours, invoices were issued on time, collection times were reduced, write-off percentage decreased, and unprofitable clients were identified and addressed. The following year, revenue grew by another 5% with no change in expenses. FirmInsights was defined by the firm’s management as their secret weapon.
