Just when law firms were beginning to master business intelligence (BI), the market goes and changes the rules. Growing volumes of alternative fee arrangements raise the question of what’s next with BI?
In the old normal, law firms tracked a key few metrics: billable hours, capacity utilization, leverage, realization, and rates. It all seemed so easy. Of course, it was not as simple as it looked and smart firms figured out that BI is a way to dig deeper to understand what levers to pull to juice profits.
As more work moves to AFA, how will firms analyze their businesses and financials? I wish I knew; I’m just beginning to think through the options. Inputs welcome!
I started thinking about this after reading Execs Want Focus On Goals, Not Just Metrics (Information week, 13 Nov 09), which describes how business increasingly monitors real-time performance via either dashboards or scorecards (the former summarize metrics, the latter compare the metrics to pre-determined targets). I’m not sure law firms need real-time data but monthly seems way too long to wait.
Then I read the blog post Performance Measurement – the sequel by James Dunning. He emphasizes the importance of forward- rather than backward-looking metrics as well as providing good general advice about metrics.
In the past, I’ve been impressed by Redwood Analytics approach to BI (Redwood is now a LexisNexis company). Redwood’s Redwood Analytics