Are you getting the financial information you need to make informed decisions?  Receiving accurate and timely financial data seems to be a consistent area of concern for most law firm leaders.  If any of the following are not true at your firm, it may be time to reevaluate your current financial management system and processes.

• You should spend most of your time enhancing revenue, profitability, and client relationships.
• You should have key performance indicators, which are measurable and comparative data, at your “finger-tips”.  This will immediately inform you of the status the firm’s financial goals and objectives.
• You should be receiving summary information that provides a quick overview of the financial health of the firm.  You can always request additional data but that should be the exception rather than the rule.
• You should receive, in addition to financial reports, information on new client matters and profitability on existing clients.  This information will allow you to take advantage of market opportunities.
• Your accounting personnel should not be manually manipulating data in a spreadsheet.  The financial management system should be producing most, if not all, the necessary information.

 

Many firms are underutilizing their financial management systems and are operating inefficient processes.  Firms purchase or lease their financial management systems, go through a lengthy implementation, and then use that system and processes for years without giving it another thought.  Benefits can be gained by conducting periodic assessments of your financial processes and supporting systems.

An efficient review of your financial processes and utilization of the financial management system should be done by an independent objective outsider.  In that manner emotion, egos, and even “turf protection” are not involved and the goal will be ensuring the firm’s objectives are achieved in the most cost-efficient manner taking into consideration the culture of the firm and industry best standards.

Here are 5 areas that should be addressed in any thoughtful, well-conceived assessment:

1. Cloud Based

Gone are the days where law firms are required to host servers to run back office systems.  Cloud based solutions relieve firms from managing hardware, security, backups, upgrades and server software versioning.  Most systems in the marketplace offer a cloud based solution.

2. Key Performance Indicators (KPIs)

All law firm leaders should have summary financial information readily available.  This should include comparative analysis which contrasts current information to prior years, budgets, and survey data.  The use of dashboard technology makes this easily doable.  Leaders need actionable information regarding, profitability, pricing, billing, collections, client status, etc.

3. Reporting

Reports should be generated directly from the financial management system and should supply business intelligence so leaders can make decisions based on accurate and timely information.  Downloading data to spreadsheets and manually manipulating the information to produce reports is time consuming and costly.

4. Time Submission

Capturing of time worked is still a struggle for many firms.  There are many alternatives in the marketplace to ease this necessity.  Attorneys should be able to submit time on any mobile device and use timers to track their various matters.  If the firm makes this process easy the attorneys will comply with expectations.  If time is not submitted daily, firms will lose up to 20% of the hours worked.

5. Billing

Submitting timely and accurate bills is a critical piece of a firm’s cash flow.  Financial systems should be able to adapt to client invoice requirements; deliver invoices online; and  accommodate alternative billing models.

In conclusion, a financial system assessment should not be time consuming and implementing the recommendations should more than pay for the cost of the review and improve your firm’s financial management and ultimately, profitability.

About Legal Strategies Group LLC

The Legal Strategies Group LLC (LSG) is a consulting firm that provides business advice to law firm leaders exclusively.  We help firms take a fresh look at financial, marketing, and organizational issues ensuring that your firm achieves its maximum potential.  With years of experience, we know lawyers; how they work; and have a proven track record of success.  If you need assistance and/or advice with your financial management system, financial processes, or other business issues, LSG can help.