Various studies estimate that 94% of spreadsheets have errors, including law firm reports. Despite this alarming statistic, spreadsheets have cemented themselves in our professional lives. Often it's like we toil away on a blank canvas, applying our fancy brush techniques — and when we're done, we realize that we painted the wrong subject!
The best law firm reports are timely, accurate and relevant. But spreadsheets take a long time to produce and may be inaccurate, so you're often forced to decide whether you want to create a 10-minute report that doesn't provide enough detail or a 10-hour report that isn't timely (and may contain errors).
Not having up-to-date reporting isn't just a hindrance, it can cause massive issues in the future. Small problems can grow if unrecognized, and each moment that they go unchecked can lead to lost revenue. This affects almost every facet of your business.
Below are some examples of situations we often encounter that show how the ability to pull the right information together quickly (or not) can impact a law firm.
As your law firm continues to grow, it can be hard to see which practice area is really expanding. Budgeting for the upcoming year is extremely difficult if you can't quickly pinpoint how services are spread out among clients. Do you have a few dominant clients dominating your revenue stream, or are you diversified among a broad group of clients or practices?
Proper staffing levels are critical to the health and success of any law firm. The inability to track usage in an up-to-date way can lead to over- or under-staffing, and leave you unprepared when the next great opportunity arises.
Expenses can be a silent killer that tends to get overlooked until it is too late. Unchecked expense spending can grow exponentially as policies become more lax over time. Accurate expense monitoring allows for a simpler way to manage upcoming issues before they take root.
As your AR ages, it becomes increasingly likely that the full value will never be collected. Using outdated data in your law firm reports is giving money away. Seeing all your open AR in the aggregate with the ability to drill down into the details provides an effective means to keep open AR under control.
Managing WIP is easy in the short term but can be a headache if left unchecked. A thriving business needs to have a handle on exactly how much human capital investment is going into each client. Providing daily visibility into WIP can reduce overages. Manually pulling this information is an unnecessarily tedious task that can otherwise be very simple when done with the right tools.
Bad realization rates can be caused by numerous issues, none of which are good for your firm. If your clients' expectations aren't being met, causing issues with collection, solving the root of the issue is critical. Finding these gaps as soon as possible allows for a better relationship with your clients going forward and greater profitability for your firm.
How much do you need to rely on your gut instinct to figure out who your best employee, client or even practice area might be? Large numbers tend to steal the attention, but understanding true profitability is critical to making informed choices. Often, strategic decisions need to be made quickly. Having this information at a moment's notice can be a key differentiator.
The good news is that today, the right tools and processes can easily solve these law firm reporting challenges. By implementing a feature such as a dashboard, you can quickly slice and dice data and provide more digestible visualizations that can be interpreted by non-technical decision makers within your law firm for enhanced data analysis and improved planning.
If you would like more information or need assistance with improving the efficiency of your firm's back-office operations, contact our Law Firm Services experts.
