AUTOMATED SOLUTIONS BRINGS SAVINGS AND EFFICIENCY TO LAW FIRMS
JOY A. LONG
Nonbillable hours are the bane of every law firms' existence. Those hours are typically spent on anything from client intake to collections and they eat up a lot of time that may be more profitably spent elsewhere. Fortunately, automated solutions are finding their way into law firms and are helping them to make better use of their time while creating new efficiencies and reaping cost savings along the way. This article highlights a few areas of law practices, such as client intake, document drafting, marketing, and billing and collections, which are benefitting from automated solutions.
Related Read: AI: From Hollywood Science Fiction to the Legal World
The benefits of introducing automation into your law practice extend beyond simply freeing up time from mundane tasks. Properly implemented, automation can:
- Reduce human error — for example, in data entry during client intake or billing;
- Boost attorney satisfaction, as more time is spent on billable work that uses their expertise and knowledge;
- Significantly cut overhead;
- Improve and streamline the client experience; and
- Make smaller firms more competitive with their larger peers.
These and other advantages usually more than offset the upfront and tax-deductible investment made in the long run.
POTENTIAL CANDIDATES FOR AUTOMATION
In the typical law firm, several areas jump out as ripe for automation, for example:
This is generally a party's first contact with your firm, so you need to make it count. Attorneys need to collect a standard set of initial information for each type of case they handle. With automation, your firm can build different online forms for each type of matter, allowing clients to easily enter the information themselves. They do not have to waste time entering anything that is unnecessary and there is less chance of something being mistranslated when the client relays it over the phone to someone in the office. It is worth noting that today's consumers have grown to expect such on-demand interfaces that firms that do not provide the option for clients to do it themselves, risk seeming behind the times.
With robotic process automation (RPA) tools, a user can complete a questionnaire with the vital information for a lease, letter of engagement or similar contract. The tool proceeds to add that information to a template to produce a document ready for human review. Machine learning (ML) can be applied to create more sophisticated documents.
With either RPA or ML, your attorneys can draft documents more quickly, with little risk of error and at a lower cost to the client. ML can also help with contract review by checking for essential provisions and comparing subsequent drafts to ensure nothing has fallen between the cracks.
Billing and Collections
This process often is subject to delays, which can lead to cash flow issues, especially for solo practitioners and smaller firms. Clients have been known to return invoices for repeated rounds of corrections. Automated billing reduces the odds of the kinds of errors that can come from paper-based time tracking and invoicing systems. It also provides an audit trail, should questions arise down the road. Automated time tracking can send out alerts when attorneys are spending too much time on certain tasks, making it less likely that clients will object to billed amounts.
CRM systems can can interface with many of a law firm's other crucial systems, such as your accounting and client intake systems, in order to glean key client data and preferences for use in a firm's strategic marketing efforts. Firms have also found ways automate their communications through their websites using SaaS products to deliver key communications, such as newsletter, blogs and event invitation deliveries, giving your marketing department the ability to track not only what clients respond to, but also gathering prospect information that may generate new leads.
THE FUTURE IS NOW
In today's economic environment, clients increasingly are demanding their attorneys to do more with less, as well as demonstrate how their firms add value. Automation offers an affordable avenue to do just that, empowering firms to lower overhead while raising productivity, accuracy and efficiency.
CHARTING THE FUTURE: HOW KEY PERFORMANCE INDICATORS CAN HELP YOUR FIRM SUCCEED
ROBERT G. SWENSON, CPA, MST
After a tumultuous year, many law firms are looking towards a calmer future. But the waning COVID-19 pandemic is not the only factor affecting firms' futures. Each firm needs to review some key performance indicators (KPIs) to make informed decisions on the road to success.
RESEARCH FINANCIAL KEY PERFORMANCE INDICATORS
For many law firms, the biggest consideration is financial performance. Four KPIs that will help shed light on your firm's financial health include:
How much revenue does your firm collect compared with its billings (net realization) and how long does it take to collect that revenue? Determine how the amount billed compares with the amount of time worked (billing realization).
- Profitability per Attorney and Client
You need to know how individual attorneys and clients are affecting your profits when making decisions about compensation and client relationships. Look at profitability for each type of matter when considering which types of work to pursue.
- Unbilled Days
How long does it take to bill clients for work? Compare the fee portion of unbilled work-in-progress with the average fee billings.
- Uncollected Days
This is the ratio of the fee portion of accounts receivable to average fee billings.
SET STRATEGIC GOALS
It is admittedly hard to shift your focus away from billing-related metrics, but you also need to consider other KPIs that are specifically aligned with your firm's strategic plans and goals. After all, strong profits per partner are no guarantee of continued success.
For example, you cannot afford to overlook client development. To measure your firm's performance in this area, look to the number of new clients per month compared with the total number of active clients, matters per client and practice areas per client. Evaluate your firm's marketing and client initiatives to determine which are working and which should be refined or discarded. This might involve measuring, among other things, the cost of client acquisition.
And do not overlook client satisfaction. Satisfied clients are returning clients and referring clients. Firms are increasingly turning to the net promoter score (NPS) to measure satisfaction. They ask their clients a single question: "On a scale from 1 to 10, with 1 being not at all likely and 10 being extremely likely, how likely are you to recommend the firm to family, friends or colleagues?" Clients who reply 1 to 6 are "detractors" and those who say 9 or 10 are "promoters." Calculate your NPS score by subtracting the percentage of detractors from the percentage of promoters.
Related Read: The Benefits of Client Satisfaction Surveys
Once you have decided to implement a KPI program, what is next? An effective KPI program includes:
- Selecting KPIs
Select quantifiable KPIs linked to your goals. For example, if your goal is client growth, you might look at your rate of converting consultations into clients.
- Setting Targets
Establish targets for your KPIs that tie into the goals, perhaps based on comparable peer benchmarks. Using the example above, you might target a conversion rate of 50% to 60%.
- Monitoring KPIs
Track relevant data and measure the results against your targets. Bear in mind that you generally need several months' data to detect trends.
- Acting on KPIs
Use the information to make solid decisions.
Be sure to cycle through the steps regularly as your focus may shift. By doing so, you might find that some KPIs are no longer relevant and could be replaced with more suitable metrics.
HARNESS DATA FOR THE LONG HAUL
The amount of data available to you likely is enormous. Contact your ORBA financial advisor for help evaluating and selecting the most appropriate KPIs given your firm's circumstances. Doing so can set you up for long-term success.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.