Ian Hopkins Senior Associate Consultant at cpm21 was recently a guest speaker on an Osprey Approach Legal Software UK webinar “Becoming data driven: How modern law firms can continuously optimize with real time data.”
In this article Ian Hopkins shares his thoughts on how smaller law firms can use data to enhance and improve the decision-making process at their firms.
Most law firms collect some data and use it for limited monitoring purposes, but many law firms do not base any major decisions on it, instead preferring to rely on intuition and gut feeling.
Following a hunch when making a major decision without using a data supported approach is often risky. Getting strategic decisions wrong can result in significant additional expense to the business.
A data supported strategy is based on collecting and analysing data to support the decision-making process. The results of your data analysis can tell you whether it would be wise to follow a particular course of action and reduce the risk associated with major decisions.
For example, you may feel that you need to employ more staff. You may be influenced by feedback from your lawyers who tell you how busy they are. But having more information such as the number of open cases, the number of cases per lawyer, the utilization rates of your lawyers, what your future pipeline of work looks like and the overall profitability of the team, will help you make a more accurate decision as to whether you genuinely need to recruit and incur additional cost.
Another example I sometimes see is law firm partners who wish to open an office in a neighboring town or city. Such decisions carry significant cost implications and should be thought through carefully supported by available data, but often are made on gut feeling and instinct.
The Law Society Gazette recently featured research showing a league table of towns and cities across the UK where law firms had opened and closed, over the past 5 years. The table was compiled from data extracted from Companies House.
Any partner thinking of opening a new office would be well advised to consider the research data and ensure it forms part of the overall business risk analysis that will provide a better understanding of the attrition rate, likely competition, and greater insight as to the chances of success of the investment.
Law firms of all sizes are now able to collect, analyse and access data to unlock insights so it is a concept that is not confined solely to large law firms with more resources and deeper pockets.
By supporting your decision with data, you can be more confident about the choices and decisions you make because an element of risk is taken out of the decision-making process.
If you are thinking of implementing a data supported culture in your firm, start by ensuring the data you hold is up to date and accurate. Unfortunately, in my experience bad data is the norm, making analysis far more difficult.
Provide sufficient time and resources to ensure that the data held in practice management systems and wills banks, for example, are up to date, accurate and can be relied on for reporting and marketing purposes.
Ensure that data policies, roles and procedures are clear, up to date and understood with training available to all and identify any barriers that are likely to get in the way of delivering change in the firm.
A recent study showed that those businesses driven mostly by data-based decision making had a 5 – 6% higher productivity rate and 6% higher profits.
The transition to a culture of data supported decisions in a law firm will not happen overnight, but the benefits are clear and proven to those that are able to make the change.
If you would like to discuss any of the themes raised in this article, please contact Ian Hopkins, Wayne Williams, or Paul Jones of cpm21.
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