Edge Welcomes New UK Partner
Tony Bash has joined Edge International as a partner based in London. He joins other Edge partners in the UK, Nick Jarret-Kerr and Chris Bull, in serving law firms in the UK, Europe and Asia.
Tony has wide experience in working with global law firms. He has worked as Finance Director with major firms in the UK and US including Weil, Gotshal & Manges, Mishcon de Reya, Linklaters, Norton Rose, and Freshfields Bruckhaus Deringer. Tony's focus is helping firms with highly practical approaches to revenue management and working capital control; expenditure management and procurement; business intelligence; financial analysis and Finance / Practice Management systems. In the current market Tony's expertise in matter pricing (including alternative fee arrangements), financial due diligence and financial SRA compliance complement the experience of our other Partners particularly well. His work as Finance Director in leading firms also gives him practical insights into the analysis, calculation, mechanics and sensitivity of partnership compensation. Tony is a qualified accountant and holds an MBA. Contact Tony at email@example.com
The Business Intelligence Agenda
The five (or so) "killer" reports law firms need in the new world.
By Tony Bash
I have been working with law firms for more years than I care to remember, but yet in all these years I have yet to see truly cutting edge business intelligence that truly enables a firm to make critical business decisions. Every so-called dashboard or analytical graph points backward, not forward. They report on billable hours or fees or realization rates for the month just gone and the year to date. That's all well and good but what does that tell us about what may happen in the future?
So in this new world where competition is set to grow massively from every conceivable angle, firms have to start getting smart about their BI. I am convinced that as we move forward the winners will be the firms who realize that to make decisions that count they need what I've termed "killer" BI. "Killer" status is earned only if the BI is regularly influencing (and sometimes changing) business decisions. It is:
- Targeted to the right audience
- Easy to understand
In my mind, examples of the types of things a firm should be focusing their BI efforts on are:
Targeting Business Development - as the market gets more competitive and budgets remain tight, firms need to know whether each element of their marketing and BD spend is delivering profitable work
- Return on Investment is (ROI)
- Quantify marketing spend properly - including all partner and BD staff time
- Track return on each event, campaign and initiative
Cross selling matrix - which departments, teams, individuals (and even clients) are generating work for which departments and teams in the firm
Pricing performance: firms must understand how the increasing spectrums of pricing methods perform, in terms of profitability. Before they can do that they have to be able to categorize their revenue into pricing methods - rate card, discounted, fixed fee, contingent, capped, value-based. In my experience, very few firms can do this; something business leaders in other sectors would consider to be a huge business risk.
Capacity planning: how many billable hours is each fee earner, practice group, department and firm as a whole doing on a daily, weekly and annualized basis. This has to take into account start and leave dates and part time working. Most fundamentally, it has to acknowledge and estimate the existence of unrecorded time - if lawyers are working it, even if not recording it, it is not spare capacity. Until they know this, firms can't make hiring and firing decisions on a sound business basis; which is why, in my experience, so few of them do!
Given what you know about leverage, realization rates and achieved rate per hour, what do your average annualized billable hours need to be to make the PEP figures the firm has targeted?
There are plenty more examples in the BI armory and their priority will vary according to firm, market conditions and so on. It is about providing genuine intelligence that really gets under the skin of the firm as a business, very quickly. Firms have to move away from the bad old days of producing reams and reams of spreadsheets that are prone to error and probably never get read. They need to get their accounting professionals out into the business adding real value and influencing the big decisions. This is truer today than ever, in an unpredictable new world where rivals will be coming at firms from angles - and with information - they hadn't even thought of. Contact the Author Tony Bash.
Budgeting for Growth: the Increasing Importance of STRATEX
Implementing strategy growth by matching growth with risk.
By Nick Jarrett-Kerr
Law firms are historically under-capitalized by external standards and in the traditional partnership model, partners are typically anxious to avoid any unnecessary expenditure which might result in profit dilution in the current - or indeed in any - year of trading. Not only will funding and budgetary constraints impact upon the array of strategic projects, but deep-seated partner prejudices may need to be overcome. Such prejudices (against anything which might affect short term profitability) often question the value of long term strategic investments and surface in different ways. The partner nearing retirement, for example, may not be happy to invest in projects in which he or she is unlikely to see a return during the remainder of his or her practicing life. Other partners may be skeptical about the value of investment in technology.
But it is the area of growth that often gives rise to the greatest chance of partner knee-jerk. In principle, most partners are not against growth - particularly if growth does not require them personally to change greatly. Hence, growth by the organic means of hiring and developing new people is relatively easy to implement, provided that there is an existing load of work which newly arrived lawyers can tackle. Things can become trickier if there is likely to be an insufficient volume of internally generated work for the new arrivals, because many managing partners instinctively will resist hiring new people - especially laterally hired partners - unless convinced that such partners will almost certainly be able - as the expression goes- to "wash their faces in their first year."
However, strategic growth almost certainly involves elements of risk. Efforts to prime the growth pump will need firms increasingly to make strategic hiring decisions which may not break even in the first two years. Here, the concept of STRATEX is appealing. We are all used to OPEX (operating expenditure) and CAPEX (capital expenditure), and the identification of a separate line of strategic expenditure (for which the term STRATEX has been coined) can be a useful way of identifying and prioritizing growth initiatives in which the expected long term benefits and returns can be fixed and monitored.
STRATEX provides a useful part of prudent financial planning which can help both to budget for investment and to establish careful lines of accountability. Not only can this transform the odds for successful strategic implementation of growth plans, but - perhaps more crucially - it provides a useful means of persuading cautious and reactionary partners to think more positively about long term investment in their firm's future. Contact the Author, Nick Jarrett-Kerr.
Approaches to Process Improvement in the Law
Three optional ways that law firms can address legal process improvement.
By Chris Bull
Over the last year, I have noticed a very tangible increase in law firms and in-house departments interested in reviewing and revising their core processes for delivering legal services. The drivers, as in so much else, are primarily rooted in price pressure, financial performance and a push for improved efficiency. Undertaking this work requires an acknowledgment that all work is a process of some sort, not always easy for lawyers who can view the core legal work they do as a "black box" - un-chartable territory. In preparation for a book on Legal Process Improvement, I have begun to look more closely at the different approaches that can be used to map and review legal process.
Process Improvement (PI) projects
Tackling a single process or practice area using PI tools is a common starting place. These projects require a disciplined and methodical approach to reviewing and improving the process, which can be a challenge in law firms where project rigor is not always applied to the core lawyer's work (although with the growing use of Legal Project Management this is changing).
There are a wide range of process improvement methodologies used that mostly originated in manufacturing. The two best known today are Six Sigma and Lean, sometimes used together. Home-grown variants and tailored derivations of these complex and industrial-scale tools have sprung up in many sectors, including legal and I am finding more law firms and corporate legal departments who have used Lean Six Sigma to overhaul their processes every month.
Projects will focus on the biggest immediate challenges - typically (and not just in the law) these are tackling profitability and/or productivity. Rather than attempt a huge firm-wide change, PI projects are usually focused on a particular practice, service line or worktype. This incremental approach pragmatically focuses resources on the biggest challenges facing the firm. It fits well in the legal market, where innate skepticism and resistance to change means that actual "proof of concept," rather than trying to rally the firm around grand concepts ahead of time, is almost always the secret to successful change.
Business Process Re-engineering (BPR) programs
As firms begin to have some success with individual, incremental PI projects some search for a more fundamental and transformational impact. The adoption of larger scale and pan-organizational process change is commonly tagged as Business Process Re-engineering (and sometimes badged as enterprise-wide 'Transformation') and is associated with a high reliance on enabling technology
In law firms with strongly established individual practice groups and less historic standardization and reliance on under-pinning IT, these firm-wide BPR programs will still be very hard to apply. In the higher volume segments of the legal world, in particular those where legal work is increasingly transacted remotely and where external investment is being introduced, the opportunities that can be achieved from BPR programs are being taken very seriously.
Business Process Management (BPM)
For organizations that wish to take a process view of the business to the very heart of their organizational structure, performance management and culture the over-arching concepts of Business Process Management (BPM) come into play. Here, the entire business is run on a process, as opposed to a functional, basis. There are legal organizations which would surely benefit from this approach and from breaking down the long-standing departmental and functional siloes that have been built up. But it seems unlikely that we will see such wholesale and firm-wide adoption of a process mentality by law firms anytime soon. Contact the Author, Chris Bull.
Legal League Consulting, LLC
Dehli and Mumbai,
|At The Podium: Upcoming Appearances by Edge Partners
February 25, 2012
Pam Woldow gives the Keynote address at Managing Partners' Forum in Queensland, Australia
February 29, 2012
Bithika Anand speaks at the IPBA Meeting and Conference in New Delhi, India
March 21, 2012
Gerry Riskin addresses the Pittsburgh Legal Administrator's Partner/Administrator event
April 16, 2012
Jordan Furlong gives the Keynote at the Canadian Judical Council Conference in Ottawa, Canada
April 18, 2012
Pam Woldow presents a Webinar on the Role of Legal Administrators in Legal Project Management for the ALA
April 19, 2012
David Cruickshank speaks at the National Association of Law Placement in Austin, TX
June 8, 2012
Pam Woldow speaks to the ALFA in Palm Beach, USA