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:

• Timely
• Targeted to the right audience
• Relevant
• Easy to understand 

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.

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.