The quarterly publication of the International Legal Technology Association
Issue link: http://read.uberflip.com/i/11430
BEST PRACTICES While the specific focus of each firm will be unique, the following core competencies are essential for any firm to succeed in the new normal. Continuous Efficiency Improvements Align AFAs and Firm Objectives Despite the significant advances in accounting and practice management systems over the last 10 years, it is surprising how many firms don’t know or understand which aspects of their business are profitable. This knowledge is fundamental to implementing AFAs. Set the Bar for Margins Whether studying historical profitability or establishing a new standard, a detailed understanding of costs and profit margins is a key starting point for AFAs. Profitability analysis requires firms to develop an hourly cost rate model that incorporates direct and indirect costs, including realistically acceptable partner compensation. Cost rates should be based on forward-looking, what-if scenarios rather than historical profitability. One approach is a cost rate calculation that incorporates budgeted compensation and budgeted working hours by fee earner or fee earner classification. Many lawyers have long viewed efficiency as irrelevant to their profession, and something relegated to the production of commodities. The first step to achieving lawyer efficiency is demonstrating that increased efficiency is likely to increase the lawyer’s ability to focus on high quality legal work and on the unique needs of clients. Efficiency requirements do not start and stop with lawyers. Seek out and improve efficiency in every action that supports lawyers and delivers work to clients. Help the Client Achieve Maximum Efficiencies and Responsiveness Firms can help clients work more efficiently. Automated, consistent methods of delivering key documents to clients enables them to make rapid, effective decisions and handle tasks such as budget approvals and document collaboration. A single vehicle for work product placement, whether a client-hosted extranet or a firm-hosted portal, allows for consistent and professional access by all parties. Communicating with the client in the method the client prefers further solidifies the client’s trust. Leverage the Firm’s Experience and Knowledge Foster Trust Engaging clients in the planning, decision-making and monitoring of a matter or a portfolio of matters builds trust between the in-house lawyers and outside counsel. The result is that over time, the firm can become more deeply entrenched in the client’s business. 12 www.iltanet.org Peer to Peer Clients are more often expressing outrage at firms’ tendency to constantly reinvent the wheel. As a result, knowledge management takes on a critical importance. Focus your knowledge management program on enabling your lawyers and legal teams to deliver with greater efficiency and effectiveness.