Trying to grow your law firm without the right knowledge and insight is like trying to steer a ship across the Atlantic—only you have no map, no rudder, no sail, and no destination in mind.
Sure, you could end up in a charming beach town, soaking up the sun and making friendly conversation with the locals. But you’re just as likely to wind up aimlessly drifting for months or tossed ashore in the same exact spot where you started.
Business intelligence is your rudder, your sail, and your map of the seas.
It’s what you need to understand where your law firm currently is, where you want it to go, and how you’re going to get there. (So let’s get started!)
What is business intelligence, anyway?
The short version: business intelligence is using data and specialized software to better understand your law firm’s performance and make better decisions.
Now, if you’re like many attorneys, you might not love the idea of crunching the numbers and filling in endless spreadsheets, but the beauty of law firm business intelligence software is that it does most of the hardcore data wrangling for you.
A robust business intelligence dashboard easily populates reports, giving you insights into your firm’s growth, workflows, finances, and more—and all you need to do is click a few buttons.
How business intelligence can help you grow your law firm
Interested? We thought you might be.
And why wouldn’t you be! While business intelligence may sound complex, it’s really about simplifying complex information in a way that helps you answer very practical questions about your law firm.
Understanding your practice’s business performance
One of the biggest advantages of law firm business intelligence software is that it helps you keep track of values known as key performance indicators (KPIs).
You don’t need us to tell you that KPIs are hugely important. You can’t grow your firm without understanding your practice’s month-over-month, quarter-over-quarter, year-over-year (you get the point) performance and progress.
Three of the most critical KPIs for law firms are:
- Average case unit value (ACUV): The average monetary value of all case units
- Throughput rate (TR): The number of case units your firm can finish in a year (a throughput rate of 50 means you can expect to finish 50 cases)
- Cycle Time: A measurement of how long it takes you to complete individual matters, from the point when an engagement letter is first signed to the point where you’ve closed the case and collected your payment
Taken together, these measurements help you understand how profitable your cases are and how efficiently your firm can expect to complete them.
Business intelligence software instantly populates in-depth reports that highlight your KPIs and break them down for further analysis based on matter, client, and more.
Identifying inefficiencies and bottlenecks
The KPI analysis offered by business intelligence software also helps you spot bottlenecks in your workflows and opportunities for more efficient processes.
For example, do you find that a particular task is taking longer than usual and bogging down your average cycle time and throughput rate? It could mean that you’re due for some process refinement.
Working out pricing and fee arrangements
One of the major drawbacks of billing by the hour is that it’s hard to know how much revenue your firm can expect a matter to bring in—and hard for your clients to know what their invoices will look like.
Legal business intelligence software helps your firm and your clients navigate this in a couple of ways:
- By allowing you to compare average cycle times and billable hours for different matter types, business intelligence tools give your firm a better, more data-driven estimate of how many hours a matter is likely to take.
- Since you now have a better estimate of average matter hours (and an understanding of the outliers), it’s easier to set your hourly billing at a rate that’s fair but still profitable for your firm.
- This knowledge can even help you work out alternative fee arrangements, where clients pay slightly more for the average matter but less for matters that far exceed your averages for billable hours. You remain dependably profitable, and your clients don’t need to worry as much about complicated cases breaking the bank—it’s a win-win for everyone involved!
Helping you plan for your firm’s future
Business intelligence will shine a spotlight directly on your firm’s most reliable revenue sources.
For example, when populating reports, you might see that cases in a particular practice area generate a higher ACUV (that’s the average value per case unit mentioned above), while other cases barely allow your firm to scrape out a profit. That could have major implications for everything from marketing to case management to how you look to expand your firm going forward.
Once you have a firm grasp of what your most valuable practice areas, cases, and clients tend to be, it’s easier to make informed decisions about next steps:
- What cases to take on
- Which cases to prioritize
- Which services to market most heavily
- Which services to scale back on
If personal injury cases involving commercial vehicles are your biggest earners, those are the cases you want to target and pursue!
For firms that serve a large number of ongoing clients, KPI analysis can also help you identify your practice’s “MVPs”—the clients who consistently bring your firm the most revenue. If certain clients are giving your firm reliable, cost-effective business, you’ll want to invest extra time in your relationship with them.
Set a course with Rocket Matter
If your law firm is ready to set sail with informed, data-driven decision-making, Rocket Matter can help you captain the ship (and yes, we know our whole thing is rockets, you’ll have to excuse the mixed metaphor).
Our new Premier Tier comes complete with a whole suite of business intelligence tools, so you can gain actionable insights into your firm’s KPIs with the click of a button. Try our free Premier Tier demo today!