Article by Red Rain CEO Stephen Butler.
Gone are the days when being a successful and profitable law firm meant simply hanging a shingle over your front door and waiting for the job to come in… The legal profession in Australia is more competitive than it looks has never been. Since 2011, the number of lawyers practicing in Australia has increased by 45%. There are now 83,643 lawyers nationwide, 26,066 more than in 2011.
As of October 2020, there were 16,393 private law practices in Australia. Most were independent or single-manager law firms (82%), followed by two- to four-manager law firms (10%). In all of Australia, there were only 71 law firms with 21 or more directors. Almost half of them were based in New South Wales.
With the Australian legal market now exceeding $27 billion a year, if ever there was a time to understand the efficiency of your business, it’s now.
As the age-old saying goes; “if you can’t measure it, you can’t manage it”. Without reliable data, companies are flying blind and effectively making decisions on a whim. The most successful companies – law firms or otherwise – have sophisticated Business Intelligence (BI) tools to measure and analyze performance. Gartner defines Business Intelligence as an “umbrella term that includes the applications, infrastructure, tools, and best practices that enable access and analysis of information to approve and optimize decisions and performance.”
So the question for your business is: what data drives your decisions and performance?
The problem for most law firms is that they are too busy to think about these things or make sense of the data that may be presented to them. The problem in the modern age of business is the sheer volume of this data. There is so much information out there that it’s hard to know where to start – let alone establish a path to success. The main problem is identifying what is relevant to you and getting meaningful insights. .
This last point is particularly relevant. Legal professionals are singularly focused on their primary task, which is to interpret and apply the law. While it’s imperative to run a profitable and efficient business, present most lawyers with a page full of numbers and their eyes may glaze over. Therefore, presenting information in a clear and visual way makes it digestible and fundamentally easier to implement.
Fast and clean data
Data is great, as long as it’s up-to-date and relevant and not subject to human error. The problem for most companies is that they rely on reports from their accounting systems for business information. The problems are that reading and understanding a report is not straightforward and you need multiple reports to get all the information you need. Worse than that, the report is outdated from the moment it was created.
The systems that will help you make effective decisions must be able to act, process and provide up-to-date data. They should be easily accessible and easy to understand.
This is another big point – the vast majority of organizations already have the data they NEED to make better business decisions – it’s just a matter of leveraging that data in a way that makes it accessible in order to do work for the business. Leveraging existing data doesn’t have to be particularly complex – it’s really about putting financial numbers into a system designed to help people visualize – and turning an existing asset into something more tangible and ultimately useful to the company.
Companies that can properly leverage BI will have better control over their processes, profitability, and cash flow. They will have better visibility into what is happening within their organizations and can standardize procedures that eliminate inefficiencies and improve efficiency. It also helps companies to be proactive rather than reactive. For example, if you can understand where the backlogs are in your service delivery, you can focus on improving those areas faster and more efficiently than competitors, giving the business a competitive advantage.
Having numbers presented in a way that is clear, concise and easy to digest also leads to efficiency gains down the line. Rather than “flying blind” or spending countless hours gathering and interpreting numbers, a BI solution captures relevant information based on predefined parameters and effectively automates specific financial processes.
This frees up time for legal professionals to focus on other tasks, while effectively saving firm staff costs associated with reporting.
Additionally, giving lawyers information about their personal performance, in a way that they can easily understand, means that they become aware of and learn about the financial aspects of their practice. This improves responsibility and accountability.
Do what your competitors don’t
Being smart is hard work, but having great BI doesn’t have to be. It takes time, effort, and focus, but with the help of some advanced apps, it’s within reach and within budget even for small businesses. Short-term effort saves time, provides in-depth insights into the business, and ultimately helps the business earn money, resulting in a win-win situation for the company. company and its employees. Competitive advantage can be essential in today’s ultra-connected world. Business Intelligence can provide that edge and literally make the difference between being a leader and being part of the pack.