Most law firms can access financial and operational reports native to their time, billing, and accounting systems. As long as the information is accurate and complete, it's easy to view the basics, such as:
- an income statement,
- a balance sheet,
- case and rate lists,
- timekeeper productivity,
- accounts receivable, and
- work in progress reports
While the numbers are available, small and mid-sized firms rarely apply them to more advanced reporting and Key Performance Indicators (KPIs).
Due to budget constraints and limited awareness, most small-mid law firms don’t have a data analytics process or staff. They are not able to easily access and compile data from various sources to utilize in their firm’s decision-making. Absent a data analytics process, law firm managers (partners and management staff) often rely on emotional decision-making (the gut approach) in making financial and operational decisions.
To overcome this tendency, we recommend that law firms embrace data analytics disciplines.
DATA ANALYTICS DISCIPLINES
Now- if you wonder what data analytics disciplines are and how to use them, you aren't alone.
This article is the first in a series that will explore
- basic data analytics,
- law firm performance management, and
- Key Performance Indicators (KPIs)
By the end of this article series, you will have a better understanding of these concepts and how to apply them at your law firm.
We will consider the four main types of analytics that you can use to measure your firm’s performance including:
- Descriptive: based on historical data and focuses on your past and recent performance
- Diagnostic: indicates why your performance is the way it is
- Predictive: gives insight into what is likely to happen
- Prescriptive: helps determine what to do to improve performance
In the next articles, we will show you how these analytics can be used to monitor the firm’s success and to evaluate whether the firm is moving in the right direction.
Click here for Part 2 of this article series: Financial and Operational KPIs Your Law Firm Can Track Right Now
DON'T MISS OTHER ARTICLES IN THIS VALUABLE SERIES!