Issue link: https://epubs.iltanet.org/i/30285
software intelligence. The net result is that lawyers are freed up for more productive work. Law firms also avoid the very real occurrence of revenue loss due to underbilled or overlooked activity. AUTOMATED, EXTENDED DATA ENABLES NEW POSSIBILITIES Beyond freeing lawyers to spend more time performing work rather than manually documenting their activities, this approach also delivers new classes of data which can be harnessed to change the business of law firms in the following dramatic ways: • Matters can be disaggregated to their component phases, activities and tasks • Work efforts and workflows can be analyzed and redesigned • With a better understanding of resource availability and allocation, new staffing plans can be entertained • Management visibility can be extended, with all constituents to the matter being informed more quickly of progress, inflection points and stumbling blocks An additional benefit relates to pricing and various models frequently used, contemplated and debated. As we all know, the hour has been the default approach for years. Objections to it are many and need not be explored in detail here, but they essentially boil down to client value and aligned incentives. The reality is the billing mechanism for legal work ought not to be predetermined by the design of 16 Financial Management ILTA White Paper the support systems deployed. In a service industry, time spent will always be the best mechanism for understanding a firm’s costs. We will always look to collect this information; it will be the lifeblood of any process improvement work. A WORLD BEYOND THE BILLABLE HOUR Our ability to move away from dependence on the hour for billing purposes, however, largely hinges on our understanding of these factors: • The legal resources any particular matter will require • The value that the client places on the work • The firm’s ability to forecast with precision the outcome of the matter and any contingent direction it might take • The firm’s capability in understanding marginal costs and resource utilization • Above all, the ability to do all of this relatively quickly, as needed We are already seeing firms move in this direction. Some firms will become world class experts at this and will truly set themselves apart, either in the profits earned or the reduction in costs to the clients, or both. No firm will do so operating in a manual (however enhanced) time- entry environment. The data required to do effective analysis simply cannot be assembled manually on a consistent and accurate basis. All law firm managers know this to be true.