Issue link: https://epubs.iltanet.org/i/30285
a profitability analysis component. A budget that matches scope of work and meets the client’s costs needs, but will be unprofitable for a firm, will become a problem over time, especially if it is utilized as a template. So profitability analysis must be embedded in the systems and processes used. Initially, approval processes will be relatively simple; however, a defined workflow should soon emerge. Again, IT and KM can play a role with workflow tools and knowledge to support an efficient, technology-enabled workflow process. Monitoring Budget to Performance Second to a budgeting tool, monitoring the progress of AFA engagements may be the best opportunity for IT and KM to provide value, especially in the long run. Most of the budget- building tools noted above are also designed to provide monitoring abilities. Again, the level of detail required by the client and the type of AFA will determine the level of detail in monitoring. Most firms already have tools that can be used for simple monitoring of budget-to-performance. Elite has basic budget-monitoring abilities, as does Aderant’s CMS. So it is possible to provide some level of monitoring support with existing systems. Many firms may also have their own reporting tools built on Crystal Reports or a similar system. Making sense of monitoring reports will likely require a human element. Too many of the reports I have seen are complicated and will benefit from analysis and explanations by nonlawyer experts. These analysts may be existing financial personnel, or new- breed project managers. As the level of detail rises in Business Intelligence Leads to Succ by Saul Himelfarb of Data Fusion Technologies, Inc. W 34 ith the rapid adoption of alternative fee arrangements (AFAs) in the legal industry, firms are scrambling to see how they can configure their various systems to better support non-hourly billing models. One of the key systems within the firm that is central to tracking AFAs is the firm’s business intelligence (BI) system. When attorneys enter into AFAs with the firm’s clients, how do they determine what amount to bid for a particular engagement? The purpose of using an AFA is to create a “win-win” situation where the firm and its client each get a fair deal on the project. The client gets a better total cost than Financial Management ILTA White Paper he would with an hourly engagement, and the firm still makes a profit. But how does the firm know if the amount they will be bidding will end up making it a profitable project? A comprehensive BI system will allow the firm to look at previous matters that are similar to a new matter to determine its potential profitability. Once the data is captured, the matter is analyzed based on billing rates, leverage of partners to non-partners and hours assigned. The model matter can then be updated based on any differences between the model matter and the new matter being analyzed. How would the project look if we assigned