Recently, DFTech was asked to participate in a study to help provide insight into how law firms are currently leveraging the various concepts and metrics for firm profitability to help them run their business more effectively while continuing to provide a high level of value to their clients. The study, by Jim Hassett at LegalBizDev, was recently published under the title Client Value and Law Firm Profitability. It is a fantastic read for anyone interested in the topic as it attacks the issue of profitability from many different angles and provides insights from firm leadership at many of the nation’s most influential firms. In addition, other profitability experts are consulted extensively, and that is where DFTech comes in. For those readers who would like to find out more please visitwww.legalbizdev.com.
DFTech’s participation in the study was largely geared toward how firms choose to
- measure profitability. In fact this was one of the first questions asked in the interview. After thinking about it for what seemed like an eternity, the only answer I could provide was, “differently”. DFTech has assisted many of the nation’s leading firms to establish and implement consistent profitability measurement practices. DFTech’s Intellistat Analytics product systematically computes and measures profitability at all component levels within a firm (Office, Practice, fee earner, Book of Business, Client, Matter etc.). A critical phase in the implementation of profitability measurement processes is what we call “profitability discovery analysis”. This is a meeting, or roundtable discussion, where many ideas are floated as to how to best measure profitability at the particular firm. In almost every meeting, the first question I am asked by the client is, “What do other firms do?” I think the reason this question gets asked so much is because firms generally want to measure profitability like everyone else does, assuming that the other firms who have preceded them in this initiative have gone through the pain of pioneering and have come out the other end successfully achieving their desired goal.
However, in all of my years helping firms arrive at the right way to measure and analyze profitability, I can definitively say that no two firms measure it exactly the same way. There are many similarities and best practices in this area, but each firm should personalize the measurements to suit their unique characteristics and priorities (which is exactly what Intellistat Analytics allows firms to do). Each firm is unique in its makeup, geography, size, specialties personalities, etc. As such, the key in any sort of profitability model is making sure that the methodology provides a consistent way of measuring profitability on a relative basis. Importantly, the specifics of the chosen method may be less important than whether or not the methodology has internal “buy-in” from firm leadership. Since this sort of analysis can be controversial, and most firms are led by professionals who love a good debate, a good model is one that minimizes this debate and provides an accurate set of metrics for relative profitability within the firm, based on that firm’s specific requirements.
Jeffrey Suhr, SVP Products, DFTech
Hi all – I am just returning from the LMA’s recent P3 Conference held in Chicago over the last two days. The event was excellent in every regard, with upwards of 300 colleagues in attendance. The theme was project management, pricing, and process improvement. The sessions were highly informative, and the networking opportunities were tremendous.
P3 attendees form a very strong and motivated social network. The mutual exchange of ideas and experience on topics such as matter profitability, gradually shifting the “old guard” culture away from the all-mighty billable hour, and non-traditional pricing strategies was extremely informative.
DFTech had a chance to discuss best practices in profitability analysis with a group of about 50 attendees. Each firm is unique in this, but virtually everyone wants to better understand what other firms do. With a little time and effort up-front to determine a firm’s requirements for revenue credit and cost allocations, including overhead and partner compensation, our clients can have ready access to profitability data via multiple tools and at any level in the firm. Our solutions allow our clients to tailor legal industry best practices to their needs, and to easily shine a light (brightly or dimly – your choice!) on key firm profitability metrics.
Thanks to the folks at LMA, and to all the attendees, for a great event.
Dan Whelan, GM, DFTech
Greetings current and potential Data Fusion clients, and welcome to our new website and blog. Since 1993, firms have relied on DFTech for custom solutions and Elite services. But today, our services and products have expanded to include the most comprehensive and easy-to-use analytics, budgeting, financial reporting, and matter planning & pricing tools available to the legal industry. My hope is that this site and blog will become a source of useful information for your firm. Please take this opportunity to browse our site, and to pass along any and all feedback.
If you are one of our clients, you know about DFTech’s long history of excellence in the legal industry. I want to assure you that this tradition remains the foundation of everything we do. Our people are dedicated to your success, and we will always keep our commitments to you and “make things right” when we are fortunate enough to win your business.
Through the changes at DFTech, we have emerged as strong and committed to success as ever. 2014 will see the release of several exciting new product initiatives, not to mention a renewed promise of excellence in customer service.
I wanted to take this opportunity thank you for your interest in and support of DFTech over the years. The loyalty of our clients means everything to us and we will do whatever it takes to earn and retain that loyalty. I look forward to working with you.
Dan Whelan, GM, DFTech
“Dorsey & Whitney is pleased to extend our relationship with DFTech through the adoption of Intellistat Budgeting & Forecasting software. We’ve used their Analytics package as well as their Financial Reporting tool extensively for a number of years. The support and customization DFTech has been able to provide have made these tools invaluable for providing access to, and understanding the many complex metrics our firm tracks. Based on the success of the Analytics and Financial Reporting packages here at Dorsey, it was only natural that we looked at their Budgeting & Forecasting software when we decided to implement a new firm-wide budgeting solution. Upon review, it was evident that DFTech did their homework. The ability to aggregate a large number of departmental budgets into a central point as well as work in both domestic and foreign currency was critical. DFTech met this challenge.”Robert “Skipp” Swayze, CFODorsey & WhitneyRead More»