What's Killing Your Law Firm's Efficiency?
Running an efficient law firm matters; it can mean the difference between a successful firm and one that struggles to be profitable.
There are a lot of things that can hamper a law firm’s best efforts to be efficient, not the least of which involves having the right personnel in place and delegating responsibilities so non-revenue generating activities are handled by non-billable staff members. However, even if responsibilities are appropriately delegated and things on the personnel front are running like a finely-tuned machine, you may still have efficiency-killers lurking in the way your firm leverages and uses technology.
The biggest problem may simply be that — while you’re already using technology to handle certain behind-the-scenes tasks for your firm — you haven’t implemented a legal management system designed to automate processes for the entire firm. You may be leveraging manual processes or inefficient technology that may actually be contributing to your firm’s efficiency problem.
When your law firm doesn’t have the right tools and technology infrastructure in place, you’re losing efficiency in several ways.
1. Reports and Billing
Some law firms get stuck using the same timekeeping and billing processes that have been in place for many years because that’s the way they’ve always done things. While these systems might be OK for law firms in the past with today’s technology, firms can create more efficient processes – and more importantly create competitive advantages – for their firm which will be shown in increased profitability and better client service.
What’s more, automating timekeeping, billing, accounts receivable and collections functions into one system can streamline processes, regardless of whether a firm uses centralized billing or fully-distributed or collaborative billing, becoming more efficient and paperless should be the ultimate goal for any firm. These processes not only increase cash flow in a firm but also allow the firm to better manage accounts receivable collections with a formal and automated process.
When firms choose to automate their billing and reporting functions, following up on past-due invoices is fast and easy. All of the information billing and accounting personnel needs is right at their fingertips, including image copies of all client invoices and any disbursement backup images to assist in quick collection follow-up.
Reporting is another area law firms get stuck doing the same things over and over again. All law firms should take the time to continuously evaluate the reporting needs of the firm. Increasing the profitability of the firm is possible through more robust real-time reporting available with today’s technology, including practice management watchlist tools and interactive dashboard reporting through business intelligence tools. Law firms should constantly reevaluate the key KPI’s that are important to their firm and also within the legal industry. Rather than combing through manual spreadsheets or simplistic reports for partners, law firm administrators can generate accurate, professional and dynamic reports in just moments. But most importantly is that the attorneys themselves can utilize current technologies through reporting dashboards and on-line reports to be more self sufficient and able to better manage their practice and clients in a real-time fashion.
2. Working from a Paper System
With rapid increases in technology over the last couple of decades, more and more industries have been moving to paperless office environments. Attorneys and law firms have been slower to adapt than some other industries, in large part because of the sheer volume and nature of information maintained in paper files for both client documents and accounting processes.
While law firms have mostly converted client document to an electronic document management system, they have been slow adopters of adopting paperless efficiencies when it comes to the internal accounting functions like:
- Client/matter intake
- Conflict checking
- Check requests
- Expense reporting
- Client and firm invoice
- Imaging (both billing and accounts payable)
- Write off approvals
Some firms have been slow to adopt a total paperless efficient office because they have always done things a certain way. It is for exactly those reasons law firms should embrace a legal management system that will bring both efficiencies and convenience.
Paper records and manual processes are inefficient and cumbersome. Also, most of these manual processes require multiple people to perform the same task or data entry several times for the same information. Not only does it take work to create and maintain paper or after the fact electronic copies of client invoices, intake forms, in many cases there are multiple copies being stored on a client network, which adds to the ever-growing storage space issues facing law firms today.
With a legal management system, client/matter intake forms, expense reports, check requests and other firm records are touched and stored electronically one time and are indexed for easy retrieval. Sharing paper files when collaborating with others is also time-consuming and labor-intensive. Utilizing email technologies for automatic notifications and firm workflow is not possible with these manual processes. Firms that have chosen to implement software solutions using legal management systems for these processes are able to have single input of information, one common storage method and be able to share those records with others in just moments, with just a few mouse clicks. No more standing over the photocopier or scanner to image these documents after the fact with no real index for easy retrieval.
Implementing a paperless office has a bigger application than client service. Many back-office operations tasks and workflows can be simplified by removing the need for paper records. Maintaining the confidentiality of law firm records is also simple when using a legal management system as access to certain files or records can be granted (or removed) by law firm administrators. Check out our blog Less Paper vs. Paperless Offices: Improving Your Law Firm’s Efficiency to see what steps you can take to eliminate paper from your office.
3. Being Desk-Bound
Advances in technology mean we can access a wealth of information and accomplish almost any task by using our mobile phones, tablets or laptop computers. Some law firms still cling to outdated notions about work, thinking that associates and staff members can only be efficient when they’re working inside the office. Those firms may actually be hampering their employees’ efficiency. This can have a snowball effect on the firm’s efficiency as a whole.
Law firms can realize significant gains in employee productivity when they choose to embrace a legal management system that allows them to use their system to access information for timekeeping, reporting from almost anywhere via the internet in a very secured fashion. As discussed above, cloud-based systems allow for seamless client servicing and law firm management. Using integrated timekeeping, billing, workflow, reporting and all other accounting system functions can help increase timely utilization of those tools, helping increase operational efficiencies and ultimately law firm profitability.
What’s more, firms that implement policies allowing employees to work remotely or have flexible work arrangements can also benefit from a decreased need for physical office real estate space.
Find a Legal Management System for Your Firm
There may be a lot of factors holding your firm back from being as efficient as it can be.
If your billing and reporting systems are manual and labor-intensive, if you are still relying almost exclusively on paper client and back-office files or if working for your firm requires employees to be physically present at their desks during regular working hours, it’s time to explore how a legal management system can help your firm gain the competitive advantage that can come from automating records, processes and workflows.