It doesn’t seem to matter if your firm’s 2020 plan was on the back of a napkin or in a sport-tuned spreadsheet, by now it’s outdated if not irrelevant.
For law firm finance departments facing the second half of this unprecedented year, the time for navel-gazing and gnashing of teeth is over. What firms need now is visibility to make it through the immediate future, and insights to plan for what’s still to come.
Visibility (or what law firms need to see about their financial health right now)
Much of the talk about making it through a battered economy is about survival. The difference between subsistence and existence; eking or earning. Law firms aren’t immune to the peaks and valleys of the broader economy. While courts are opening back up in new ways and clients will always exist in some form or another, we’re not out of the woods yet.
For now, CFOs and their teams need to see both the forest and the trees. In order to know where things stand, they need answers to real-time, real-world questions like:
- Are we performing our work in the most efficient manner?
- Are we earning as much profit as we can from our existing pool of work?
- Are we collecting all of that value, getting the most cents of earnings out of every dollar worked?
The need for visibility into metrics like profitability and cash-to-work cycles isn’t new, but it is more urgent than usual. Law firms that rely on manual data mining and complex spreadsheets can quickly find themselves stretched too thin and behind the curve when leadership is faced with rapidly shifting priorities and high-pressure decisions. Quite literally, it’s hard to survive on outdated information.
That said, visibility isn’t all about avoiding doom and gloom. Better visibility also allows a firm to understand their options. Consider, for example, the vast amounts of money saved on travel and entertainment expenses in the past quarter. With a clear understanding of where your firm has not been spending, you may find new confidence in your 2020 Plan B.
Insights (or the data to support decisions facing law firms in the future)
Speaking of Plan B, now is the time for financial departments to consider whether they have the insights necessary for planning beyond the summer of 2020.
Consider your staff allocation for example. The ability to confidently plan for splitting your associates among a less-active M&A group to cover a coming tide of bankruptcy cases requires knowledge. Even if it seems like a relatively safe assumption, the details will matter.
- Which lawyers are hitting their numbers?
- Who is likely to dip?
- Who has some temporary bandwidth to help out?
- Who is simply not performing?
These are objective facts, but they become hard decisions without trustworthy data. And remember, in the scenario above, the change could be temporary. Maintaining a steady watch over 4, 8, or 12 weeks will be necessary as the bankruptcy business shifts to a pool of M&A opportunities, requiring another adjustment to who is doing what work for the firm.
Make it easier on yourself with help from Thomson Reuters
Successfully managing late 2020 and beyond is going to require agility that won’t come easy to every firm. Businesses will need to start with clean information, model their moves over time, and take action based on those outcomes. That sequence requires both visibility and insight. Awareness of what is, and an understanding of what could be.
Make no mistake, firms already do this. Just… with a lot of time and effort. But there is an easier path. Thomson Reuters Advanced Financial Solutions provide law firms the ability to operate with speed, clarity, and confidence even in the most uncertain times. To see what that could mean for your firm, schedule a demo today and let’s talk about the future.