Redwood Analytics

Four times per year we host the Redwood Forum, which is a chance for Redwood users to get together online and talk about business intelligence, law firm management and finance, and the role our tools play in that space. 

Benchmarking is the process of comparing the cost, time, or quality of what one organization does against what another does.  Keeping this in mind, there are several reasons why Redwood feels the benchmarking report is important:

•  The legal industry is consolidating and becoming increasingly competitive
•  Law Firms are being run more like businesses, making more use of financial data and other operating metrics
•  A good fact base can help gain consensus around important decisions
•  Benchmarking helps to blend the art and science of running a successful law firm.

Using this information, firms can set expectations and goals relative to the competition.  During the recent Redwood Forum, Redwood consultant Dan Ronesi presented on Benchmarking Tools and Trends.

Types of Benchmarking

Internal

Q: How do I compare to myself?

A: Business Intelligence

Zeroing in on best practices around practice groups, attorneys, departments, and clients can help set a standard to help identify opportunities for the firm.

External

Q: How do I compare to the market?

A: Benchmarking survey

Firms should compare themselves against others in similar markets, regions, type of law, and size for relevant information to set goals for success. 

Looking at information that is timely and relevant is vital when setting standards using Benchmarking information.  Lexis Firm Insight 3.0 was recently released, and compiles the most up to date information possible by looking at quarterly updates.  Significant improvements with the product were based on feedback we received from our clients including simplified mapping and a "drag-and-drop" interface.  The tool also displays measures at the title, class year, practice, and group level with regions broken down by state and major cities

 Figure 1

Looking at Lexis Firm Insight, as shown in Figure 1, firms are able to easily identify and track recent trends.  This represents actual data from Q1 2010 from LFI participating firms.  At the high level shown on Figure 1, a firm can look at the average billable hours worked per FTE - in this case, the partner level.  One of the improvements to the tool is the ability to break this information down by title.  Figure 1 distinguishes the equity partners and non-equity partners.   The titles are broken into different durations for a more detailed analysis.  The "My Firm" section (not represented here) in the middle allows the firm to compare numbers against the "Top 25%," "Median", and the "Bottom 25%" for each specific measure.

The list of available measures to filter on is at the bottom of Figure 1.  Figure 1 is filtered on:

Quarter: Q1, 2010
Time Period: YTD
Firm Size: All
Practice Group: All
Region: All
Location: All

Figure 2

Figure 2 is an example of an analysis filtered by Practice Group, and is a snapshot of the Corporate, Litigation, and Real Estate Practice Groups.  The bucket focused on Corporate illustrates an increase in production for all partners.  The bucket focused on Litigation shows an increase in production for all partners; however the increase is not that substantial.   For more detailed analysis, remember that a firm can filter on region and location for more relevance in the data.

Dan presented several more examples that illustrate current trends we are seeing in the legal space, as well as the flexibility and usefulness of the Lexis Firm Insight tool by filtering on class year, non-partner firm titles, and standard rate shown in a graphical view (Figure 3), and other measures that give firms a more comprehensive look at their performance.

Figure 3

Dan was unable to delve into all capabilities of the tool because time restrictions but did mention other measures that can be examined, including leverage and other aspects of production.  As long as a firm is using the Elite, Juris, or CMS billing system, they can participate in Lexis Firm Insight.  For a more detailed look at Lexis Firm Insight, please contact any Redwood Consultant.