Normalizing Mix Variables in Law Firm Financial Data

Normalizing Mix Variables in Law Firm Financial Data

Most law firm managers understand the importance that business analysis plays in steering a firm toward success. However, as with so many things in life, a little bit of analysis can be a dangerous thing.

Management reporting processes typically collect, organize, and ultimately combine data sets from different practice areas, offices, industries, etc. Superficial reports compare aggregate characteristics (e.g., top-line results) without identifying the varying components contained within the data sets and normalizing for these variables. This can lead those who examine such reports to draw misleading or even totally wrong conclusions.

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