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50 Shades… of Metrics
ILTA Annual Conference
August 20, 2013
(SFW Version)
Today’s goal
Boost your ability to make a metrics-based case
Metrics  projects
Projects  metrics
Metrics
CIO/CKOControl
Low
High
Operational
Management
Firm
Management
Level
Leverage
Profit per
Partner
Practice
Realizat...
How Projects Can Improve Operational Metrics
Data Cleanup
Getting the “house in order” for compliance and cost
Complement ...
How Projects Can Improve Matter Metrics
Fees collected / matter realization
Ability to show fees from similar past matters...
Example: matter budget accuracy
The “before”
Actual fees for buy-side M&A deals exceeded estimated fees by
25% on average
...
Tying projects to matter budget accuracy
 Track actual fees versus budgeted fees
 Identify significant variances and the...
Field of Dreams Field of Gain
Field of Pain Field of Distraction
Projects to improve matter accuracy
ValuefortheBusiness
H...
-Due diligence
specialists
-Deal profiling
process
-Standardized
Checklist
Projects to improve matter accuracy
Valueforthe...
Firm Financial Metrics
Profits per partner = realization rate x average standard rate x
leverage x margin x utilization
Re...
How Projects Can Improve Firm Financial Metrics
Utilization and Leverage: Aligning people with revenue,
active work, and r...
Hypothetical example: margin
Fixed fee for services: $40,000
Average time recorded:
Partner: 20 hours @ $800 / hour = $16,...
Metrics Infrastructure Checklist
 Rationalize data architecture
 Make data relatable across the enterprise (any one piec...
Further reading
John Alber, “Rethinking ROI: Managing Risk and Reward in
KM Initiatives,”
http://www.llrx.com/features/ret...
Questions and Follow-Up
Chris Boyd
Senior Director of
Professional Services
Wilson Sonsini
cboyd@wsgr.com
Dave Cunningham
...
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50 Shades of Metrics

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A insightful discussion on the range of operational and strategic metrics of value to large law firms.

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50 Shades of Metrics

  1. 1. 50 Shades… of Metrics ILTA Annual Conference August 20, 2013 (SFW Version)
  2. 2. Today’s goal Boost your ability to make a metrics-based case Metrics  projects Projects  metrics
  3. 3. Metrics CIO/CKOControl Low High Operational Management Firm Management Level Leverage Profit per Partner Practice Realization Revenue per Lawyer Matter realization Margin Resource usage and utility Matter Budget Accuracy Anecdotal feedback Matter profile completeness Client File Completeness Integration of Lateral Lawyers Ratio of Stale Data Systems Ease of Use eDiscovery value Sample document completion Litigation Hold Completeness Client Self-service Resources RTO / RPO Practice area sites Search Relevance Regulatory Compliance PC Reliability Storage Costs per Tb Support Service Levels
  4. 4. How Projects Can Improve Operational Metrics Data Cleanup Getting the “house in order” for compliance and cost Complement to records; replacement for archive Potential to clean up 60%+ of data; $1M in savings over time Metrics: $ per Tb, ratio of stale data Document Management Evolved into strategic resource of documents, e-mail, precedent, research, peer documents, etc. Metric: completeness of and access to client file Metric: regulatory compliance Metric: Integration of lateral lawyers
  5. 5. How Projects Can Improve Matter Metrics Fees collected / matter realization Ability to show fees from similar past matters Internal marketing of fee data Matter budget accuracy Case and deal metadata Checklists and precedents Client file completeness Defined matter tracking process Incentives for attorneys, paralegals and secretaries
  6. 6. Example: matter budget accuracy The “before” Actual fees for buy-side M&A deals exceeded estimated fees by 25% on average Clear loss on fixed-fee deals and likely write-offs on billable- hours ones Analysis showed that half of the variance occurred because of (a) insufficient deal precedent and (b) inefficient due diligence Potential solutions Deal profiling process focused on key variables in matter budget estimation Standardized due diligence checklist, process and output formats Corps of highly trained, dedicated due diligence specialists
  7. 7. Tying projects to matter budget accuracy  Track actual fees versus budgeted fees  Identify significant variances and their causes  Specify potential technology / information solutions  Estimate each solution’s:  (a) value to the business; and  (b) ease of implementation  Recommend the best combination of high value and low difficulty
  8. 8. Field of Dreams Field of Gain Field of Pain Field of Distraction Projects to improve matter accuracy ValuefortheBusiness High Low Low High Ease of Implementation
  9. 9. -Due diligence specialists -Deal profiling process -Standardized Checklist Projects to improve matter accuracy ValuefortheBusiness High Low Low High Ease of Implementation
  10. 10. Firm Financial Metrics Profits per partner = realization rate x average standard rate x leverage x margin x utilization Realization rate = actual revenues / standard rate revenues Average standard rate = standard rate revenues / hours billed Margin = (revenues – expenses) / revenues Utilization = # hours billed / # timekeepers Leverage = # timekeepers / # partners
  11. 11. How Projects Can Improve Firm Financial Metrics Utilization and Leverage: Aligning people with revenue, active work, and recruiting pipelines, ERP-style Margin: Efficiency tools on fixed-fee matters
  12. 12. Hypothetical example: margin Fixed fee for services: $40,000 Average time recorded: Partner: 20 hours @ $800 / hour = $16,000 Associate: 50 hours @ $400 / hour = $20,000 Paralegal: 20 hours @ $200 / hour = $4,000 Tools help reduce average due diligence and drafting time by an average of 5 associate hours Splitting the savings between the client and the firm: $1,000 fee reduction for the client $900 profit increase for the firm (assuming 90% realization and 100% re-use of the saved hours) Significant profit increase when multiplied by hundreds of matters
  13. 13. Metrics Infrastructure Checklist  Rationalize data architecture  Make data relatable across the enterprise (any one piece of data can be related to any other)  Requires standardization of IDs, naming conventions, etc.  Adopt standard relational database platforms (MS SQL Server, etc.)  Impose relational database discipline (rationalize table structures, IDs, etc.)  Adopt and become expert in analytical and reporting tools (e.g. MS Analysis Services, MS Reporting Services)  Segment skill sets so that someone becomes expert in analyses and reports that are relatable to firm metrics  Shift of some IT mindsets into KM and Practice Management mindsets  Begin capturing matter historical data for uses beyond marketing  Matters experience database on steroids  Make historical info relatable to pricing  Task coding infrastructure  Work with practice management to broaden task coding  Include tools that can “backward task” work that is uncoded
  14. 14. Further reading John Alber, “Rethinking ROI: Managing Risk and Reward in KM Initiatives,” http://www.llrx.com/features/rethinkingroi.htm Jack Bostelman and Chris Boyd, “Showing the Positive Financial Impact of KM in Law Firms,” http://www.wsgr.com/attorneys/BIOS/PDFs/boyd- 0413.pdf Chris Emerson and Amy Wu, “The Pricing Professional’s KM Toolkit,” ILTA KM white paper, July 2013
  15. 15. Questions and Follow-Up Chris Boyd Senior Director of Professional Services Wilson Sonsini cboyd@wsgr.com Dave Cunningham CIO Winston & Strawn dcunningham@winston.com

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