TC hunting 101
The majority of law firms are planning to boost their lawyers’ commercial awareness through training, a new study has found.
The report, published by tech firm BigHand, found that 51% of firms are looking to give their lawyers additional training on commercial awareness as part of their efforts to reduce ‘profit leakage’ — i.e. the amount of money that a firm has earned but hasn’t actually collected.
As well as making their lawyers more commercially aware, 64% of firms plan to collect and bill more frequently, while nearly a third (31%) said they will adjust their billing terms.
The study also noted that just 38% of firms provide associates with profit information for matters they’re working on, with 39% providing billing information.
This data is key, the report says, for lawyers to understand the firm’s commercial position within a matter, and for associates to have a detailed discussion with clients on value for money.
“The shift towards a commercial focus for lawyers is inevitable — and firms will fare far better if they drive the conversation, rather than clients. And that demands a different culture, one supported by a legal workforce with the confidence to take a business-focused approach to all client engagement”, the report says.
Elsewhere, it was found that 47% of firms have increased billable hours this year. Counteracting this, however, is confirmation that 59% have seen an increase in write-offs (work it accepts it’s not getting paid for), with 43% saying that this increase was over 10%.
Highlighting the difference between profitability and billable hours, the research comments that:
“In the current economic climate with more pressure than ever to provide clients with more value for less, law firm leaders must turn their attention from short-sighted discounting and billing billable hours write-offs to improving financial transparency from the matter onboarding process and throughout the lifecycle.”
The finds are based on a survey of 800 individuals from senior legal finance roles, CEOs and managing partners at UK and US law firms with 100 lawyers or more.