Mastering the Closing Process Part 4: Leveraging Data for Continuous Improvement
The last of the three key elements needed to truly master the deal closing process is the concept of leveraging data to continuously improve the delivery of legal services. Twenty years ago, email was unheard of at most law firms. Today, artificial intelligence, machine learning, and online services are creating a fundamental shift in how law is practiced. Ultimately, these innovations are improving firm performance by reducing non-billable work, but how do you know for sure?
Today’s transaction management software solutions provide you with in-depth reports that are important in helping you track user activity and performance. This insight can be extremely important to project leaders in understanding how well the product is being adopted throughout the organization. Although usage data is important, it is just the tip of the metrics iceberg. In a previous blog, we discussed the importance of creating a plan to ensure a successful and sustainable digital transformation. The plan should include the firm’s value-based goals, a strategy for how to accomplish them, and key performance indicators (KPIs) to gain valuable insight into your practice and identify opportunities for growth.
In a recent Legal Business World article, Be the ‘Me’ in Metric, Leveraging Business Metrics to Improve Law Firm Performance, Tim White, Principal at PeopleView Legal Business Advisors states, “to be effective, metrics should be clearly defined, quantifiable and consistent with the firm strategy and goals.” In addition to the traditional billable hour, matter management and operational metrics, his suggestions include measuring client value metrics.
White explains that clients are demanding greater value from their firms. Focusing on providing clients more value will help a firm position itself as a collaborative advisor to clients, instead of being seen as one of many commoditized service providers. Client-value metrics leverage the client perspective, and firms who understand what clients perceive as value, and who can demonstrate how they deliver value, will not only improve their chances of retaining clients, but will differentiate themselves from their competition. Transforming the legal transaction process to improve client value and satisfaction can give a firm the advantage they need in today’s global legal market.
For firms who are interested in leveraging data to make informed decisions and improve performance, figuring out where to start can be overwhelming. Access to data is not the issue if you have implemented technology solutions that provide metrics on system utilization. The problem is aggregating all the different sources of data together to answer key questions and validate theories.
Michael McDonald, an assistant professor of finance at Fairfield University in Connecticut, provided some advice for legal firms in his Above the Law article Data Analytics for Lawyers. He states that there are five important steps to any data analytics project:
- Figure out what the question to be answered is
- Gather relevant data
- Clean and structure that data,
- Run analysis and test hypotheses
- Make a decision
Any firm that sets out to use data on a one-off quick project, McDonald says, is going to find themselves a victim of the garbage-in, garbage-out paradigm. So in summary, taking the time to understand the business metrics you want to use in evaluating the performance of your existing transaction process, and using a structured method to analyze that data, can make a significant difference in your firm’s ability to continuously improve the services you deliver and increase value for your clients.