lex1 - presentation - financial planning and...

8/8/2011

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Financial Planning and Profitability: Looking Back and Forward to

St Ah d Stay Ahead

Russ HaskinDirector, Consulting & ServicesLexisNexis

Bill Puncer, Esq. Director, Market OutreachLexis Search Advantage

Agenda

• Looking at Profit – What has changed in recent years?– What is the process in improving profitability

• Visibility into the Data

– Gaining Buy - In

• Transitioning lessons learned to Matter Planning and Alternative Fees– Setting up a successful approach– Using data to model and plan for success– Getting the data that hasn’t been captured

PROFITABILITY 101PROFITABILITY 101

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Profitability 101 – The Basics

• How Much Can We Charge?

• How Much Does it Cost Us?

• How Can We Maximize the Spread?

Has the model changed?

y

Cap

acity

Pro

duct

ion

3. Realization2. Utilization

4. Leverage

Fee

Cap

acity

Reve

nue

Con

tribu

tion

Mar

gin

Ope

ratin

g

Prof

it

Net

Inco

me

Dire

ctC

osts

O/H

Investmentcosts

6. Client Investment Speed (Time Value of Money)

1. S

tand

ard

Val

ue o

f

5. Margin

Improving Firm Profitability Initial Steps

• In order to begin a systematic process of improving firm profitability a firm first needs:

1. Visibility into the data2. An understanding of the data3. A strategic and tactical plan to use the data

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WHY do firms want profitability & financial information

• Give partners visibility to what is happening• Take action to improve current situation• Monitor action against budgeted/expected • Monitor action against budgeted/expected

results• Encourage the right behavior!!!!!

BI Today …BI Today …Value to Business Value to Business

People

Processes

Performance Mgmt Framework

BusinessStrategy

Take Take action to action to resolveresolve

What What should should we be we be doing doing ge

nce

genc

e

Actionable DataActionable Data

Customer ROICustomer ROI

BI Yesterday …BI Yesterday …Value to Value to IT/AnalystIT/Analyst

Processes

Analytic Applications

BI Platforms

Information Management

about it?about it?

What What happened?happened?

Why did it Why did it happen?happen?

Evol

utio

n of

Ev

olut

ion

of

Busin

ess

Inte

lliBu

sines

s In

telli Help? Yes!

Services Approach Services Approach

Framework (tools)Framework (tools)

Visibility into the Data

• Delivering tailored financial intelligence • Distributing reports, dashboards and key performance

indicators with firm goals with flexibility to personalize to each person’s preferred format. D li i d d i d i i h • Delivering easy-to-understand, customized insights to partners and attorneys when and where they need them.

• Quickly access detail on performance, opportunities and goals using flexible tools.

Education

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Visibility into the Data

Timely Distributions to Promote Sound Decisions

Allowing many distribution methodsIncluding triggers, email, and mobile devices Understanding Drivers across the Firm

Gaining Buy In• Commitment from leadership

Must be “in it for the long term”

• Establish basis for moving forward—what will we measure, and how?,

• Implement achievable business processes to build information base

Start small and higher level

• Track results, and create a feedback loop

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Gaining Buy in

Develop models for use by Practice Heads and Executive Committee to help them understand the business drivers

A. Education – start with pilot groupP h f ’ l b h d • Present the firm’s actual numbers in the education process

• Focus on metrics behind each of the profit drivers• Understand and explain how Elite/Aderant information may differ from Redwood

B. Process to deliver analysis• Establish set of reports and graphs with key statistics

for each group• Compare practice groups to firm, not each other• Identify opportunities and set specific goals• Monitor progress

What Firms and Companies are Starting to Realize

• It is possible to reduce a company’s legal costs (up to 25% or more)

• While increasing quality of the legal product• Improving communication• With the firms maintaining and actually enhancing

profitability

How do you define Alternative Arrangements?

• Discounted hourly rates

Hourly-based

• Contingency• Success incentives

Risk-based

• Stage based• Hybrid

Value-based

Non Hourly – “True Alternative Arrangements”Hourly – Alternative or no?

• Volume discounts• Blended rates• Task-based rates• Retainers

Success incentives (usually coupled with reduced rates)

• Fixed fees• Capped Fees• Collared

Arrangements• Hold backs

Hybrid • Market priced fixed

fees• Bundled pricing• Pure value based

Risk vs. Value – Debatable and interchangeableMany other alternatives and more are added daily

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Overall Matter Management is:The process of analyzing, communicating, guiding, delivering, and reviewing an alternative engagement from its creation until its conclusion in an attempt to meet three key deliverables:

Client satisfaction on value

Client satisfaction on quality

Acceptable results and returns to the firm

The process starts at the beginning. Mistakes made in estimation, risk identification, and scoping will be felt throughout the engagement and beyond

Successful Approach to Matter Planning

Training

Establishing a process

People

Technology

Collaboration

Matter Management Simplified

- What is the client looking to

Know Your GoalKnow Your Goal Model and PrepareModel and Prepare Deliver and TrackDeliver and Track ReviewReview

- What are the activities need to - Are we staying close to the - Did the actual events fall in line achieve? Do we need more information?

- What are the key risks?What needs to fall out of scope?

- What are the firm’s legal and business needs?

- Is this core to our business? Should we say no?

- Have we done work like this in the past?

accomplish the goals?- What does the timeline look

like?- What resources do we need?

Constraints?- Can we use historical data?- How do we maintain quality

while balancing firm needs? - How do we plan for trigger

events?- Where can we improve

efficiency?

budget and schedule?- Are we appropriately leading

and working with the client and internal team?

- Do we need to adapt to changes?

- Are there key deadlines we need to readdress?

- Do we need to change strategy?

- Are we delivering a quality product to the client?

with the plan?- What is the feedback from the

client?- What is the feedback

internally?- Where did we succeed?- How can we improve? - Where can we improve

efficiency?- How will we approach it next

time?

Define Success Start Somewhere Communicate Learn

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How do I better understand historical performance to improve

staffing and matter management decisions?

• Automatically pull data from your billing system to use historic performance as a template for f t o kfuture work.

• Track variance between actual and budget on a daily basis (early warning).

• Better manage staff and matters with insight into historical drivers of profitability.

How can I model and track engagements to optimize firm revenues

and deliver the financial results clients expect?

• Model fee arrangements, including alternative fees, at the client, matter, and phase/task level.

• Perform “what-if” analysis ycomparing various pricing and staffing models.

• Generate fast cash flowand income reports using monthly forecasting and variance analysis.

• Reward right behavior that delivers optimal profitability.

Clients and Firms Behaving Badly

• How accurate has your timekeeping and invoicing been over the last decade?

• How efficient have your processes been?• Are attorneys appropriately assigning task or project Are attorneys appropriately assigning task or project

codes?• What about your clients data?• Do you have access to the data you need?

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Matter Management Simplified

- What is the client looking to

Know Your GoalKnow Your Goal Model and PrepareModel and Prepare Deliver and TrackDeliver and Track ReviewReview

- What are the activities need to - Are we staying close to the - Did the actual events fall in line achieve? Do we need more information?

- What are the key risks?What needs to fall out of scope?

- What are the firm’s legal and business needs?

- Is this core to our business? Should we say no?

- Have we done work like this in the past?

accomplish the goals?- What does the timeline look

like?- What resources do we need?

Constraints?- Can we use historical data?- How do we maintain quality

while balancing firm needs? - How do we plan for trigger

events?- Where can we improve

efficiency?

budget and schedule?- Are we appropriately leading

and working with the client and internal team?

- Do we need to adapt to changes?

- Are there key deadlines we need to readdress?

- Do we need to change strategy?

- Are we delivering a quality product to the client?

with the plan?- What is the feedback from the

client?- What is the feedback

internally?- Where did we succeed?- How can we improve? - Where can we improve

efficiency?- How will we approach it next

time?

Define Success Start Somewhere Communicate Learn

F

MM

G

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Stages of a Legal Career

GRINDERS MINDERS FINDERS

ResearchDrafting

StaffingManagement

MarketingCli t l tiDrafting

Document reviewLitigationNegotiation

AssociateJunior Partner

ManagementQuality assuranceSupervisionSophisticated services

Partner/Practice group leaderCFOKM resource—PM

Client relationsLeadershipBusiness planningAFA proposals

Managing PartnerCFOCOOCIO

Kinds of Information Required

GRINDERS MINDERS FINDERS

AFA management AFA proposalsResearch, drafting& discovery

Lexis Search AdvantageKiiacEquivio

Lexis Matter Experience

Redwood Planning

& discovery

Defended a single Plaintiff employment Defended a single Plaintiff employment

How many times have we…

Finder & Minder Questions

discrimination matter?

…got it Motioned out early?

…gone to Trial (win/loss)?

…won on Appeal?




…won on Appeal?

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How much Discovery did we do

…how many depositions?

h t k th ?



h t k th ?

In that Matter…

Finder & Minder Questions—Deeper

…who took them?…who took them?

Who/What were are toughest…

…Adversaries?

…Judges?

…Jurisdictions?


…Adversaries?

…Judges?

…Jurisdictions?

Defended a single Plaintiff employment Defended a single Plaintiff employment

How many times have we…

Phase & Task




…won on Appeal?




…won on Appeal?

(L240)

(L450) (A109)

(L530) (A103)



h t k th ?



h t k th ?

In that Matter…

Extract Entities

…who took them?…who took them?


…Adversaries?

…Judges?

…Jurisdictions?


…Adversaries?

…Judges?

…Jurisdictions?

8/8/2011

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LSA Matter ExperienceHow Does It Work?

Timekeeping Note Analytics Matter Search and Analytics

Ad D P fili L LSA d D P fili • Adapt Document Profiling to analyze timekeeper notes

• Derive phase and task codes (e.g. ABA L-Codes)

• Map to customer codes where applicable

• Load phase/task codes into LSA Experience Warehouse, and optionally Elite/Aderant

• Leverage LSA and Document Profiling to mine documents

• Aggregate and profile matters based on associated work product

• Incorporate additional matter information from Elite/Aderant

• Provide simple and powerful search interface to locate matters by type, jurisdiction, topics, etc.

LSA Matter ExperienceTimekeeping Note Analytics

Phase Task

L110 A104

L210 A103

L210 A103

Worked Date Timekeeper Hours Narrative

11/10/2009 14782 1.1 Review documents sent by J. xxxxx regarding subpoena of Dr. xxxx.

11/11/2009 14782 1.75 Draft and revise motion to quash subpoena.

11/12/2009 14782 0.85 Review and revise motion to quash subpoena.R i d i d ft titi f l t h i

1. Analyze narratives for key classification phrases

2. Use sequence analysis to identify related entries

L430 A103

L330 A101

L110 A107

11/17/2009 13455 3.2Review and revise draft petition for rule to show cause in preparation for filing in Supreme Court; prepare Motion to Stay for filing.

11/18/2009 14782 0.5 Draft proposed deposition accommodations for Dr. xxxx's deposition and send to J. xxxxx.

11/20/2009 00304 2.25

Exchange voice messages with Mr. xxxxx regarding identification of issues in suit and significance of Dr. xxxx's testimony; receive voice message from and phone conference with Mr. xxxxxxx regarding status and further handling of matter; extended phone conference with Mr. xxxxx regarding issues in xxxxxxxx litigation; phone conference with Mr. xxxxx regarding same.

3. Derive Phase and Task Codes based on sophisticated rules

LSA Matter ExperienceMatter Search and Analytics

1. Locate matters using sophisticated conceptual search, powered by LSA’s deep understanding of matters

3. Review and act on details of multiple matters at a glance

4. Export results to Redwood Analytics, Microsoft Excel, and other applications to continue the analysis

Client Matter Matter Type JurisdictionResponsible

AttorneyHours

L100 L200 L300 L4001008027 - Pittsburgh Corning

1 - O-Ring Failure Suit

LitigationClass Actions

Federal3rd District Allen Brougten 1533.2 642.8 2041.1 205.9

1008158 - Georgia-Pacific

100 - Foundry Exposure


Texas178th District Eric Walker 833.5 425.2 1825.2 105.1

1008158 - Georgia-Pacific

191 - Gasket Failure


Federal10th District Eric Walker 1210.3 877.5 - -

1008225 - A C & S2 - Gasket Failure

LitigationProduct Liability

Federal3rd District Michael Ingrids 1456.5 610.6 1939.1 195.6

2. Understand key drivers behind matters, and filter to target the most relevant ones

8/8/2011

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QUESTIONSQUESTIONS

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