By Legal Futures Associate BigHand
Law firms at a stand-off with client demands for AFA’s growing, finds latest industry report
With a global recession and further economic downturn predicted, clients are demanding financial transparency and cost certainty across their engagements with law firms as they look to alleviate their cost pressures. Firms need to respond and ensure they have the internal resources in place to maximise client value while safeguarding profitability.
BigHand collected data from over 800 responses from senior legal finance roles, Managing Partners, LPM and Finance Systems roles from law firms of 100+ lawyers in the UK and North America.
Key findings from the report:
- Half of firms (54% of NA & 45% of UK) report an increase in demand for real-time financial updates for matters.
- Only 1.5% of NA and 3.2% of UK firms are providing updates on every matter, suggesting firms do not have the tools to meet the increased pressure for more transparency.
- 46% of firms confirming a rise in demand for AFAs this year.
- Profitability data is available to just 22% of NA, 19% of UK Partners and only 17% of NA, 20% of UK Associates.
- 70% of NA, 67% of UK firms plan to invest in budgeting tools to help with financial planning and forecasting in the next two years and 72% of NA, 66% of UK firms plan to invest in legal pricing solutions.
The report shows the increasing issues firms face with evolving client expectations for greater matter visibility and flexible pricing. Firms must continue to focus on balancing clients’ expectations for close client collaboration and support a significant cultural shift to an expanded responsibility for profitability.
Investments in pricing teams and supporting pricing technology, although essential, should be coupled with process change that encourage their use. The combination of process improvements, investment in budgeting technology and people give law firms the best chance at reducing their leakage and alleviating the concerns discussed in the report, Improving Client Engagement to Safeguard Profitability.
For more information get in touch with BigHand via email at firstname.lastname@example.org