‘2013 has been a turning point for the legal sector with the gap between best and worst performing firms widening’ says David Snell, head of the PwC law firms’ advisory group.
PwC’s 2013 Annual Law Firm Survey has revealed that whilst profit margins for the top 10 firms have increased by an average of about 2 percentage points over the last year, the vast majority of firms who fall into groups outside of the top 10, are struggling with declining profit margins. Around a third of these firms report net profit margins of less than 20%.
So, amid intense price competition how can firms outside of the top 10 address this issue of declining profitability in 2014?
According to Martin MacDuff, Managing Director of Redbrick Solutions, firms must first of all seek to maximise fees and minimise costs, in order to deliver a profit margin sufficient for the firm to achieve its strategic plans and targets.
He comments “We meet law firms of all shapes and sizes and find that many of them are unable to answer questions such as, ‘how much does it cost you to offer that conveyancing service?’ or ‘which department generates the most profit for the firm?’ Without a sound understanding of key measures of cost and profitability it is very difficult for firms to put in place achievable strategies for growth”.
Martin goes on to say, “most firms do have financial information available, but accessing it can be time consuming, and the data can be of questionable quality. Clients using our Business Intelligence solution have found that having powerful business information available at the click of a button, in an easy to read format has made a world of difference to the way they view their business. With our suite of customisable reports, they can now easily understand costs, profit and productivity across either the whole business or targeted areas and are using that information to drive steady growth.”
The PwC Law Firms Survey 2013 identified that ‘making the best use of technology will be key to future success.’ Whether it’s streamlining business processes, bringing about improvements in productivity, or providing accurate and reliable financial information. There is a technology solution upon which sound business decisions can be taken.
To understand more about the benefits technology solutions could bring to your business, contact Redbrick Solutions on 0845 166 2629, or visit www.redbricksolutions.co.uk.