June 26, 2006
Law Firm Benchmarking Comes of Age
Measurement improves performance. It doesn’t take a rocket scientist to understand why athletes measure performance and why they so carefully study the performance of others. When you have a target and when you measure your own performance against that target, it becomes more achievable.
Intuitively, managing partners understand. For years they have purchased every law firm survey they could get their hands on. Unfortunately, the surveys were always at least one year outdated. Most firms could never find survey segmentations that represented a perfect peer group for comparisons.
That world is beginning to change. Live benchmarking and timely shared information among individual anonymous members of peer groups will give law firms realistic targets for identifying opportunities for improved performance and increased per partner income. Just as record keeping in sports has changed the quality of the game live peer group benchmarking will change the practice of law for the better. Consumers of legal services will benefit as law firms compete to provide competitively better service at lower cost through efficiency. Measurement, especially competitive measurement, improves results.
Who are the players?
Redwood Analytics: The first on the field is Redwood Analytics. Redwood has a significant presence among the AmLaw 200 law firms. Redwood works with each participating law firm to map data from the law firm’s existing business system to Redwood’s proprietary extraction tool. Once implemented, performance data is automatically extracted to provide actionable performance metrics for the individual client. The extracted information is stripped of its firm identify and added to Redwood’s database of participating firms. That anonymous database is used by Redwood to provide participating law firms with comparative performance metrics for their selected peer group. Those comparisons put Redwood clients on track to match and exceed their target group—driving constant improvement.
Thomson Corporation: Not to be left out, Thomson West recently announced the West PeerMonitor™. As with Redwood Analytics, the service is targeted toward large law firms. Thomson’s news release explained the new services: “Law firm leaders, often frustrated by the lack of real-time competitive information available to them, now have an answer that will help them to make more informed management decisions.” According to Thomson West, PeerMonitor provides law firms with competitive facts as current as the most recent monthly financial statements. PeerMonitor enables law firm executives to benchmark their business performance to a named group of peer law firms across a range of pricing, profit and expense categories.
Juris, Inc.: The Company is targeting a release of its new Peer Group Benchmarking service, Juris® Insight, for October of 2006. Unlike Redwood or Thomson, the Juris peer group benchmarking service is targeted toward midsized law firms. The service will eventually be available to both law firms using Juris law firm business systems and those using competitive financial systems. However, the initial release will be limited to Juris law firms which comprise more than one fourth of all US midsized firms. Like Redwood and Thomson West, information available to participating firms differs from traditional survey approaches in that it is collected automatically on a real time basis. Performance information is extracted from the financial systems of participating firms with all identifying names purged, and is held in a secure database. Participating firms can compare their own performance against a peer group they select. For example, a firm comparing its performance against a peer group of five firms may compare its performance to the aggregated results of the best two or three and worst two or three, but never against a single firm in the group. The identity of individual firms is masked at all times.
Today, law firm managing partners and executives invest significantly in the purchase of year-old surveys, and then invest their time and staff time in comparative analysis against imperfectly matched segmentations. They do this in an effort to collect competitive intelligence as a guide for improving the law firm’s own performance. This is all about to change—not only for the mega firms, but with Juris Inc.’s entry for midsized firms as well.
Real-time peer group benchmarking takes law firm decision making to new levels and promises to place participating firms on the track toward continuous improvement. Like athletes in training and competing against the best, the accomplishments of each contributes toward improvement across the entire field.
Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
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Filed under Blog by Tom Collins