Efficiency and effectiveness – the perfect mix!

March 18, 2020

Phil Muller, Director of Legal Services at Williams Lea, explains how for law firms, long-term success can only be achieved by focusing on doing the right things to improve their operations.

You may have heard the old saying – ‘efficiency is about doing things right, while effectiveness is about doing the right things’ and law firms are acknowledging that efficiency is only part of the solution.

Many businesses talk about making their operations more efficient. Usually, this translates into cost savings, but in the legal sector many law firms will instinctively retreat from anything that simply translates into faster, leaner, and cheaper – because cutting costs won’t solve all your problems.

Does greater efficiency lead to greater effectiveness? Can you, and should you, forego one to get to the other? Our 2019-2020 Trends and Opportunities in Law Firm Outsourcing Survey highlights that there is increasing pressure on law firms to improve their functions, particularly when it comes to meeting demands of outside counsel guidelines:

• 59% of respondents are investing in process automation to protect profits should an economic downturn occur
• 90% are re-engineering their e-billing process to reduce client-side rejections
• 63% said that client pressure to reduce costs has had the most impact on their firm’s back office strategies
• Client pressures are driving back office strategies, with 51% of law firms citing pressure to meet outside counsel guidelines and ensure data and security protection

With these growing pressures, it’s easy to fall into the mindset of only looking for ways to improve efficiency, to cut costs to fund investment in more strategic areas. Whilst this can be a good thing, efficiency is only one of the of ingredients that a firm needs to be successful and to deliver sustainable operational excellence. I believe that in a dynamic and competitive market, the law firm needs to add effectiveness to the mix and they should be striving for efficient and effective outcomes.

The perfect mix!

Efficiency: Speed, accuracy, timely, transparent, measurable, targeted, and focused
Effectiveness: Commercial uplift, releasing fee earner time, client delight, business transparency
Culture: Overcoming partners’ and staff resistance to change, finding the right partner, sympathetic to firm structure, ways of working, people skills and training, seamlessness, consistency, great communication

E-billing is a great place to start

Our survey shows that there’s a growing need for law firms to bill their clients more effectively. In the past year, managing write-offs (66%) and client pressures for custom billing solutions (61%) are the top billing challenges for firms.

With over 60 billing software packages available globally and multiple clients with varying outside counsel guidelines, that are different by client and sometimes by matter, how do law firms cope effectively with this constantly moving target? Here is how we improved the effectiveness of a leading global law firm:

Efficiency
We provided a fully trained e-billing experts for their largest clients – picking up the matter at pre-bill stage and combining client billing guidelines to agreed contract and work in scope, making it singularly focused, disciplined, and efficient

Culture
Every fee earner and partner have their own preferred ways of working, times to work, how they want things presented. Focusing on specific clients and partners enables a cultural fit that enhances the law firm’s experience and more importantly, their clients’ experience

Effectiveness

• Reduced time from pre-bill time to cash collection, means £ millions released from lockup and DSO down from 81 days to 31 days
• Reduced time required for partners to review bills
• Less fee earner and client time spent dealing with discrepancies
• Client delight: e-bills passed first time with no rejections and no suspicion
• Increased business from the law firm’s client who reported that, “it is just easier to work with law firm”

Ultimately, this is bringing improved cash flow enabling greater business growth. So, while efficiency can be a good thing, focusing on effectiveness will help you achieve your real goals.

To find out more, download our 2019-2020 Trends and Opportunities in Law Firm Outsourcing Survey conducted in partnership with Sandpiper Partners.