2012 redwood analytics® user conference analysis. insight. action. benchmarking making sense of...
TRANSCRIPT
2012 Redwood Analytics® User ConferenceAnalysis. Insight. Action.
BenchmarkingMaking Sense of Market Data
Chris BurgessConsultant, Redwood Analytics
2012 Redwood Analytics® User ConferenceAnalysis. Insight. Action.
Agenda
• The Role of Benchmarking
• Types of Benchmarking
• Lexis Firm Insight
• Q&A
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What is Benchmarking?
Benchmarking is the process of comparing the cost, time or quality of what one organization does against what another organization does.
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Why is Benchmarking Important?
• The legal industry is consolidating and becoming increasingly competitive
• Law firms are being run more like businesses, making more use of financial data and other operating metrics
• A good fact base can help to gain consensus around important decisions
• Benchmarking helps to blend the art and science of running a successful law firm
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The Role of Benchmarking
• Provides the opportunity to truly measure performance: in terms of the outcome in terms of the underlying activities that
drive results
• Benchmarking is diagnostic and leads to day-to-day operational usage
• This is what partners want to know
2012 Redwood Analytics® User ConferenceAnalysis. Insight. Action.
Types of Benchmarking
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Types of Benchmarking
Internal• How do I compare to
myself?• Business intelligence
External• How do I compare to the
market?• Lexis Firm Insight• Benchmarking surveys
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Internal Benchmarking
Internal comparison is a key to identifying opportunities and best practices• Clients / Attorneys / Departments / Everything
Setting firm standards will allow easy identification of opportunities
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Internal Benchmarking
• Discounting• Rates• Inventory
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Internal Benchmarking
Discounts by Department in the Rolling 12 Month Period
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Internal Benchmarking: Partner Rates
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External Benchmarking
Benchmarking must be timely, relevant and reliable
• Normalization of the data
• Definition of terms
Comparing performance against similar firms can indicate areas of opportunity
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External Benchmarking
Good benchmarking should be objective based
Ask: What are my long term goals?
• How do I compare against my competition?
• How do I compare against those I aspire to be like?
• Am I small-law and want to be mid-law? Am I mid-law and want to be large law? Am I big but want to be bigger?
• What actions can I take based upon what I have learned?
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External Benchmarking
Firm-to-firm comparability is a complicated issue
What metrics are comparable?• Hours• Rates• Realizations• Speeds• Leverage
What should you not compare?• Profitability—Cost related items• Dimensional—Geography, Size, Practice
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External Benchmarking: Rates
Example: Rates
• An external benchmarking review of rates can give you an idea of how to price yourself in the market
• Benchmarking is evidence to show what is being charged by similar firms
• It can act as ammunition against those who resist change
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Opportunity Valuation
2012 Redwood Analytics® User ConferenceAnalysis. Insight. Action.
Lexis Firm Insight
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Lexis Firm Insight
• Simplified mapping and interface
• Data pulls directly from participating firms, does not rely on surveys
• Display measures at title, class year and practice group level
• Regions broken down by state and major cities
• Allows for comparison by size and practice group
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Lexis Firm Insight
Client Investment
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Lexis Firm Insight
Partner Hours
Non Partner Hours
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Lexis Firm Insight
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Lexis Firm Insight
How would your firm compare?
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Lexis Firm Insight
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Questions?