Financial MatterManagement

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Financial Matter Management

The legal industry is experiencing an operational shift. Clients are demanding increased efficiency from lawyers, causing changes in processes and service delivery. General counsel has experienced a generational shift, focusing on delivering legal spend to budget. This indicates higher budget consciousness, and requirements for quality services at predictable or lower fees.

Firms are struggling to adapt to the changing landscape. As legal work becomes commoditized and lawyers can only charge unpredictable fees for “high risk” matters, the economic consequences of not adapting to these new general counsel requirements are too high.

So how can firms future proof their processes to stay competitive and profitable?

Pricing & Legal Project Management: Solutions to Your Challenges

Firms are aware of the pricing pressures they are facing, which require them to adjust their processes. Firms have to focus on growth and efficiency, including the use of defined budgets, alternative pricing, and legal project management, driven through innovative technologies.

This is where Pricing and Legal Project Management (LPM) functions and technology come into the mix.

Law firms are increasing their use of project management and pricing. As of this year, over three quarters of firms plan to employ project managers in the near future, compared to only 56% in the previous year . The number is expected to grow to 90% in 2020. Similarly, firms also intend to adopt formal approval processes for pricing.

This change of focus is paying off. The utilization of pricing and legal project management functions is positively impacting firms’ realization and margins. And with both of these metrics being continuously squeezed further by competition, firms are in great need of any solution that helps them maintain or increase them.

Pricing and LPM functions become even more important with the increase of Alternative Fee Arrangements (AFAs). Currently accounting for around 10-15% of firm revenues, AFAs are expected to increase due to clients’ avoidance of hourly fees and the predictability and transparency they offer .

The predictability and transparency of pricing and LPM:

• Increases the chances of winning new business;

• Manages risk by controlling quality;

• Increases profitability;

• Improves realization, and

• Delivers greater client value.

2019 Client Advisory Report(https://www.privatebank.citibank.com/ivc/docs/2019CitiHildebrandtClientAdvisory.pdf)

LegalBizDev Survey on Alternative Fees (http://www.legalbizdev.com/files/LegalBizDevSurveyFinalSummaryGx.pdf)

1

2

1

2

58%

38%

Chief Legal Officers want greater cost reduction from law firms

CLOs want non-hourly pricing

35%

32%

CLOs want improved budget forecasting

CLOs want more efficient project management

To make AFAs profitable, firms need to efficiently scope, staff, price, and report on their matters. They need to balance their need to stay profitable with meeting client demands, and the most efficient method is to use pricing and LPM technology within the firm.

• Protects business with current clients;

• Improved client communication;

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Pricing and LPM are intertwined and circular processes. Firms cannot do pricing analysis without thinking about managing their matters. When the pricing team determines how much a matter will cost, they will inevitably have to plan the work that needs to be done and who will do it. Once the matter starts, the firm must do its best to efficiently meet the budget, which means lawyers must stick to the plan.

Financial Matter Management

Pricing Analysis

Legal ProjectManagement

And this leads to legal project management and its practices. So instead of thinking of pricing and legal project manage-ment as two distinct functionalities, they should be imple-mented hand in hand through technological platforms, and together they lead to financial matter management, or FMM.

Financial Matter Management: Technology Driving Efficiency

Understanding the importance of incorporating FMM is one thing, implementing it in an efficient way is another. The challenge is to align people, processes, and technology for seamless financial matter management.

In this case, (1) people are the pricing and LPM professionals the firm must have; (2) processes refers to the way that information flows and tasks are executed, and finally, (3) technology is the link which allows people to execute those processes in less time and at a lower cost.

All three need to support and drive the following four main building blocks of FMM:

• Planning – being able to profitably estimate the budget of a

• Alerting – the ability to set up alerts & notifications to keep

• Monitoring & Business Intelligence – ability to calculate

• Reporting – being able to communicate matter status more

All four blocks work in unison to create a flawless process machine, which allows firms to:

• Set matter objectives;

• Identify scope and define matter tasks;

• Assign resources to each task;

• Define costs and budget the matter;

• Manage client communication with efficient reporting;

• Manage deadlines and quality.

Identifying the right capabilities and aligning them with processes is embedded into any firm’s human resource and operational functions. However, to find the right technology platform for those people and processes, firms need to understand the requirements for each FMM building block.

new matter or opportunity;

stakeholders informed on how the matter is progressing, i.e. running over budget or time;

internal and client KPIs to monitor matter progress, and

effectively to clients and internal stakeholders.

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Building Block 1: Planning

As client demands for proposals and matter cost forecasting increases, firms must carefully plan their matters. This refers to the initial estimation of:

For any piece of technology to enable efficient planning and budgeting, it must allow users to flexibly plan for any matter scenario and any degree of complexity, by enabling them to:

• Matter scope, including matter phases and tasks;

• Phase and/or task resources, so the mix of partners,

• Duration of each phase/task;

• Type of budgeting, so whether the firm is billing hourly,

• Expenses for non-timekeeper related costs;

• Profitability margins for the firm.

• Plan on a single or matter portfolio level;

• Plan through top-down or bottom-up budgeting;

• Incorporate multiple fee arrangements within one plan;

• Plan at phase and sub-phase, as well as department, office,

• Plan on a period-basis (weekly, monthly, quarterly) and

• Plan by both matter and budget start and end dates to allow

• Allocate work through coded and free text phases to accommodate initial intake when codes may not yet be known;

• Use time entry fields to map matter phase codes (ex. if your

• Add phase resources by class or individual and modify them as the matter progresses without affecting phase level KPIs;

• Override standard hourly rates with client or other rates;

• Support planning for rate and cost increases over multi-year

• Add discounts and premiums on a phase or matter level;

• Add expenses not related to fee-earners (ex. e-Discovery/

• Use scenario planning tools to improve profitability such as the

• Lock matters, phases, or resources to disable editing from

• Save plans as a template to use later for the same client or a similar matter, and

• Apply security to users, groups, and roles for any plan.

Building Block 2: Alerting

Through alerting, matter stakeholders can actively set up notifications to obtain information on how the matter is progressing. In this way, they can take preventive or corrective actions if a matter is close to reaching its budget and the work has not been completed yet.

• Set up any type of email alerts or notifications on any

• Manage escalation;

• Add/remove individuals who will receive the notification;

• Customize email notification text for different types of alerts.

Building Block 3: Monitoring & Business Intelligence (BI)

To maintain communication on matter performance and progress, lawyers always need to know the status of their matters. Monitoring should be done on an internal basis so the firm knows whether it is profitable based on its own KPIs. It should also be done for client purposes with client KPIs.

• Monitor through dashboards with both internal and

• Configure dashboards to meet client requests;• Update matter data at any point to get a real-time view of

• Monitor at individual or matter portfolio level;• Monitor multiple plan scenarios for a single matter.

Monitoring functionality should also contain Business Intelligence to provide overviews of overall firm performance in addition to matter performance.

associates, paralegals, and other staff (leverage);

using some type of AFA, or a mix of both;

and country-level;

monitor accordingly;

greater monitoring and planning flexibility;

matter for amounts, percentages, or increments;

Alerts and notifications should also be flexible and accommodate different matter scenarios and complexities. At its core, alerting functionality should allow firms to:

Monitoring functionality should allow firms to:

client-facing KPIs;

matter progress;

client is using standard e-billing codes, the platform should have the ability to map them to the firm's internal phases);

matters;

e-Disclosure);

effect of different fee arrangements, discounts or premiums;

those without the right permissions;

Building Block 4: Reporting

Finally, as clients demand detailed reports on their matters, firms should also be able to quickly generate and send them. Reports should not only be client-facing, but also for internal purposes, for example, reporting to a partner on how a matter or matter portfolio is progressing. Reporting functionality should include:

• Generate status reports using dashboards or spreadsheets at any point throughout matter progress;

• Customize dashboard reports with out-of-the-box KPIs to meet client requirements and internal firm policies;

• Capture dashboard reports through screenshots;

• Drill down into matter data through pivot tables and tokens;

• Update matters in real time to generate the latest status reports.

To gain some of this functionality, firms have been using spreadsheets for financial matter management. But as matters and requirements become more complex, spreadsheets quickly become an inefficient and unworkable solution especially for rate management, bottom-of-the-bill discounts and efficient reporting. Law firms need solutions which rapidly deliver actionable data decreasing the burden on firm resources. This is where Prosperoware found the opportunity to develop a comprehensive Financial Matter Management platform designed to offer all the flexibility and functionality that a law firm might need.

Umbria – Empowering Teams to Transform Client Experience

To tackle law firm challenges for financial matter management, Prosperoware has developed its platform, Umbria, for both pricing and legal project management.

Umbria enables law firms to satisfy two primary goals: (1) internal - monitor matters that may overrun and have profitability challenges and, (2) external - enable partners to communicate matter status more effectively to their clients.

Umbria is a technology for efficient matter management, both on premises and in the cloud. Using the platform significantly decreases the time and cost it takes for law firms to conduct financial matter management, particularly managing client level arrangements which present a challenge from all Time and Billing Systems, and enabling efficient report generation.

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• Improving client communication & managing risk;

• Increasing profitability & improving realization; and

• Delivering greater client value.

Planning & Budgeting

Umbria tackles the complexity of planning through offering a flexible planning platform, which fulfills all the necessary requirements for law firms. Users can plan for any matter scenario of any degree of complexity, using different types of budgets, fees, and expenses. They can add different types of fee arrangements within one plan, and create multiple plans for one matter to compare on important KPIs.

Umbria also allows for rate card changes within the main screen, which is especially important for global law firms with multi currencies.

Users can add bottom-of-the-bill discounts or success rates and see how it impacts matter profitability with the out-of-the-box What-If Analysis. They can customize KPIs which are important to them and their clients to conduct scenario planning.

The platform integrates with the major time and billing systems such as Aderant, Elite, and Elite 3E to pull matter data and enable its four building blocks of functionality.

business;

Planning &Budgeting

Multi-LevelAlerting

Dashboards &Reporting

Profitability& BI

Umbria

• Increasing fee and cost predictability;

Umbria benefits law firms through: • Protecting business with current clients & winning new

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We are a thought leading software enterprise company for a digitized world. Our core competency is our expert understanding of the enterprise systems, the data and processes in service industries, and building technology for transformative change. We develop software for cybersecurity, privacy, and regulatory compliance for content systems, and financial matter management.

About Prosperoware

For multi-year matters, Umbria enables rate and cost changes, as well as amount to be worked pre- and post-in-creases. Amongst others, it also gives firms the ability to map up to 6 phases to client e-billing codes, avoiding the problem of code mismatches.

Multi-level Alerting

When it comes to alerting, Umbria has again been designed with flexibility in mind. Law firms can create any type of alert on their matters, whether by hours, amounts, or custom values. It helps them keep their matters on time and within budget.

Firms can create alerts for budget vs. actual and refilling retainers. They can also measure against multiple KPIs, both internal and client-facing ones. They can set up any type of email alert on matters, for example:

• when the matter budget hits $500K;

• when 80% of it has been spent;

• for each $50,000 spent on a matter, or

• for every $50,000 spent between $500K and $800K;

Firms can also manage escalation by using the Burn Rate feature to get alerts on the percentage of the budget that has been used in comparison to the percentage of work that has been completed. This indicates that partners get an alert if for example 70% of the budget has been spent but only 30% of the work has been completed and allows them to take action to better manage the matter.

Reports & Dashboards

Umbria streamlines monitoring and reporting with visual dashboards which can be generated into quick reports for clients or partners. Firms can monitor multiple budgets at the same time, and tailor KPIs based on their internal and client-facing policies. Umbria is built on a widget-architecture, allowing users to customize each dashboard to their needs. It also allows real-time updating of matters, so users can see the latest data.

These dashboards can then be screenshot and generated into PDFs to send to clients as status reports, or firms can drill down with Excel and create different data-driven reports.

Profitability & Business Intelligence (BI)

Planning, Budgeting, and Monitoring (PBM) make up Umbria’s core functionality. But the platform extends as an enterprise version to offer both Profitability Analysis and Business Intelligence.

Umbria has a built-in tabular cube which allows firms to generate actionable insight into their performance, allowing users to drill down on matters and resources. Through the Profitability module, users can also calculate cost rates and allocate cost on different level, while creating and supporting multiple cost models.

Different Typesof Budget

TotalRecurring

PeriodSpend

Fee Types

HourlyNon-hourly

Expenses

SoftHard

The reporting features of Umbria allow law firms to increase their client experience and satisfaction, keeping all key parties informed on how the matter is progressing.