Future-proofing for growth
Posted on Tuesday, 07 November 2017.
An interview with Bond Dickinson FD Martin Lucas
Background: Bond Dickinson is a full service UK law firm providing a wide range of legal expertise to clients across multiple sectors. The firm is combining thisyear with US-based Womble Carlyle to create Womble Bond Dickinson – a transatlantic law firm with more than 420 partners and 1,000 lawyers serving clients from eight UK and 15 US offices. The combination places Womble Bond Dickinson in the UK’s top 20 and the US top 80 firms, with combined revenues in excess of US$410 million or £340 million, offering its clients a growing number of local, regional and international legal services.
The global economic crisis ended more than a decade of almost uninterrupted growth in demand, revenues, and profits for the legal industry. New levels of price sensitivity amongst corporate clients have since highlighted a need for greater efficiency, predictability, and cost-effectiveness in the provision of legal services. Leaders in law firms across the globe have been examining how best to balance these rising client expectations whilst maintaining profitability and growth.
Bond Dickinson Finance Director Martin Lucas was concerned that the firm’s long-term ambitions could be hampered by a lack of visibility and control over underlying drivers of profitability – namely the hourly rates and resourcing levels required to execute matters for optimal efficiency. Its leaders wanted to enhance the firm’s capability to measure performance against strategic targets more frequently and with greater confidence in the numbers.
“We operate in a very competitive market, one that is arguably over-supplied in the UK and Europe,” says Lucas. “We are batting all the time to secure client mandates and the pressure on our rates and costs is pretty relentless.
“Our partners wanted better, more granular information about clients and matters to help them understand the factors affecting account profitability,” he adds. “They also wanted to be able to draw from detailed data when speaking with clients and discussing service levels and fees.”
As with most professional services organisations, Bond Dickinson’s unit of sale is time, and fee calculations usually start with a multiplication of hours worked against agreed rates. The firm’s Partners wanted a granular understanding of exactly where and how time was being applied at the account level – by the type of activity (matter), number of hours, team member, and levels of seniority. They also wanted broader analysis looking at profitability within sectors, geographies, regional offices, and functional teams.
“In essence this is a simple business, we sell hours of expertise at agreed prices,” says Lucas. “Accounting is done on a time and materials capture basis but profitability is a challenge – people are our biggest cost. The trick is to manage how work is delivered to ensure that the amount of time is appropriate and the mix of team seniority is optimal.”
The more detail the Partners could interrogate the more choices they would have about how to achieve profit targets. The firm’s former systems had evolved over time leading to multiple sources of information and a lack of data consistency, complicating agreement over what constituted key metrics.
After evaluating several solutions, Lucas and his team selected prevero as its platform for profitability analytics with data visualisation. The choice of prevero not only delivered integration with the firm’s data warehouse for profitability modelling, but also a platform for the addition of future Corporate Performance Management (CPM) applications.
This modelling capability was key to the sense of accountability for the numbers the finance team wanted to create – giving visibility and greater ownership of numbers to partners. This was important as clients may purchase multiple services from multiple teams and it was important to the firm to be able to understand how services rolled up into an overall picture of client and service profitability.
“Prevero is enabling us to deliver profitability reporting to our partners as part of a single platform for reporting, budgeting and planning. We are pleased with how it’s working and our partners appreciate being able to view the data from different cost and revenue perspectives.”
Lucas and his team have empowered the firm’s partners to use its newfound data visibility to take different decisions on how to drive the business. Training for the firm’s partners is underway and the majority are now actively using the tool to review and analyse numbers. The new level of detail allows comprehensive, informed discussions around different clients, matters, and teams and the fact that reports are now available in near real time means that any course corrections can be made quickly.