Numbers Don’t Lie

The Results

The 2009 results of the AM LAW 100 describes a scenario of double digit revenue decreases for the majority of firms. The good news is that revenue per partner and profit per partner did not fall at the same precipitous rate. The bad news is that these measures were largely managed primarily through headcount reduction, compensation cuts, and fewer lawyers achieving partnership status. Adding to this bad news is the emergence of the alternative fee revenue model, the pressure on law departments to cut their external legal spend, and a general downturn in the economy.

The Boom Bust Cycle

Law firms can choose to try to manage the boom-bust cycle by their traditional means; controlling headcount and compensation. Yet managing human capital is not the same as adding more machine capacity to an assembly line or more memory capacity in a computer; changes in headcount create disruption in the form of lack of continuity with clients and colleagues, not to mention training and cultural issues.

The Legal Assembly Line

A core process in delivering legal services is assembling data from various sources, making sense of it, and codifying it into a finished product such as a contract or some other legal document. Raw data can flow from case management systems, knowledge management systems, other inside and outside sources, and from the human capital within a firm. The finished product often then flows to various approvers and ultimately into a repository or case management system. Thus the “assembly line” for delivering legal services includes people, systems, and raw materials which can all benefit from the use of technology.

The Solution

Top performing companies have adopted technology as a permanent way to manage costs, create efficiency, and improve speed. For law firms, document assembly technology enables the construction of a contract or document to move from a purely manual environment to an automated environment and, much like the assembly line did for manufacturing, document assembly enables the production of more finished contracts per unit of labor and improved quality.

Benefits to Law Firm Employees

Document assembly technology enables current employees to take on more work in a more intelligent way, creating more time to work on higher value legal issues. This heightens employee morale and creates a more stable and predictive cost structure. Also, the use of technology contributes to a firm’s ability to stay competitive, to improve the profitability of various legal business processes, or perhaps even dominate various areas of the law; especially where the production of high volumes of predictable yet complex documents is required.

In these uncertain times, using technology will help law firms mitigate the boom/bust hiring cycles and provide permanent efficiency, quality, and employee morale boosting benefits. Do you agree?

This post was authored by Lowell Moritz, Exari VP of Account Management.

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