Making Data-Driven Decisions: The Importance of Data Benchmarking
By Trey Ruello, Director of Data Services at Aderant
The ability to leverage data is crucial in today’s tech-savvy business environment, and companies within multiple verticals are utilizing data to form a competitive advantage and improve results. For example, insurance companies use predictive analytics to provide intelligence relating to customer service, pricing and product optimization, and client engagement. Meanwhile, Netflix estimates that its data algorithms have saved the company $1 billion a year in value by improving customer retention. Additionally, Microsoft used its behavioral data from employees to better understand and improve B2B sales operations. These companies are proactively using data to distinguish themselves from competitors.
Data usage for benchmarking, analytics, and cost reduction is increasingly popular in the legal world as corporate legal departments seek to maximize value and streamline interactions with outside counsel. With the past decade’s rapid growth of legal eBilling, outside counsel guidelines, and legal spend management platforms, corporate legal departments are leveraging data to provide insights into their spending and drive interactions with their outside counsel law firms.
Law firms are also searching for ways to leverage their internal data in tandem with industry data to increase efficiency, identify areas for improvement, and gain better insight into potential additional value. Firms are actively building mission-oriented business intelligence (BI) groups to report internal and/or third-party data. Some are leveraging their data for insight into the health of their business, while others are interested in providing an objective evaluation of performance or showcasing metrics to distinguish them from competitors. Many firms are competing with themselves to improve on their best practices. Regardless of their motivations, law firms want access to relevant data in real-time.
What kind of data are we talking about, exactly? Historically, firms have wanted data to examine trends in the legal industry. Law firms are both data contributors and consumers – they often subscribe to research reports and have participated in surveys about rates, profitability, and other benchmarking metrics. Firms are relentlessly interested in scorecards showing how they measure up on market share, practice groups, timekeepers, rates, and more.
In recent years, a slew of technology and service providers have cropped up to furnish business intelligence data to law firms. These resources leverage a firm’s internal data to create informative dashboards and useful reporting. From a personnel standpoint, large firms are increasingly equipping themselves with internal BI teams and the processes necessary to act on this data. Whether a firm has a designated BI team or not, there are ways it can begin to capitalize on the data’s value and efficiently identify areas of potential improvement. But how can firms best leverage both internal and external data to stay informed?
When selecting data intelligence products, a firm should look for intuitive, interactive platforms that provide actionable insights into improving efficiency, profitability, and performance in billing. A compelling offering should include visibility into a variety of benchmarking and performance statistics, such as deduction and write-off rates, AR days, and overall market trends. This visibility allows the firm to compare themselves “apples to apples” to both the industry at large and peer sets; it also allows them to track their own internal performance history to demonstrate accountability. Firm leadership is then able to evaluate whether the organization is leading, keeping pace, or falling behind through metrics, key performance indicators (KPIs), rankings, and visualizations. Furthermore, the firm has the ability to track and monitor their progress and effectiveness, ensuring they are meeting targets and can adjust their approach to meet targeted goals.
Corporate clients often curate detailed insights from data they regularly collect about their outside counsel firms. Aderant’s concept of “data intelligence” revolves around providing law firms better visibility into similar metrics to even out this information asymmetry. Helping law firms leverage the power of data for their own benefit provides them with a strategic edge. It also enables informed, data-driven dialogues and negotiations with their clients, where now both sides leverage data to drive discussions.
There’s more on the horizon from Aderant when it comes to data intelligence. We look forward to sharing a sneak peek of our newest offering to clients attending our Virtual Momentum 2021 Conference next week, and plan to roll out additional information on the initiative in the coming weeks and months. Stay tuned!
For more information about Aderant, email us at [email protected].
