firmTRAK-traks-billing-Efficiency-of-Law-firms

Billing Efficiency and the ‘Time-Value-Money ‘equation of law firm performance

Benchmark estimation of law firm caseload turnover profitability performance is impossible without expert metric reporting. If a firm’s overall operational performance can be measured by its earnings before interest, taxes, depreciation, and amortization or “EBITDA,” the cost of capital required to maintain its assets, the opportunity costs of work process activities correspondent to an attorney group’s billable hours measure the efficiency rate of estimated and actual accounts receivables on record.

The TVM of Law Firm Billing Cycle

A core principle of capital structure valuation, the accounting methodologies defined as time-value-money or “TVM” formulae, determine future earnings will be worth more than the present value of accounts. Based on financial planning and risk analysis of profitability factors, TVM equations are at the base of performance analysis, permitting a firm to understand the efficiency and value of its AR accounts. Work in process or “WIP” estimation of outstanding billing gives further insight into the daily performance of those accounts and their efficiency as operational assets.

How KPIs Enhance AR Efficiency and Firm Profitability

When efficiencies are gained, more time can be spent on billable client work (utilization rate). According to CLIO, an average firm’s utilization rate is ~31% or about 2.5/ 8 hours a day. firmTRAK application provides the efficiency measures a firm needs to determine their TVM.  This application is plug and play with a Practice Panther integration and a  CLIO integration and provides legal data trend forecasting reports out of the box. Gain per diem billable hours back continuously by actively utilizing firmTRAK by measuring where your law firm performs.

Law firms can maximize the highest and best use of each team member’s time with enhanced AR efficiency performance reporting. At firmTRAK, we advise clients on how to boost their firm’s profitability by increasing billable per diem hours based on KPIs. Our software application as a service subscription provides law firm clients improved tracking and control of trust accounting including customer billing, customer invoices, worked time, billed time, collected time, utilization rate, realization rate, and collection rate of those accounts.

 

The Top Helpful Hints for Boosting Law firm Profitability Performance

  • Prioritize TVM optimization of firm AR accounts and other revenue-enhancing activities.
  • Outsource law firm administrative functions to gain per diem billable hours back with continuous WIP analysis.
  • Calculate the opportunity costs of doing administration with Practice Panther and CLIO API integration.
  • Review types of work for efficiencies by team members (i.e., billable and non-billable time, filters by practice area).
  • Review productivity of team members corresponding with analytic reporting of benchmark KPIs.
  • Forecast firm financial performance for strategic planning of future firm profitability.

The Solution for Lam Firm Accounting

firmTRAK’s accounting solution provides law firm client’s the administrative support to maintain good data for the reporting KPIs they require to improve the bottom line. Our law firm reporting software was developed by a lawyer and a project manager working together to create a product that can meet the requirements of law firms for financial control and performance-based decisions.