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Beyond the expertise of its personnel, the competitive advantage of a legal firm may often be determined by its cost management strategy and its ability to respond with agility to the industry’s growing trends. One growing trend offering firms a strong competitive advantage, the demand to provide predictive matter costs for alternative billing, has transformed the way firms handle billing methods and manage business processes.

Recent studies demonstrate that firms using a proactive approach to alternative billing, including the use of business analytics to quantify document management costs, are more profitable than firms that respond reactively to alternative billing methods. However, a large majority of U.S. firms have yet to incorporate business analytics as part of their document management strategy, a decision that can potentially eat away at the firm’s profits.

According to a recent Altman Weil study of large- and medium-sized firms, a total of 97 percent of firms polled offered billing in a form other than hourly, yet a mere 28 percent of these firms take a proactive approach. As the study indicated, while reactive firms made up the large majority of respondents (72 percent of firms polled), the smaller, proactive population was found to be more profitable than their reactive counterparts. Of the proactive firms, 84 percent reported that arrangements other than hourly billing were at least as profitable as their hourly billing, while only 51 percent of reactive firms found their alternative billing arrangements to be at least as profitable as their hourly billing.

While this stark contrast reveals an evident competitive advantage in favor of firms offering alternative billing, their profitability can be directly impacted by their billing accuracy. In other words, viability forces firms to fully understand and accurately quantify print costs, not only for expenses relating to billable client cases, but also internal business processes. It is estimated that the individual attorney at the average firm prints anywhere from 20,000 to a staggering 100,000 sheets per year. Yet a majority of firms are “blind” to the exact quantity of documents their firm is printing and how this cost directly impacts their bottom line, putting them at a disadvantage to achieve their true profitability. If these costs are not transparent, then the firm is not truly mastering its business.

Making Costs Visible

Before a firm can accurately project costs for billable projects, it must gain a comprehensive view into its asset utilization and performance. Understanding the cost metrics associated with printing can allow firms to strategically manage assets, and in turn, help increase their return on investment (ROI). With the help of a discrete capture and reporting solution, this data can provide visibility into the true costs associated with printing, empowering firms with the quantitative insight needed to make more profitable decisions toward improved efficiency, such as document workflow improvements and fleet consolidation.

The increased visibility offered by managing this activity within the firm (often referred to as managed print or document services) can also offer critical information for firms entering into the request for proposal (RFPs) process, allowing them to participate in an informed conversation with technology providers. With RFP contract terms typically lasting three to five years, firms are challenged to remain vigilant and knowledgeable about the discernible value of asset usage. Extensive trend analysis and forecasting provided by metrics can allow firms to stay on top of asset operations, preparing them with the awareness needed to enter into RFPs well-equipped to leverage and discuss the real needs of their internal operations.

Predicting Costs for Client Projects

With an increasing number of general counsels requesting cost allocation transparency for potential cases before retaining the firm, if the firm cannot make these projections, it may risk losing the bid. The metrics offered by a managed document service (MDS) program can help with a valuable aspect of the transparency firms require to meet the increasing demand for alternative billing arrangements.

Establishing integrated controls over assets can allow firms to take a proactive stance in managing their assets, allowing them to gain transparency into the total cost of ownership of devices and associated consumables. Miscalculations and gaps in a firm’s cost recovery process can diminish its profits, but capturing and reporting billable costs can contribute to the remediation of excessive or unmanaged operating expenses, allowing firms to bill clients more accurately and recover costs.

Firms can leverage the same data that MDS provides for expense analysis to help improve their ability to address another area of growing importance to law practices: compliance. Compliance officers can identify document touch points and use metrics to build business cases for workflow remediation, using adjacent tools within the MDS program to deploy workflow rules to desktops. Compliance efforts can also benefit from collecting metrics by allowing firms to generate historical reports that can be used in response to a compliance audit.

Firms are not truly in control of their business until they can quantify the costs of their document processes. When firms lack the analytics to validate that document management costs are accurately allocated and billed, they cannot be confident that they are maximizing their savings. Conversely, when firms decide to take a proactive approach, leveraging analy­tics as part of their greater business intelligence strategy, they can position themselves for increased profitability, helping to redefine their competitive advantage.

Beyond the expertise of its personnel, the competitive advantage of a legal firm may often be determined by its cost management strategy and its ability to respond with agility to the industry’s growing trends. One growing trend offering firms a strong competitive advantage, the demand to provide predictive matter costs for alternative billing, has transformed the way firms handle billing methods and manage business processes.

Recent studies demonstrate that firms using a proactive approach to alternative billing, including the use of business analytics to quantify document management costs, are more profitable than firms that respond reactively to alternative billing methods. However, a large majority of U.S. firms have yet to incorporate business analytics as part of their document management strategy, a decision that can potentially eat away at the firm’s profits.

According to a recent Altman Weil study of large- and medium-sized firms, a total of 97 percent of firms polled offered billing in a form other than hourly, yet a mere 28 percent of these firms take a proactive approach. As the study indicated, while reactive firms made up the large majority of respondents (72 percent of firms polled), the smaller, proactive population was found to be more profitable than their reactive counterparts. Of the proactive firms, 84 percent reported that arrangements other than hourly billing were at least as profitable as their hourly billing, while only 51 percent of reactive firms found their alternative billing arrangements to be at least as profitable as their hourly billing.

While this stark contrast reveals an evident competitive advantage in favor of firms offering alternative billing, their profitability can be directly impacted by their billing accuracy. In other words, viability forces firms to fully understand and accurately quantify print costs, not only for expenses relating to billable client cases, but also internal business processes. It is estimated that the individual attorney at the average firm prints anywhere from 20,000 to a staggering 100,000 sheets per year. Yet a majority of firms are “blind” to the exact quantity of documents their firm is printing and how this cost directly impacts their bottom line, putting them at a disadvantage to achieve their true profitability. If these costs are not transparent, then the firm is not truly mastering its business.

Making Costs Visible

Before a firm can accurately project costs for billable projects, it must gain a comprehensive view into its asset utilization and performance. Understanding the cost metrics associated with printing can allow firms to strategically manage assets, and in turn, help increase their return on investment (ROI). With the help of a discrete capture and reporting solution, this data can provide visibility into the true costs associated with printing, empowering firms with the quantitative insight needed to make more profitable decisions toward improved efficiency, such as document workflow improvements and fleet consolidation.

The increased visibility offered by managing this activity within the firm (often referred to as managed print or document services) can also offer critical information for firms entering into the request for proposal (RFPs) process, allowing them to participate in an informed conversation with technology providers. With RFP contract terms typically lasting three to five years, firms are challenged to remain vigilant and knowledgeable about the discernible value of asset usage. Extensive trend analysis and forecasting provided by metrics can allow firms to stay on top of asset operations, preparing them with the awareness needed to enter into RFPs well-equipped to leverage and discuss the real needs of their internal operations.

Predicting Costs for Client Projects

With an increasing number of general counsels requesting cost allocation transparency for potential cases before retaining the firm, if the firm cannot make these projections, it may risk losing the bid. The metrics offered by a managed document service (MDS) program can help with a valuable aspect of the transparency firms require to meet the increasing demand for alternative billing arrangements.

Establishing integrated controls over assets can allow firms to take a proactive stance in managing their assets, allowing them to gain transparency into the total cost of ownership of devices and associated consumables. Miscalculations and gaps in a firm’s cost recovery process can diminish its profits, but capturing and reporting billable costs can contribute to the remediation of excessive or unmanaged operating expenses, allowing firms to bill clients more accurately and recover costs.

Firms can leverage the same data that MDS provides for expense analysis to help improve their ability to address another area of growing importance to law practices: compliance. Compliance officers can identify document touch points and use metrics to build business cases for workflow remediation, using adjacent tools within the MDS program to deploy workflow rules to desktops. Compliance efforts can also benefit from collecting metrics by allowing firms to generate historical reports that can be used in response to a compliance audit.

Firms are not truly in control of their business until they can quantify the costs of their document processes. When firms lack the analytics to validate that document management costs are accurately allocated and billed, they cannot be confident that they are maximizing their savings. Conversely, when firms decide to take a proactive approach, leveraging analy­tics as part of their greater business intelligence strategy, they can position themselves for increased profitability, helping to redefine their competitive advantage.