Financial Benchmarking

The starting point for any successful change programme is a review of how your firm is currently performing and where you want to be within a specified timeframe. I conduct the review process through a financial benchmarking exercise.

Financial benchmarking is important for all law firms because it enhances financial performance, identifies best practices, monitors progress over time, assesses risk and return, and supports strategic decision making. Financial benchmarking also provides a clear picture of your current progress toward your goals. It helps you determine crucial differences in resource management, improving overall efficiency, reducing costs, and identifying potential cost-saving strategies.

Over time, I have developed a detailed checklist that focuses on financial performance and key performance indicators, analyzing the main law firm KPIs such as fee income, profitability, working capital, staff costs, marketing costs, IT, and PII spend.

Results are compared against the performance of similarly sized law firms, as per legal profession benchmark surveys such as the annual LMS, Nat West, and Crowe/IFLM surveys.

The results will identify areas where your firm is competitive against similarly sized firms and, crucially, areas that need improvement. I bring my instinct and expertise, honed over 30 years, to identify the areas that need improvement to become more profitable and to improve bottom-line performance and cash flow.

The starting point for any successful change programme is a review of how your firm is currently performing and where you want to be within a specified timeframe. I conduct the review process through a financial benchmarking exercise.

Financial benchmarking is important for all law firms because it enhances financial performance, identifies best practices, monitors progress over time, assesses risk and return, and supports strategic decision making. Financial benchmarking also provides a clear picture of your current progress toward your goals. It helps you determine crucial differences in resource management, improving overall efficiency, reducing costs, and identifying potential cost-saving strategies.

Over time, I have developed a detailed checklist that focuses on financial performance and key performance indicators, analysing the main law firm KPIs such as fee income, profitability, working capital, staff costs, marketing costs, IT, and PII spend.

Results are compared against the performance of similarly sized law firms, as per legal profession benchmark surveys such as the annual LMS, Nat West, and Crowe/IFLM surveys.

The results will identify areas where your firm is competitive against similarly sized firms and, crucially, areas that need improvement. I bring my instinct and expertise, honed over 30 years, to identify the areas that need improvement to become more profitable and to improve bottom-line performance and cash flow.

Recent financial benchmarking projects with law firms have identified areas for improvement as follows:

Firm A - A high level of PII premium as a % of turnover. Actions taken resulted in the law firm discussing matters with its PII brokers and obtaining an improved offer at the next renewal.
Firm B - Excessive lock-up of WIP. Actions taken resulted in a project within the law firm for lawyers to proactively manage WIP, consequently reducing WIP days and enhancing cash flow.
Firm C – Excessive debtor days. Actions taken resulted in the law firm's credit control process being overhauled with improved debt collection in the firm and enhanced cash flow.
Firm D – A low ratio of fees per lawyer. Actions taken included training in time recording and closer performance management of lawyers, resulting in an improved fees per lawyer ratio.

Depending upon the needs of your firm the scope of the Financial Benchmarking exercise can be widened to include areas such as business planning, risk management and compliance, business development and marketing and human resources giving a holistic view of the operational and financial performance of the firm.

The Financial Benchmarking exercise is priced on a fixed fee basis, dependent upon the number of KPIs involved and the size of the law firm. Whether a Financial Benchmarking exercise is appropriate or a more detailed analysis covering non-financial aspects, get in touch so we can discuss the best approach that will meet the needs of your firm and provide a quote.

Improving Team Performance

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Improving Team Performance

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+44 79166 69095 | ih@hopkinslegalconsulting.co.uk