Benchmarking is an effective way to help organizations identify best practices, compare themselves to their peers and reveal areas where there may be opportunities for improvement. Benchmarking in the legal business is no exception. Law firms recognize the value of benchmarking themselves against industry standards in areas including fees, financial performance and staffing ratios.
Earlier this month, Law360 featured an article by HBR Consulting’s Fahad Zaidi that provides insights into mistakes to avoid when building a law library. More specifically, Fahad explores common missteps that law firms should be aware of when considering data analytics tools and new software for their libraries.
Based on the Citi Client Advisory Survey, early 2015 showed tepid growth (0.1% increase) in demand, with firms benefitting from a 2.3% increase in revenue driven by a 2.8% increase in rates. While the overall revenue growth was positive, according to the recent survey, those gains were offset by a 3.9% growth in expenses which starts to chip away at Profit Per Partner and cash flow. Compensation grew by 5.8% which was the key factor in the overall increase in expenses. However, operating expenses were up 2.5% which is slightly higher than overall revenue growth, and highlights the challenges firms are facing in managing their non-revenue based expenditures.