How are results currently measured in law firms?

“You cannot manage what you cannot measure and you cannot measure what you cannot describe”

The publication of the annual global ranking of firms by Acritas (now the Thomson Reuters Global Elite Brand Index), which assesses different aspects of firms, such as brand awareness or the favorable perception of stakeholders, among others, has become a tradition. But is that all that is currently measured in the legal landscape? Marc Gericó, our Managing Partner, analyzes this for Ámbito Jurídico.

In the past, for law firms, an accounting analysis of expenses was the main tool and indicator of their business growth. Today, however, it falls far short of meeting the demands and needs of an increasingly globalized and competitive economy.

Gericó states that “the VUCA environment in which organizations are currently operating, exacerbated by the healthcare crisis, represents a flood of opportunities, but also threats. Although the framework of action of firms is potentially expanded, this situation can turn against them if it is not properly managed”.

What should companies pay attention to if they want their business to thrive?

Today, there are indicators for measuring performance results that are complemented by the Balanced Scorecard (BSC) concept with financial and non-financial indicators, “with the latter acquiring considerable importance, given the competitive advantage that the exploitation of intangible assets represents for a law firm,” adds Gericó.

During 2022, firms will focus much of their efforts on the BSC, which will transform the objective and strategy into tangible objectives and indicators from the perspective of the client, internal operational processes, learning and growth.

Financial perspective

Represents the long-term goal of the organization, which will be to achieve superior returns based on invested capital. Balance sheets and periodic indicators should play an essential role “in reminding the organization’s executive team that improvements in quality, response times, productivity and new services are means to a specific end, not ends in themselves.

Customer perspective

The firm must be clear about its Key Clients, who will value the value proposition offered in each specific case. To this end, they must establish measures focused on the attributes of the service -for example, quality and price-.

Internal process perspective

“From the identification of customer needs to the satisfaction of those needs, a complete value chain is built where a whole series of intermediate stages are found, among which are the innovation process, the operational process and the after-sales service process,” adds Gericó.

Learning and growth perspective

These drivers come from employees, systems and organizational alignment. Despite being affected by artificial intelligence applications, the human capital of the future will have to be made up of partners and workers who can efficiently perform the functions of their regular job.

As Gericó points out, “the BSC has gone from being only a system of improved indicators to become a complete central management system for the law firms of the present and the future, essential for the correct performance of the business, where ‘you cannot manage what you cannot measure and you cannot measure what you cannot describe’”.

If you want to read the full article in the Ámbito Jurídico, click here.