As technology advances, and the provision of legal services evolves, how does this affect the role of the CFO (FD, Head of Finance) in SME law firms?
There are many areas of change for leaders in law firm finance. As automation increases, the business as usual processing of financial transactions has become less of a focus, but compliance, the constant changes to regulatory regimes and ever increasing compliance burden has grown to replace that. Access to data, not just internally generated and processed, but external sources as well, has opened up huge opportunities to seek competitive advantage.
The opportunity for the CFO in this changing environment is to move from financial gatekeeper to essential business advisor. The future focused CFO can develop a new role advising the Managing Partner; supporting Heads of Department; and educating fee earners. The focus of the role changes from tactical to strategic.
Owning the data
In order to truly add value in this strategic role, it is essential that the CFO starts to own the key to sound decision making – the data. Traditionally, electronic data has been owned by IT – purely because they were the only people with the knowledge and ability to manage and access it.
That is (or should be) no longer the case. With the right systems in place, and the right people on board, finance can, and should own the firm’s data. That means taking responsibility for its accuracy, analysis of what it means and communication of conclusions.
And this is not just financial data. In a modern law firm, the measures of business success go well beyond fees and time. Information about the firm’s people and clients, the projects (matters) and risks, form key measures of operational success and progress towards firmwide objectives. Whilst some of this data might be sourced and managed elsewhere (HR, Business Development) surely ownership of the key performance measures derived from these logically sits with finance.
One of the key challenges all businesses face with the proliferation of data, and wider access to that data, is managing to deliver “one version of the truth”. That can only happen if someone in the firm owns all data and co-ordinates the interpretation of that. Technology is available to deliver a unified view across multiple sources to different stakeholders, but that can only really work if there is clarity over what the firm’s objectives are, how they are to be measured, what data is to be used and how accurate the data is. If this is not the role of the most numerate, logical and analytical mind in the firm (the CFO?) then whose role is it?