Financial priorities and performance management in a remote working environment
On a recent webinar panel session I spoke to three finance leaders from Katchr client firms about their experiences to date in responding to the current crisis. I was keen to understand how things had changed in terms of financial priorities, new approaches or tactics being adopted, and how performance management was being handled in a remote working environment.
Financial priorities, it turns out, have not changed much. Or at least not in these three firms. Good financial management does not look much different in good times or bad. In a well-run law firm, the standard measures of success remain the same: recording the hours, billing those hours, getting paid, and replenishing WIP with new instructions.
So what has changed? Certainly the phrase “cash is king” has never been so popular. Whilst the 4 measures above might remain the ingredients of success, the overall objective has now firmly switched from profit to cash. At least in the short term. And the key to maximising cash is of course speed – reducing that WIP to cash cycle time. More emphasis on assessment of risk, stricter requirements for cash in advance, more interim billing, and fee earner accountability for debt are all elements of tighter lockup management we are hearing about.
Across the wider Katchr customer base we have definitely seen more emphasis on self-service reporting. This, I believe, has been driven by two factors.
Firstly, the inability of managers and team leaders to assess the workload and productivity of their people by simply looking across the room or walking around the office, has created a need for other information to make decisions on. Data-driven decision making, whilst the de-facto approach of most finance professionals, has not always been as prevalent amongst the lawyers.
Secondly, especially during the first few weeks of lockdown, this has been an extraordinarily fast changing environment. As a result, monthly, or even weekly reports distributed by a finance team have been out of date before they were even published. With fast and easy self-service access to up to date information, managers have been able to react swiftly as circumstances have changed around them.
One common theme is that, even for the more specialist firms, new business volumes have varied significantly across work types. The ability to repurpose people to ensure that resources are matched to workloads has become an important advantage to those firms with the ability to make those judgements on hard data and not just gut instinct.
Looking forward, the consensus of our webinar panel was that overall revenue was not likely to return to pre-pandemic levels until sometime in 2021, so matching expenditure to income was going to be the challenge for the next 6 – 12 months as focus slowly returns to profit.
So what’s the “new normal” for law firm finance leaders as we enter this new era? Well the way work gets done may change significantly, but what work needs to be done remains the same: focus on WIP, bills, debtors and instructions as the base to build profit and ultimately return to growth.
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