Unlocking Hidden Value: How To Use Financials To Boost Your Business Development Strategy

Unlocking Hidden Value: How To Use Financials To Boost Your Business Development Strategy

By The Strategies & Voices Editorial Committee
February 29, 2024 | 5-minute read
Business of Law Financial Management and Measurement Content Type Infographic Additional Options Content Level: Essential Firm Size: Small Firm Size: Medium Firm Size: Large
Business Development
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Despite sitting on a goldmine of financial data, many law firms barely scratch the surface when it comes to leveraging this wealth of information for business development (BD). In an era where data-driven decisions are paramount, understanding and applying financial analytics can help to transform your BD strategy from good to exceptional.

The reality is that most BD teams have some level of access to their firm’s financials — whether that is full, direct or data filtered through the finance team —yet they are often not using it to its fullest potential. To better understand how firms can utilize financial data, the Strategies & Voices Editorial Committee spoke with Carlyse Evans, a senior advisor for Unbiased Consulting and former global director of administration at Baker & McKenzie. Hear what Evans has to say on utilizing financials for resourcing, client management and more in the interview below.

Utilizing Financials for Resourcing and Client Management

First and foremost, firm financials should be a major element in all strategic discussions. Trying to develop a strategy without them is like wandering in the dark — they can shed light on areas where the firm needs to focus, and where it needs to step back. “Financials should feed the BD strategy, which should be consistent with the firm’s overall strategy,” says Evans. “Every partner thinks their clients and industries are the most important. Financials can tell where a firm should really be focused as opposed to trying to cater to the specific interests of different partners.”

When determining resource allocation, it’s important to note different types of work may ebb and flow throughout a month, quarter or year. Financials can help the BD team identify which areas require more or less focus.

Regardless of access level, many BD teams will use financials to look only at their top clients. While this data can be valuable to understand how many practices are servicing those clients, the type of work the firm is doing for them, what industries they are in, etc., it is also important to look at the broader client base.

“If you only look at the top clients, you are missing new, up-and-coming clients,” explains Evans. “They may look like a small client on paper, but it could be the next Google.”

Of course, the financials can and should be utilized to determine the amount of time and resources invested in specific clients.

“Not every client should receive the same investment of BD resources. These resources should be dedicated to profitable clients with growth potential, so looking at clients from a profitability perspective is also important.”

For example, if you see that a major client’s revenues are declining and realization is taking a hit, it might be time to have an honest conversation with the relationship partner to see if there is anything the firm can do to revitalize the relationship, propose alternative fee structures or salvage a relationship that is no longer mutually beneficial. Otherwise, it may mean investing less resources in that client going forward.

On the other hand, if you note a client’s revenue has grown exponentially in the past two years, but only in a specific practice area, the BD team might suggest that the relationship partner hold a care discussion with the client. This should be a bigger discussion than just the firm’s involvement in specific matters, but rather how the client feels about the relationship and what their broader pain points are. This could lead to a larger discussion of ancillary issues that the firm could assist with.

In addition to resourcing and client management, financials are crucial when pitching for work. Whether you have the benefit of a pricing team that can help ensure a deal is priced profitably or working with individual partners, the financials should help guide rates, alternative fee arrangements, team structure and more.

Additional Uses

Evans recommends financials be used daily by the BD team, noting, “Some firms take it to the next level and give client relationship managers all the data they need on a dashboard.” When the available data goes beyond individual clients to firm- or practice-wide data, it can be even more helpful. For example, financials should always be used in major strategic decisions, such as market expansion and diversification, strategic partnerships and investments, risk management and much more.

For those BD and marketing teams fortunate enough to have access to financial data but who may not be using it to the fullest potential, Evans says that many firms already provide a short primer on financials for new partners that could also be shared with BD to help them understand what drives the firm. If the firm has financial analysts, Evans recommends asking them to spend time with your team, making “an investment of a few hours that will pay off in the long run.”

Takeaway: 3 Steps to Get the Most of Firm Financials

Firm financial data is a gold mine of information. Ensure you and your team are using it to its fullest potential through these simple steps:

Step 1: If your BD team does not have access to firm financials, work with firm management to see what is realistic in terms of the firm’s culture and technology. The benefits noted above are well worth the arguments that may be presented (e.g., confidentiality, culture of confidentiality, etc.), and it is easy to make a strong business case.

Step 2: If your BD team has limited access, make the most of it! Show management and the rest of the partners what you are able to do with limited data. Whether that’s finding ways to cross sell a major client or be more creative in pricing strategies, your value-adds will likely lead to increased access.

Step 3: Make sure your team understands how to best utilize the financials. Find a way to educate your team, whether that is through the finance team, LMA courses, experienced BD professionals or otherwise. The financials drive the firm, and often firm culture and partner behavior. There are only benefits to ensuring your team is well educated.

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The Strategies & Voices Editorial Committee