Coach’s Corner: A Financial Dashboard Shows a Law Firmâs Speed â And If It Has Enough Gas
By Ed Poll, Esq.
Principal, LawBiz® Management
Every law firm is a business and every business should know where itâs going. Like the driver of a car, the lawyer should look out the window to see whatâs ahead (analogous to identifying new matters for generating additional revenue) while glancing at the dashboard to make sure all indicators (in this case, of financial performance) are positive. Those who understand âThe Business of Law®â refer to this as reviewing the financial metrics of the law firm.
Admittedly, todayâs financial information systems and software can and do produce extremely detailed metrics on financial performance. But such complexity of data raises the concern of conveying the information so that it is usable. Go back to the analogy of driving a car. All the driver behind the wheel wants to do is glance at the dashboard and see the speed, the efficiency of how the engine is running, and how much fuel is left. This âdashboardâ concept can be applied to the benchmarked financial metrics compiled by software programs, with the key ones displayed in an easy-to-understand visual format for presentation to law firm management.
Information on the digital dashboard should be visually appealing, presented either as bar graphs or line charts. It should not try to display too much information on one visual â no more than the current 12-month trend plus the same month of the prior year is a good reference point. Use longer timeframes as appropriate.