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Building a Business Case for Law Practice
Management
What You Need To Know
Whatever their size, solo and small law firms often face matters and client relationships that are as
sophisticated and complex as those faced by their larger peers. More often, the difference between
them lies in the resources available to manage the challenges that these issues create. While not
new, the past several years have seen increasing growth in law practice management solutions
that combine case management, billing, and client management capabilities, enabling small firms
to manage the complexities of firm and case management. Despite acknowledging the potential
value of these solutions, many firms delay or forego investment as a result of unclear business
cases and significant time required to deploy and transition to new solutions and processes.
Blue Hill conducted research interviews with 45 law firms with approximately 50 or fewer
attorneys regarding their evaluation and implementation of practice management solutions. This
report highlights the reported experiences of participants with respect to their own investment
drivers, evaluation criteria, and business case development. Benefits reported by firms
implementing practice management included a four to eight hour per month reduction in
non-billable activity as well as 40% fewer support staff than firms with out practice management.
Investment Drivers
Generally, research participants indicated that their interest in practice management stemmed
from the availability of a centralized and integrated management of client, billing, and matter
information. Practice management offers a “single source of truth” that preserves relationships
between these types of information and automates tasks and scheduling of activities. Participants
reported one or a combination of four business objectives:

Reduction of attorney time dedicated to case and business administration

Attorney efficiency in locating and sharing case and matter materials

Increased efficiency on the part of support staff

Reduced costs related to physical file storage or IT maintenance
The first two of these factors largely relates to the reduction of non-billable activities for the
attorneys. Firms largely looked to two primary sources for these reductions: (1) automation of
administrative tasks, such as generating client invoices and reconciling accounts; and (2)
AT A GLANCE
Study Participants
 45 law firms
 Number of attorneys
ranged from 1 to 55
Investment Drivers
 Reduction of non-billable
attorney time
 Increased support staff
efficiency
 Reduced costs of physical
file storage and IT
maintenance
Business Case Factors
 Attorney time
 Support staff time
 IT Costs
 Physical storage costs
 Firm risk
Related Processes
 Client / contact
management
 Scheduling
 Time tracking
 Billing
 Account reconciliation
 Matter management
 Attorney collaboration
 Remote access
Value Realized
 4 to 8 hour reduction in
non-billable time per
month
 20% to 100% conversion
of non-billable to billable
time
 40% fewer support staff
centralized access to matter documents and information. In both cases, participants emphasized
the potential for new revenue and billable time. However, other “soft” factors, such as peace of
mind and improved quality of life were also identified.
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The latter two factors relate to more “tactical” cost reduction concerns. In this light, practice
management was found to offer value by reducing support staff time required to complete
activities. Here, the ultimate impact was found in the increased ability of staff to support firm
activities and administration while maintaining overhead. Larger firms identified this factor with
greater frequency than smaller firms and were less likely to expect to see corresponding increases
in attorney billable hours. Reduced paper and IT storage was often cited as a secondary driver.
With respect to physical documents, the impacted costs relate to paper, printing, real estate, and
SOLE PRACTITIONER
“If I’m not practicing
law, I’m not making
money. I don’t get paid
to run bills. If I’m
document storage and preservation. In the IT context, firms tended to report being driven by
running bills, I’m not
approaching storage limitations or end-of-life issues for on-premise servicer. In the final scenario,
practicing and I’m not
the availability of cloud deployment was found to be a critical driver of the solution sought.
getting paid. Practice
management helps me
Identifying Firm Cost Centers
spend less time on bills
Recognizing that practice management drivers typically relate to attorney and staff efficiency, a
business case for practice management requires an understanding of how it maps to the these
gains. Participants identified eight areas where practice management provided value either by
automating processes or centralizing data. Table 1 summarizies these areas, comparing the
and more time doing
things I’m good at and
that I get paid to do.”
practices of firms wih and without practice management.
Table 1: Summary of Practices Supporting Firm and Matter Management
Without Practice
Management
Client / Conflict

Manually tracked
Management

Solutions used include: email, spreadsheets, and paper files
Scheduling

With Practice
Management

Automated within practice management
Manually by electronic or paper calendars

Automated within practice management

Manually tracked

Automated within practice management

Standalone time tracking tool used

Standalone time tracking tool used

Manual data entry of client and time information

Standalone billing tool for generation of invoices

Automated generation of invoices, bills, and engagement letters
Account

Manual reconciliation

Automated within practice management
Reconciliation

Solutions include: spreadsheets or dedicated accounting tool

Some used dedicated accounting software

Paper files maintained on site

Centrally managed within practice management, integrated with

Paper files maintained by physical storage provider

Documents stored on attorney desktops or in shared folder
Time Tracking
Billing
Matter
Management
Collaboration
Remote Access

By email or paper documents
 VPN, remote desktop, or remote email client
 Cloud file share
client and billing data

Some paper files maintained

By email or paper documents

Internally within practice management

Externally via portals managed by practice management
 Directly via practice management
Source: Blue Hill Research, September 2014
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Eight of these nine areas result in time delays, either requiring individuals to complete
processes manually or in delays related to information retrieval or access. Notably, in the
absence of practice management, organizations report large amounts of time given over to
information entry or search as individuals look for information stored within single instances
(be it a paper file, an attorney’s calendar, or an individual’s email inbox).
Depending on a firm’s size and number of support staff, these activities would be distributed to
attorneys and support staff in differing degrees. Smaller firms with less than ten attorneys
typically reported that while some processes would be shared with support staff, attorneys
were responsible for firm administrative and information retrieval. Firms with more than ten
DIRECT COST SAVINGS:
ELECTRONIC & CLOUD
STORAGE
Paper files and on-premises
IT infrastructure and
storage add direct costs that
may be reduced by practice
attorneys typically reported that most of the administrative activities described were
management. Paper files
performed by support staff. However, even here, information search (typically involving matter
typically create costs for
or client documents as well as schedule management) and time tracking and data entry
firms in the form of the
activities nonetheless created a drain on attorney time. In addition, the upkeep of on-site
paper itself, office space, and
servers creates an additional drag on time, particularly among smaller firms that lack
off-site storage services.
dedicated IT personnel. In addition, most firms profiled lacked any IT infrastructure
redundancy, meaning that server crashes or other incidences would result in additional time
losses for employees until the system could be restored.
The differences in how these activities impact stakeholders within the firm has a direct impact
on how firms conceptualize and measure the value of practice management. Where attorneys
are affected, the time occupied by administrative and information search activities generally
Similarly, on premise
servers result in costs
related to purchase, utilities,
and office space. They also
provide fixed storage
constitute non-billable time, limiting firm revenue generation. Even where these activities are
capacity, requiring firms to
billable, they nonetheless constitute bloat, imposing costs unnecessarily to clients, which can
buy new units either when
have an impact on client satisfaction and willingness to pay. Where support staff are implicated,
filled or when they reach
the cost to the firm comes in its overhead. Here, time unnecessarily occupied by activities
end of life. While not
affects staff’s capacity to support the firm, creating project backlogs or potentially requiring
expansions in staffing.
Accordingly, firms building business cases for practice management must determine how the
activities listed in Table 1 are distributed between attorneys and support staff. This will play a
key role in determining whether to prioritize revenue or overhead as the primary
measurement of the solution’s value. Manual processes in the areas described in Table 1 also
create opportunities for mistakes that expose the firm to risks. Where minor, such as a missed
necessarily addressed by
practice management itself,
these later concerns
typically form additional
advantages of cloud practice
management.
appointment, these issues can nonetheless pile up to impact client satisfaction with
representation. However, more major issues, such as missed court deadlines or mistakes in
conflict checks or firm and client account reconciliation can invite malpractice claims or
professional conduct inquiries. While harder to identify and predict than efficiency issues,
these factors should nonetheless be considered in firm’s evaluations.
Table 2 summarizes these costs and how they are measured.
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Table 2: Costs Reported Driving Adoption of Practice Management
Factors
Measured As
 Potential billable time lost to administrative
activity
 Potential billable time lost to information
search and retrieval
 Excess billable time charged to client
 Amount of billable time per attorney
 Firm revenue
 Client satisfaction and retention
Support Time
 Capacity to complete projects
 Time required to complete tasks
 Time required to maintain files and complete
file requests
 Ratio of support staff required
Direct Costs of
Physical File
Storage
 Printing requirements
 Office space required for files
 Need for third-party file storage services
 Printing costs
 Real estate costs
 Fees charged by third party providers
Direct Costs of
On Premises
IT
 Investment cost of servers
 Fixed storage limitations
 Maintenance and repair




Price of equipment
Number of units required
Fees charged by IT repair services
IT staff overhead









Time loss
Quality of legal representation
Client satisfaction
Malpractice claims
Professional conduct sanctions
Attorney Time
Risk
Scheduling errors
Lost or misplaced files
Mistakes in conflict checks
Errors in account management and mingling
Source: Blue Hill Research, September 2014
Evaluating the Impact of Practice Management
Depending on a firm’s particular drivers, opportunities for improvement, and investment
priority (attorney efficiency, staff efficiency, or direct costs), how it evaluates the potential
value of practice management will differ. Once the firm understands the potential cost of the
investment, it should set expectations drawing from benchmarks available. To aid
organizations in this process, the following sections explore the results reported by study
participants and Blue Hill estimates regarding attorney and staff efficiency.
Results Reported by Study Participants
SUMMARY OF
REPORTED BENEFITS
Decrease in non-billable time:
4 to 8 hours / month
Conversion to billable time:
20% to 100% of saved hours
Blue Hill research participants reported that their attorneys saw a reduction in administrative
Ratio of attorneys to staff:
and other non-billable activities between four and eight hours per month resulting from the
2.8:1
use of practice management. In many cases, the time saved permitted an increase in billable
time, although the amount varied. Smaller firms, particularly firms with less than five attorneys,
tended to see close to 100% conversions from non-billable time saved to billable hours.
Larger firms, generally beginning at about 10 attorneys, still reported attorney efficiency gains,
but tended to give more weight to administrative efficiency. Blue Hill finds that this efficiency
Staffing Requirements:
40% fewer support
employees than
firms not investing
gain resulted in increased staff capacity, and thus reduced headcount. Among participants with
practice management, Blue Hill found a 2.8:1 ratio of attorneys to support staff. Participants
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not using practice management reported a 2.0:1 ratio. In other words: participants with
practice management employed 40% fewer support staff than those without these solutions.
Evaluating Attorney Time Savings
Using the reported attorney time savings of four to eight hours per month, Table 3 models the
potential value of practice management based on the potential for increased revenue. For these
calculations, Blue Hill uses $45 / month as a median subscription fee of a cross-section of SaaS
practice management solutions and $233.70 / hour as the average fee paid to law firms outside
of the AmLaw 200 reported by The 2014 TyMetix Legal View Index. Blue Hill recomends that
firms use their own rates and expected costs in their own projections.
Table 3: Impact of Practice Management By Attorney Time Savings (Per Attorney)
Cost of
Solution
Reported
Time Savings
Median Per User
Cost of Practice Management (Monthly Subscription)
$45
Cost of Practice Management (Annual Cost)
$540
Low
Median
High
Attorney Hours Saved (Month)
4
6
8
Attorney Hours Saved (Year)
48
72
96
Annual Revenue by Conversion of Time Saved to Billable Hours
25%
Conversion
50%
Conversion
75%
Conversion
100%
Conversion
Low
Median
High
Number of Billable Hours Gained (Year)
12
18
24
Increase in Revenue ($233.70 / Hour)
$2,804
$4,207
$5,609
Return (Increase in Revenue – Cost)
$2,264
$3,667
$5,069
Return on Investment
419%
679%
939%
Low
Median
High
Number of Billable Hours Gained (Year)
24
36
48
Increase in Revenue ($233.70 / Hour)
$5,609
$8,413
$11,218
Gain from Solution (Increase in Revenue – Cost)
$5,069
$7,873
$10,678
Return on Investment
939%
1458%
1977%
Low
Median
High
Number of Billable Hours Gained (Year)
36
54
72
Increase in Revenue ($233.70 / Hour)
$8,413
$12,620
$16,826
Gain from Solution (Increase in Revenue – Cost)
$7,873
$12,080
$16,286
Return on Investment
1458%
2237%
3016%
Low
Median
High
Number of Billable Hours Gained (Year)
48
72
96
Increase in Revenue ($233.70 / Hour)
$11,218
$16,826
$22,435
Gain from Solution
$10,678
$16,286
$21,895
Return on Investment
1977%
3016%
4055%
Source: Blue Hill Research, September 2014
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Evaluating Support Staff Efficiency and Overhead Savings
Using the comparative 40% lower staffing levels among firms using practice management,
PARTNER
Table 4 models potential value based on support staff efficiency and overhead reductions. For
25 ATTORNEY FIRM
these calculations, Blue Hill uses $45 per month as an estimated median subscription fee of a
SaaS practice management solutions and a median salary of $59,969 for legal support staff
“The analogy I use is
based on an aggregation of support roles reported by the 2014 Robert Half Salary Guide.
this: imagine we all had
Projections in Table 4 assume use of by all attorneys and support staff in the firm. Blue Hill
to walk to the court
recomends that firms use their own rates and expected costs in their own projections.
house. Then, say we all
Table 4: Impact of Practice Management on Support Staff Efficiency
got Cadillacs. I read the
Cost of
Solution
Impact of
Solution
Comparison
by Headcount
Comparison
by Salary
Value of
Solution
& ROI
Median Per User
manual and take the time
Cost of Practice Management (Month)
$45
to learn all the features.
Cost of Practice Management (Annual)
$540
You didn’t have the time
Ratio of Attorneys to Support Staff (Without Practice Management)
2.0 to 1
Ratio of Attorneys to Support Staff (With Practice Management)
2.8 to 1
I start driving to court.
Reduction in Staff With Firms Using Practice Management
40%
Now, not only are you
Median Salary of One Legal Support Staff
$59,969
to change.
walking, you have to
Without Practice
With Practice
Management
Management
5 Attorney Firm
2.5
1.8
0.7
15 Attorney Firm
7.5
5.4
2.1
30 Attorney Firm
15.0
10.7
4.3
40 Attorney Firm
20.0
14.3
5.7
pass you and my A/C is
50 Attorney Firm
25.0
17.9
7.1
going to be on. Which
Without Practice
With Practice
Management
Management
5 Attorney Firm
$149,923
$107,088
$42,835
15 Attorney Firm
$449,768
$321,263
$128,505
30 Attorney Firm
$899,535
$642,525
$257,010
40 Attorney Firm
$1,199,380
$856,700
$342,680
50 Attorney Firm
$1,499,225
$1,070,875
$428,350
Difference
Difference
Cost
Value
Return
ROI
5 Attorney Firm
$3,664
$42,835
$39,171
1069%
15 Attorney Firm
$10,993
$128,505
$117,512
1069%
30 Attorney Firm
$21,986
$257,010
$235,024
1069%
40 Attorney Firm
$29,314
$342,680
$313,366
1069%
50 Attorney Firm
$36,643
$428,350
$391,707
1069%
push your Cadillac. I
don’t care how long it
took me to read the
manual, I’m going to
one of us is going to have
a better time in court?”
Source: Blue Hill Research, September 2014
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Key Observations and Takeaways
This report is intended to provide solo and small law firms with a basis from which to evaluate
potential investments and develop their own business cases. Among participants, Blue Hill
observes a reduction of four to eight hours a month in attorney time devoted to
administratrive and non-billable work. Among some firms, this time savings resulted in a 100%
conversion to billable time, while others saw more modest gains. In addition, firms with
practice management averaged 40% fewer support staff, offering potential overhead savings as
well. Firms making their own assessments should use these results as points of reference,
rather than stand-ins for their own analysis.
As firms conduct their own evaluations, they will be best served by focusing on the following
core questions in the development of their business cases:
(1) Which processes contribute the firm’s largest pain points lie?
(2) Do those pain points weigh more heavily on attorneys or support staff time?
(3) To what extent does the firm suffer sunk costs or sacrificed revenue opportunities
resulting from current processes?
(4) What additional costs and limitations are imposed by the firm’s current IT
infrastrucure or remote access capabilities?
(5) What professional responsibility and data security risks do the firm’s current and
proposed solutions impose?
(6) What are the expected costs imposed by the solution considered?
By combining these questions with the factors contained in Tables 3 and 4, firms should be
able to develop their own estimates for the pontential value of practice management solutions.
Building from these estimates, firms will conduct their own evaluations and return on
investment determinations. From here, firms should identify the potential value of practice
management and a baseline for evaluating the solutions that they evaluate.
Author: David Houlihan, Principal Analyst, [email protected]
Published: September 2014
Blue Hill Research is the only industry analyst firm with a success-based methodology. Based on the
Path to Success, Blue Hill Research provides unique and differentiated guidance to translate corporate
technology investments into success for the three key stakeholders: the technologist, the financial buyer,
and the line of business executive.
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