Start as you mean to go on: are top firms as efficient at managing matters as they might be from the outset?

A third believe the firm's average new matter can be three to five days before seeing the first billable hour — but do they count the cost?

Although more than two-fifths (41%) of finance leaders believe their firm is currently putting in a solid performance when it comes to efficient onboarding of new clients —  preparing the ground so that fee earners can begin their work as promptly as possible — it’s immediately clear that none would describe this initiation as a “very strong” part of the matter lifecycle. Almost three-fifths (59%) report their impression is that the beginning of the client journey, when key details are supposed to be captured and considered, is “reasonable” at best.

PARTNER PERSPECTIVE

The cost of inconsistency

Paul Foster, head of product, sa.global

The gap between how onboarding feels and what it actually produces is where most of the downstream cost originates. Closing that gap doesn't require a transformation programme. It requires firms to start treating onboarding as the commercial function it already is, and building the discipline, data and connected processes to match. 

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It “takes too long” one clarifies — or perhaps complains — with “systems that are inefficient and difficult to use”. Several point to a situation they believe requires too much manual intervention of one form or another — whether that is requesting clients provide the correct details at the right points, or lawyers themselves providing what their firms need to know about a relationship in a timely manner before they begin work. One respondent highlights a lack of process consistency being applied in the area across a firm’s different practice groups or offices as a significant challenge to efficiency — and another that these processes don’t support the capture of some key data points that would be useful for further analysis to finetune operations in future. If one thing is clear, it’s that leaders believe technology should be able to do more to streamline what can be a considerable effort involved — automating initial capture and onward flow to the right places.      

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Then asked to rate client onboarding as currently handled for the effectiveness of integration with other firm management systems to support ‘one version of truth’ — guiding effective prioritisation, decision-making and escalation — leaders could also only rate the firm’s current setup as an average 6 out of 10.

Andy Stephens, chief financial officer at Browne Jacobson, says: “There are two key complexities — the efficiency of the fee earner in discussion with the client and efficiency of the client in returning the information. The client just wants the job done, the lawyer just wants to do the job, so we do want to make it as easy to comply as possible. We’re actively exploring the technologies available to help with streamlining, and that investment to drive the efficiencies has to be a firm priority.

“Fee earners should also only need to visit a single place to view a dashboard that brings everything in the lifecycle of that matter together — with the same approach right across the firm rather than separate systems for every different legal discipline.”

With a pattern of business systems across areas of operations shifting to the cloud, Stuart Owen, group finance director at HFW, sees an opportunity to review how well onboarding integrates with others, as well as to explore new technology coming on the market. For example, he says: “There are tools and platforms that can involve AI in a lot of the conflict-checking, with appropriately rigorous oversight, to reduce the labour intensity in parts of the process.”

The time to action

Only 14% of leaders believe it takes less than a day, on average, for a lawyer to reach a position where they can begin billing a new client — almost a third that this could take anywhere between three and five days. And connected to the concern previously raised as to effective analysis of the situation for future business improvement or downstream impact, one in 10 say they don’t — or can’t — track this concept as a metric of organisational efficiency at all.

When it comes to the likely impact on profitability, it’s an absence that’s even more striking — over a quarter (27%) believe they don’t have the data to explore how much billable value may ultimately be written off as a result of inefficient onboarding (almost another third couldn’t say). However, nearly a quarter (24%) think it could amount to between one and 10% — clearly a considerable sum to potentially be leaving on the table as a result of administrative inefficiency.

22%

Of finance leaders are confident work always begins with a complete letter of engagement in place to clarify terms

Some of a firm’s matters may simply be prioritised for setup where the client urgency really exists — perhaps a long-running litigation. Another possibility, it emerges, is for a firm first to set up a temporary matter where lawyers can be time-recording for some background work, but where none can be released to a client until the relevant checks are complete. The matter can also be frozen out again if this doesn’t happen.

Mark Johnson, chief financial officer at Flint Bishop, says: “Once the matter is officially set up, the idea is then to return to the time recorder and reassign the value. There are alerts for that, but sometimes of course a lawyer will leave it or forget the detail. That’s one place with genuine leakage potential.”

It may be a challenge to absolutely tie lost revenue back to onboarding specifically, but multiply that unposted time, where billable, by an average charge-out rate and there is an indication.

Internal or client delivery delay?

In spite of the process challenges already identified, it’s also notable how — after legal compliance complexity, which is dependent on circumstances such as business structures and risk profiles that can scarcely be avoided — the hurdle leaders are by far most likely to cite is managing to collect all the relevant client information in good time (41%). Potentially manual internal management is less likely to be seen as a significant drag on delivery, including passage of information through internal channels (24%) and securing sign-off from the client with commercial terms all agreed (17%). Only 3% believe the process of agreeing the fee is a particularly significant factor.

Owen explains: “For an international firm like ours the complexity and thoroughness of AML and KYC checks has increased significantly — notably concerning sanctions, since the Ukraine war, and indeed we’ve increased investment in risk and compliance expertise across regions to support that.”

Stephens says: “It’s worth saying that sometimes there is some very appropriate caution and delay.” Standard work carried out for a longstanding client, for example, can be a very different proposition to something entirely new that requires careful international money laundering or other checks – the increasingly cross-border matters some firms work on have more sets of regulations to consider. “We currently treat all client matters as though they could fall into AML scope at some point in the future,” he explains.

“However, we have a central client matter inception team that sits with finance. So you have that team, credit control and billing resources all dealing with the same data in the same system. It is consistent across all offices in the UK and Ireland, and it means there isn’t constant back and forth with a fee earner if they have filled the questionnaire correctly — rather it triggers a workflow.” A next step would be to allow the client to interact directly with the process themselves using best-practice technology for the purpose.

Johnson adds: “It’s incumbent on us to ensure the compliance process happens as quickly as possible, but without losing any of the essential rigour in that process.” It may be particularly tempting to introduce AI to the work, he observes. “But what is the confidence that AI is doing the right thing? You don’t want to increase your risk profile, which will ultimately cost more in the long run.

“It is interesting to look at where a function sits in terms of ownership and accountability, and whether that has an impact on the priorities. Finance will obviously take a very objective view of accuracy — another area might be more likely to see a slow process and want to speed it up.”

Strength of engagement

Nevertheless, only just over a fifth (22%) can say with confidence that a letter of engagement is always in place for one of the firm’s clients before a piece of work starts. Many more (56%) say that this is ‘mostly’ the case, but some matters will still proceed before documentation is complete, or indeed that the process is unfortunately an inconsistent one (23%).

Johnson continues: “Clearly, we don’t want to slow the client process down unnecessarily, particularly where a partner’s perception may be that it’s completely safe — but these things never become a problem until they do, and then suddenly they’re potentially damaging. If you’ve started work without terms in place, lawyers are also notoriously reluctant to go back to a client when the scope changes. An absence of commercial terms sets you up for risk later down the line.”

Leaders are largely confident in the overall onboarding journey today when it comes to a client’s experience of touchpoints as part of the service — but clearly, while pleasing customers is a priority, the firms they run must also manage to optimise financial performance, and particularly at a time of much volatility and unease at the macro level. This means identifying and addressing any frictions hampering the smooth running of processes as persuasively as possible, tackling trends in errors or discrepancies raised, and subsequent write-offs, that mean the cash isn’t coming in. More than half (55%) are also ultimately confident onboarding data is fit to support the work of billing teams on this when the time comes, but that leaves 45% aware it could be significantly better. Some targeted strategic transformation work may be in order to make the difference. 

PARTNER PERSPECTIVE

The cost of inconsistency

PAUL FOSTER, HEAD OF PRODUCT, SA.GLOBAL

Many sayings highlight the importance of preparation before commitment. ‘Marry in haste, repent at leisure’ and ‘measure twice, cut once’ remind us that rushed preparation often leads to unwanted failure. 

Let’s add another: ‘matters open quickly. Billing happens slowly’. It perfectly summarises the various findings captured in our recent piece of research. 

Onboarding isn’t administration. It’s the first commercial decision. 

The first observation is how consistently onboarding is treated, dismissed almost, as an administrative, back-office function, when surely, it’s the first commercial decision a firm makes about every matter. Rate structure, scope, billing preferences, commercial terms: all happen at onboarding — or later, at greater cost. So, how can this process be dismissed so casually when its impact is felt so severely downstream? 

This is where the hidden costs creep in: work that begins before the matter is formally open. Fee earners record time before a matter exists in the system, intending to back-allocate later, but in practice that reconciliation is rarely complete. An estimated 3-5% of billable value disappears this way, not as a write-off in any report, but as time simply never captured. 

If someone told you they would increase your salary by 3%, just for getting processes in order, you’d move mountains to make it happen. So why do firms continue to carry out the same practices? 

Adequate isn’t good enough, and we all know it 

Not one respondent consistently had commercial terms locked before work begins, nor billing data confidence, integrated systems, or a governed process ensuring matters are billing-ready before fee earners start the clock. That is not a criticism. It is an honest description of where the market is.

Many describe their onboarding process as ‘adequate’. Imagine if clients constantly rated the firm’s services adequate. There would be an outcry. Heads would roll, with root-and-branch changes, urgent reviews, partner conversations. So why do firms still accept adequate for a process so closely tied to financial performance? 

There’s a better way. It starts with recognising the problem 

The gap between how onboarding feels and what it actually produces is where most of the downstream cost originates. Closing that gap doesn't require a transformation programme. It requires firms to start treating onboarding as the commercial function it already is, and building the discipline, data and connected processes to match. 

‘If there’s a will, there’s a way’. The will, I suspect, has always been there. It’s the clarity about what needs to change that has been missing. 

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Get on the mailing list for our exclusive finance research, hear about dedicated roundtables for senior leaders like you making decisions about finance, and be part of the Finance Leaders community.