The
legal
industry
is
facing
a
perfect
storm.
While
profits
in
many
firms
have
risen,
the
push
for
growth
has
led
to
key
financial
fundamentals
being
sidelined.
This
year,
86%
of
firms
plan
to
hike
rates,
yet
75%
anticipate
higher
write-offs
as
discounts
are
used
to
protect
client
relationships.
This
creates
a
dangerous
“doom
loop,”
where
rate
increases
are
eroded
by
concessions,
undermining
long-term
profitability.
To
thrive
in
this
challenging
environment,
profitability
must
be
a
firm-wide
responsibility.
Every
function
–
including
lawyers
and
associates
–
must
understand
how
their
actions
impact
the
bottom
line.
So,
how
can
firms
embed
financial
awareness
across
their
teams
and
drive
meaningful
change?
Building
Financial
Acumen:
A
Three-Step
Approach
To
truly
transform
profitability,
firms
need
a
structured
strategy
that
marries
training
and
incentives
with
the
right
tools.
1.
Train
Lawyers
in
Financial
Literacy
The
latest
market
research
from
BigHand
reveals
that
the
legal
sector
increasingly
acknowledges
the
need
for
a
firm-wide
commercial
culture,
but
the
data
also
presents
a
gap.
While
74%
of
firms
provide
associates
with
WIP/AR
data
and
profit
information,
only
34%
offer
formal
training
on
financial
performance.
Without
this
education,
lawyers
may
struggle
to
interpret
the
data
or
grasp
its
broader
implications.
Financial
training
is
more
than
understanding
spreadsheets;
it’s
about
connecting
the
dots
between
action
and
profitability.
Empowered
lawyers
will
be
confident
and
decisive
in
client
management,
ultimately
strengthening
relationships.
Conversely,
lawyers
lacking
in
commercial
acumen
may
be
unable
to
demonstrate
the
calibre
of
financial
literacy
clients
expect,
impacting
their
ability
to
win
business.
Encouragingly,
64%
of
firms
recognise
the
need
for
better
education
and
plan
to
train
lawyers
on
commercial
awareness,
albeit
at
a
slight
lag;
just
54%
anticipate
delivering
the
training
in
the
next
12
months.
To
truly
embed
a
culture
of
commercial
acumen,
financial
training
must
become
a
priority.
2.
Align
Incentives
with
Profitability
Goals
Embedding
financial
goals
into
performance
reviews
and
incentive
structures
is
essential
to
encouraging
enthusiastic
participation
from
lawyers,
while
also
fostering
a
culture
of
accountability
around
their
efforts
in
boosting
firm
profitability.
More
firms
are
now
aligning
performance
reviews
with
financial
objectives,
with
42%
planning
to
include
metrics
such
as
reducing
WIP,
improving
debtor
days,
and
increasing
matter
profitability.
However,
reviews
alone
may
not
be
enough.
Reward
structures
can
reinforce
these
objectives,
tying
bonuses
and
promotions
directly
to
financial
outcomes.
These
measures
not
only
encourage
better
financial
habits
but
also
demonstrate
that
every
individual
has
a
role
in
driving
the
firm’s
success.
3.
Leverage
Business
Intelligence
Tools
Technology
is
transforming
how
law
firms
approach
financial
performance,
with
Business
Intelligence
(BI)
tools
leading
the
way.
These
solutions
offer
role-specific
insights,
empowering
lawyers,
management,
and
finance
teams
to
make
data-driven
decisions.
BI
tools
provide
actionable
insights
tailored
to
each
role.
For
associates,
they
offer
visibility
into
WIP
and
AR,
helping
them
manage
their
matters
more
effectively.
Finance
Business
Partners
and
data
scientists
–
now
employed
by
36%
and
38%
of
firms
respectively
–
leverage
these
tools
to
align
business
goals
with
financial
objectives,
uncovering
opportunities
like
better
cost
control
and
improved
realisation
rates.
The
numbers
tell
a
story
of
progress.
Today,
44%
of
firms
use
BI
tools,
and
an
additional
20%
plan
to
implement
them
within
the
next
12
months.
Furthermore,
these
systems
are
becoming
increasingly
expected
by
clients,
with
54%
prioritising
technology
adoption
to
demonstrate
value.
Why
Act
Now?
The
pressure
on
law
firms
is
intensifying,
and
firms
that
delay
embedding
financial
acumen
risk
falling
behind.
A
culture
of
financial
awareness
is
essential
for
improving
profitability,
building
resilience,
and
meeting
client
demands
for
value.
By
investing
in
financial
training,
aligning
incentives
with
profitability
goals,
and
leveraging
Business
Intelligence
tools,
firms
can
futureproof
their
operations
and
foster
stronger
client
relationships.
To
navigate
the
challenges
of
2025
and
beyond,
firms
must
act
now.
Download
the
BigHand
2025
Annual
Finance
Report
to
explore
strategies
that
will
help
your
firm
thrive
in
a
competitive
market.
Egford,
Solutions
Manager,
BigHand