Document Assembly Can Improve Law Firm Profits

In this week's Wall Street Journal, Vanessa O'Connell writes that, "More than half of the country's top 50 law firms may have overstated a key measure of profitability in a closely watched ranking." The ranking of "profits per partner," published annually by the American Lawyer magazine in May, is the most commonly used gauge of health in the $100 billion global corporate-law-firm industry.

The findings— which were shared with The Wall Street Journal by a person briefed on the report— raise questions about which law firms are making the most profit as the legal industry slowly recovers from a prolonged downturn.

An analysis by Citi Private Bank Law Firm Group reportedly found that 22 percent of the top 50 firms overstated profits per partner by more than 20 percent in 2010.

Part of the problem may be differences in definitions of equity partners, according to Robin Sparkman, editor in chief of the American Lawyer. "As best we can tell, the majority of our numbers about law firm profits—then and now—are identical to, or within 10 percent, of Citi's,” she told the Wall Street Journal. Calculations of overall changes in year-to-year revenue have been very close, she added.

Regardless of which numbers are correct, Document Assembly is one way for law firms to increase their efficiency and profitability. Many of these top law firms are using Exari to automate documents ranging from trust and estate documents to technology licensing agreements to new partner agreements.

Exari Document Assembly serves as both an intelligent precedents system and a platform for online delivery of Do-It-Yourself documents direct to clients. It provides the tools to create smart precedents, clause libraries and packages of documents, using the firm's intellectual property and best practices. You can see how the software works here.

The ROI of Document Assembly

Depending on your accounting method, you may be trying to determine your ROI (Return on Investment), TCO (Total Cost of Ownership), or simply the payback on your investment in a document assembly or document automation solution.

There are a number of elements to consider when calculating the value of a document assembly implementation, including:

Time Savings - Automating your documents means not starting from scratch every time. You can reuse all of your standard clauses and best practices, as well as pull information from your database or CRM systems. Business or Legal users can create documents via a web interview in a fraction of the time it used to take

Cost Reduction - Legal departments don't need to spend hours drafting routine contracts or reviewing the documents, since they created or approved the templates. Think about your fully loaded cost for a senior in-house attorney. Automation can reduce or even eliminate the time they need to spend reviewing standard contracts. They could use that time instead for higher value work.

Faster Revenue - The sooner your contract is finished, the sooner you can book the revenue. And if your contracts are automated, you know exactly what's in them (i.e. no one cut and paste the wrong clause with less favorable terms).

Risk Reduction - Do you know what risks are hidden in your contracts? Do you have all the necessary data available if the regulators come to call? By automating your contracts, risks become more visible, and can therefore be managed before they become a problem. And, a much tighter approach to risk management can be built into contracts. Document automation provides immediate visibility into data to better manage compliance and mitigate risk exposure.

There is solid value in document assembly if you match the right solution to your problem. If you need help in creating a business case for your document assembly initiative, contact us and we can help calculate the value to you and your company.