Firm Management is Like Moneyball
Welcome to this month’s issue of inVOICE. These “5-minute reads,” brought to you by InvoicePrep, are short, informational executive briefs designed for law firm executives and managing partners. They provide practical tips and provoke new ideas to make your management of your Firm more effective. (For our prior newsletters please visit us here).
Last month I wrote about Key Performance Indicators (KPIs) that address a law firm’s bloodline – namely billing and invoicing metrics that can provide insight into a firm’s financial health and the quality of the work being performed, at least in the eyes of the client. The KPIs we outlined help firms to spot weaknesses in their current processes, identify the specific causes involved, and take steps to improve them.
This month I want to share some thoughts that are on the lighter side, but equally important to how law firms should be run now, and how I predict they will be run in the future. I’m interested in what you think, and also about the emotions that these ideas generate for you.
The Practice of Law and the movie Moneyball – Are there parallels?
So I just watched the movie Moneyball. For those of you who don’t know, it’s a 2011 movie starring Brad Pitt as the Oakland A’s general manager Billy Beane, who is forced to build a winning small-market baseball team on a limited budget. With the help of a young, number-crunching Yale-educated economist (Jonah Hill), Billy Beane uses metrics and numbers to assemble a team of lesser thought of players. In short, (and without giving away the ending), they go on to great success and forever change the way the game is played and managed.
On the face of it, this is a baseball movie. But it’s really much more than that. It’s a movie about change and adaptability to change. It’s a movie about the Old Guard and resistance to seeing things in a new light, and to using a new paradigm. It is these bigger picture issues that make the movie so fantastic and why it is so popular. If you haven’t seen it, you must!
I’m going to describe a few scenes in the movie to see if they resonate with you. The first scene is when the young economist describes to Billy Beane why the current thinking in the industry is all wrong. This scene is sometimes referred the to the Medieval Thinking scene. He says (in essence): “There is an epidemic failure within the game to understand what is really happening…People who run ball clubs think in terms of buying players. Your goal shouldn’t be to buy players, your goal should be to buy wins. And in order to buy wins you need to be able to buy runs…and today’s baseball managers show an imperfect understanding of where runs come from… Baseball thinking is medieval. They are asking all the wrong questions.”
There are some direct parallels to this idea and to how firms may think about their own metrics. This is especially true in the property casualty insurance realm, where buyers of legal services are increasingly interested in wins, and not players. Think of all the traditional law firm marketing we see in the industry that focuses on “how good the attorneys are.” Now think about all the questions being asked by insurance claims organizations, all of which are focused on “tell me about your wins.” There is a potential disconnect here that is powerful.
Getting on Base is More Important than Home Runs
The second scene is exciting. It is a scene between Billy Beane and all of his experienced and seasoned baseball scouts. He introduces the concept of wanting players who can do one thing and one thing only: get on base. He points out that if you can’t get on base you can’t score runs. And without runs, there are no wins. So he just wants players who can get on base.
This scene is all about old thinking and new thinking. One scout even says about a certain player, “well, he only gets a lot of walks,” to which Billy Beane says, “Why do I care? He gets on base.” I think to a significant degree, claims and litigation executives understand the importance of “getting on base.” Increasingly they’re not swayed by the player who swings for the fences and who has a fantastic brand name. They want predictable and consistent performance and they want the statistics to demonstrate that.
Adapt or Die
The third scene is often referred to as the “Adapt or Die” scene. It features the lead scout explaining why “you don’t put together a baseball team with a computer. Baseball isn’t just numbers. It’s not a science. If it were, than anyone would be doing it, but they can’t because they don’t know what we know. They don’t have our experience and they don’t have our intuition.” He goes on to say, “you’ve got a scout in there with an economics degree from Yale. You’ve got a scout right here with 29 years of experience. You’re listening to the wrong one! There are intangibles that only baseball people understand!” And, after listening to this appeal, Bill Beane says, “Adapt or die.”
This scene is used in business and management teaching classes, and for good reason. Does it have a direct bearing on the practice of law in today’s environment? I think so. Are clients increasingly using non-industry analytics experts to assemble law firm performance dashboards, metrics and performance grids? Absolutely! Will the law firm leaders who say “but there are intangibles that only lawyers understand” make a compelling argument in the future? I think it will be an increasingly hard road to follow.
Don’t Be a Dinosaur
The last scene I want to highlight for you is called the “Don’t Be a Dinosaur” scene. In it, the owner of the Red Sox invites Billy Beane to leave the Oakland A’s and to be their General Manager. He chronicles Billy Beane’s successful performance, using metrics and statistics and all of the ideas that were new to baseball at that time. He highlights that the A’s had as many wins as the New York Yankees that year, but that the Yankees spent $1.4MM per win and that Billy Beane spent $260,000. He says, “Anyone who is not tearing their team down right now, and rebuilding using the model you used – they are dinosaurs.”
Lessons to Be Learned
You might think it’s strange for a company that helps law firms to invoice and bill their clients better to be talking about such big picture industry ideas. But it’s not at all. For firms, good invoicing is very much like getting on base. Also, the metrics that are inherent to invoicing are all about law firm performance. And we help law firms with those as well.
I hope at a minimum that you enjoy watching the scenes I’ve highlighted. More importantly though, I’m interested in what you think? Can firms benefit by thinking differently about their processes and new ways of describing value to clients? Please let me know!
Tell me what you think!
InvoicePrep enhances law firm profitability by improving e-billing quality and accuracy. When invoices are prepared properly, payment is more prompt and the number of denied charges decreases. InvoicePrep’s system is streamlined, efficient and uses a combination of cutting-edge technology and professionals with extensive legal invoice compliance and e-billing software knowledge. To learn more about InvoicePrep, please visit www.invoiceprep.com