FINAncial process improvement: solutions-focused or a people problem?
The Briefing/HSBC UK Law firm strategy and investment research 2024-2025 found that delivering improvement to cash collection/lockup would be senior business leaders’ very top transactional banking priority over the past year. Over three-quarters (79%) picked it out from a list of potentially competing priorities, compared to under three-fifths (58%) of leaders who signalled as much in our audience survey 12 months earlier.
This year’s poll — covering plenty more points of strategic and operations decision-making — is now underway (and yes, please do take it right away to help us track the trends properly). In the meantime however, a recent Briefing roundtable discussion with leaders at several firms, plus the good people at AI-powered revenue management platform ayora, certainly substantiated the point.
Perhaps it’s only human nature that “nobody cares unless it’s crunch time”, as one finance leader put it — the inevitable race to the finish line for every last drop of cash when a terrifying deadline looms. Another said that lockup rather improved under lockdown, but the return to a sense of normality trickled down to a relaxation on this front too — purse-strings tightening, clients are taking longer to pay up again, and partners are no more willing to chase them down. Business as usual.
One leader quoted in last year’s piece of research pointed out the classic ‘solution’ here was to look to self-interest — tie lockup performance to partner distributions. What better way to firmly underline that cash really is king? But in this forum that idea was also questioned. Is it wielding too blunt a weapon to get the difference in performance that’s desperately needed? And if business process transformation can’t help to close the gap — which it still might — could something more targeted?
If the root of the problem is an only natural tendency to put off a task perceived as undesirable, perhaps senior management teams can tap into more than base fear alone to make things happen. For example, there is also lawyers’ (possibly typical) sense of themselves as higher performing than the next team along. One option is to partially gamify — although perhaps not great fun, depending on the stakes — by comparing (or even publicising) performance in different practice areas. Would you consider naming/shaming individuals if it would help keep cashflow on a smoother track? Whatever the precise structure, leaders noted the importance of having just the right metric to get the initiative to stick — for example, cash outstanding as a % of cash billed might do the transformative trick. You also need to watch out for people attempting to game the system somehow — oh yes, there’s that human nature again — but then again perhaps a little sprinkle of mystery over whatever’s behind the scenes transforming things never hurt anyone’s engagement.
Data in the life of a finance function
For any metrics to work, of course firms really need to be confident in their data quality — by no means a given with so many competing immediate and longer-term management priorities pressing. Perfectly good people may still keep fundamentally bad processes going, as we heard, but bad data surely doesn’t help matters.
For example, it may lead to inefficient chasing of the wrong people for payment, or doing it at the wrong time to make more of a difference — whereas better data, by contrast, could allow you to identify trends and anomalies in client behaviours affecting cashflow. Artificial intelligence running over reliable data may also have a supporting part to play; time where hard work was once effectively wasted unlocked to spend on more strategic financial analysis or continuous process improvement.
After all, there are clearly plenty of other data-linked priorities or problems on our leaders’ minds — including more context-aware pricing opportunities (and fewer post-mortems) to help partners have more proactive client conversations and grow revenue. There is also data to direct how precious time in different parts of the firm is best used by people. Data can even support more targeted partner coaching — offering well-rounded insight into individual strengths and weaknesses. One firm had introduced a periodic ‘partner MOT’ scheme — although it was unclear if this ultimately led to a simple pass or fail …
This leads us on to the correct thresholds for promotion to partner in the first place, which could be reconsidered in rather cost-constrained times. Do examples of good financial hygiene have enough heft as a contributing factor? For consistent application across the firm assessments of suitability would of course need to be centralised somehow to ensure the appropriate scrutiny.
But it probably must be faced that you’re unlikely to see improvement in behaviours overall without at least some semblance of carrot to accompany the stick. There is clearly an ongoing piece of work to help senior lawyers — however confident they seem — to understand their real market value and articulate it with commercial skill. This is not the same thing as their “market rate”, and one leader said firms should dramatically simplify their rate card structure – with any discounts already baked in — to remove all doubt on that front.
Ultimately, of course, from budget to billing, partners today should be in a position to pass well-rounded commercial understanding and skillsets on to future talent in which the firm can be confident. Arguably, that needs strategic and consistent investment in solving the puzzle of people, and clearer (or clever) process — alongside, if not before, any turning to new technology to take resource optimisation to the next level.
Law firms represented at this Briefing roundtable: Bristows, Browne Jacobson, Burges Salmon, Eversheds Sutherland, Gowling WLG, Kingsley Napley, Payne Hicks Beach, RPC
Briefing Finance Leaders returns on 9 September 2025 at the London office of HFW
Read the latest Briefing/HSBC UK Law firm strategy and investment research (2024-2025) in full in the Briefing app
