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Building on strong foundations: How portfolio analysis generates strategic insights

By Pieter van der Hoeven.

The human brain is designed to look for patterns. However, our search for those patterns is often hampered by our own preconceptions and an inability to process overwhelming amounts of data. The rise of the computer has changed all that. Modern firms are taking advantage of the boost technology has brought to analytics. With a reliable data foundation, portfolio analysis generates sophisticated insights for the modern law firm. By grouping matters together to identify trends, firms can now monitor everything from resource allocation to financial exposure.

If you ask someone in a firm what makes pricing and legal project management (LPM) so complex, they are likely to say ‘the uncertainty’. After all, before you have begun work, it is very difficult to predict how complex it will be. Will discovery throw up something unexpected? How many departments will end up being involved? For how long? Without a crystal ball, these questions are impossible to answer.

However, as I have explored in previous articles in this series, the majority of matters are composed of the same ‘building blocks’. By analysing the timecard narratives, individual activities can be identified. This data can then be used to create new fee arrangements, by cross referencing historic matters.

On a small scale, these data blocks make pricing and LPM efforts for individual matters better. But on a larger scale, they play an even more essential role when combined in portfolios to identify trends.

The relationship between portfolio analysis and trends

Anyone who keeps a casual eye on the stock market will be aware of the role portfolios play in predicting the future. Trying to predict what the stock market will do would be incredibly difficult without grouping businesses together. Indexes like the FTSE collate the best performing companies together and use the trends in their performance as an indicator for the market as a whole.

It is a story that plays out across most industries. Humans find it very difficult to see trends in large amounts of unstructured data. However, group it into a portfolio, and we can identify trends (or patterns) with ease. If we want to know if our monthly spending is increasing, we don’t look at every transaction we make in turn. We group them together into months and identify whether the overall total is increasing.

This technique is well known to law firms (and would indeed be surprising if it wasn’t). However, it is often under-used, particularly in relation to LPM and pricing. Portfolio analysis has far more to offer than monitoring growth in revenue or recovery rates. In fact, portfolio analysis could arguably be the crystal ball the industry has been looking for.

Manage your resources more effectively

One of the most consistent challenges facing LPMs is resource management. Given the unpredictability of matters, how can you ensure your staffing plan at scoping is still realistic three months later when work kicks off? How do you prevent burnout? Or keep track of the workload of key players in multiple different practice groups?

For firms who have already laid the groundwork, portfolios are the answer. Clearly, to monitor matters, you have to have good data. However, once this is in place, firms can create portfolios for every practising lawyer. Want to know if someone can take on new work? Check their portfolio to see what they currently have active, what stage the matter is at, and to what activities are they contributing.

At Clocktimizer, we use dynamic matter tracking for our portfolios, making it even easier to monitor workloads. Matters are automatically added to portfolios that match a set criteria. Say, matters on which a specific timekeeper is working. This means your portfolio view is always up to date, and LPMs can immediately identify whether resource allocation has been optimised.

Firms can even use portfolio monitoring to actively support diversity and mental health initiatives. In a recent webinar with Stephen Allen of Elevate and Royale Price of Greenberg Traurig, we discussed how portfolio monitoring can ensure diverse members of the team are given equal opportunities and work that is of equal value to their peers.

Reduce bad exposure by identifying trends

But beyond simply keeping an eye on resources, portfolios can be essential in reducing financial risk. Bringing on board a new client always carries a certain amount of financial risk. Is their business stable and do they have sufficient liquidity to pay invoices? This has been particularly challenging during the pandemic, where financial uncertainty has increased dramatically.

The portfolio monitoring approach for new clients by McCarter & English has been innovative and effective. Pre litigation costs are normally too low to merit monitoring. However, grouping all new clients together and setting alerts when budgets are exceeded for each has reduced bad exposure dramatically. Instead of costs spiraling, the team has been able to cut off bad work much sooner or to ensure they are seeking appropriate retainer replenishments.

The same approach can also work where a client runs multiple matters from a single budget. Grouping all matters for a client together keeps track of overall spend. Firms can then have proactive conversations with clients about increases in budget, rather than offering write-offs later. Indeed, portfolio groupings can offer insights on anything - from determining the profitability of specific clients to identifying which matter groups generate the most revenue for the firm. The possibilities are endless.

An ROI for innovation

The final and most underused use case for portfolio grouping is innovation. How can a firm identify whether the money spent on a new piece of technology, or outsourcing a specific activity, was worth it? How can you measure the effect of a different process on the profitability of a matter?

For Clocktimizer customers, the answer is by checking the data. First, they create a baseline portfolio to identify the existing cost of an activity, or the amount of time it takes. Then, they group together matters that make use of the new technology. By comparing data across the two portfolios, firms can clearly see whether the outcome justified the investment.

The advantage to this approach is that it makes it far easier and quicker to identify whether an innovation is successful. Currently, too many firms perform trials with new technology over a number of years and spend considerable time analysing the ROI. Testing on a smaller scale, in an agile way, reduces the financial barrier to innovation.


This article has touched on just some of the ways portfolio analysis can be more effectively used by LPM and pricing teams.

Whether it is the stock market, or a litigation matter, trends are the closest thing we have to making the future more predictable. The biggest challenge is not in recognising that portfolio analysis is effective, but in identifying the sheer number of ways it can be effective at supporting decision making.

Firms need to learn to push the boundaries of their analysis beyond standard financial insights. Instead, portfolio analysis can support strategic choices in everything from risk management to innovation.


About the Author Pieter van der Hoeven, a former M&A lawyer with 15 years of experience in the legal industry, is the co-founder of Clocktimizer, which was recently acquired by Litera. Clocktimizer is an award-winning legal technology solution that helps law firms to understand who is doing what, when, where, and at what cost. Global 100, Am Law 100, and Am Law 200 law firms use Clocktimizer to make data driven decisions around matter management, budgeting, and pricing.

Before starting Clocktimizer in 2014, Pieter was an M&A lawyer at DLA Piper and earned his MBA from Rotterdam School of Management and IE Business School. Pieter can be contacted at

#PietervanderHoeven #legaldata #servicedelivery #lawfirms #legaltech

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