I’ve previously posted on 3 Geeks about how budgets sit at the core of AFAs and on methods for building reasonable budgets. With that concept in mind, a firm needs a tool set for creating, modeling and then monitoring AFA budgets. Creating is something previously discussed. Modeling is playing with the budget; shifting tasks, adjusting leverage and generally driving numbers that will benefit clients and lead to profitable engagements for firms.
Budget monitoring is the long-haul, oar-in-the-water effort of making sure efforts stay on budget and firms remain profitable. As well, these monitoring efforts will create a knowledge base that will enable more effective budget creation and modeling going forward.
So what tools are out there? The short answer: not much. The Lexis owned Redwood Analytics is the the most evolved tool I found. And it’s on a reasonable development path. Redwood has been around a while and with a focus on law firm financial analysis, was well-poised to meet the emerging AFA needs. So it’s good to see a viable tool on the horizon.
Beyond Redwood, I found vendors willing to build something. This is not encouraging. For all the push for AFAs, a lack of tools will serve as a serious impediment to adoption. A vendor building a one-off custom application is not a good option in my opinion. These leave firms in a dead-end position. The power of a commerically developed tool with ongoing development will go a long way towards driving AFA adoption and success.
On a side / related note, the in-house law department vendors seem to be heading in the same direction as Redwood. I suppose with their more immediate demands for AFAs, legal departments should be driving this development.
I must say I am disappointed at the lack of tools for managing AFAs. In the short-run firms will be doing a lot of AFA management manually. Not the best situation, but one we’ll live with for the time being.