After several years of watching firm’s struggles, downsizing, splitting off and simply flat lining. It may be time for shareholders to start focusing once again on the best practices to increase partner income.
Gone are the days that you can simply increase prices or reduce costs – amid remarkable transition in the industry – those are short term fixes. Lawyers need to get back to the business of law and focus on the basic business metrics that make them profitable.
Key considerations include: Is the firm benchmarking? Are you reviewing your peers successes and failures through published surveys? Are you tracking days to bill, days to collect? Are they longer or in line with your peers who are turning a profit?
If you don’t have enough work, do you know if it is caused by under-reporting of time or simply that you need to focus on getting more business? Are you providing easy timekeeping tools for your fee earners – to avoid leaving dollars on the table?
Register and download this free white paper:
Nine Signs Your Firm May be Its Own Worst collection Enemy
Lessons from a Law Firm Billing Survey
These questions lead to an important measurement mechanism for law firm management: tracking utilization. Here are six tips for establishing law firm policy on utilization and creating the foundation to measure it consistently:
1. Establish targets. Set individual targets or goals for your fee earners and make sure those targets are capable of being tracked. To borrow from Peter Drucker, what gets measured gets managed.
2. Set increments. Negotiate billing in minimal time increments. Your clients are competitively looking for the best rates and minimal increments of 1/10th an hour is one of the best values you can offer your clients.
3. Use tech tools. Make sure the firm’s lawyers have the tools they need to accurately and contemporaneously track time. If they do not – look at getting one.
4. Develop good habits. Train your lawyers and other fee earners properly. This is especially true for younger lawyers who need to develop good habits early in their career.
5. Balance workloads. If you are focusing on utilization through your financial reports, make sure that you are looking at balancing workloads so that you are more efficiently covering client needs.
6. Leverage administrative staff. Evaluate the effectiveness of your leverage stacks and if necessary employ professional administrative staff to reduce lost billable hours.
* * *
These are just a few ways in which you can start now in getting your firm financially stable.
Often times we have to look inward to things you have been doing far too long in order to make changes that effect the health and long term being of the firm.
If you enjoyed this post, you might also like:
5 Considerations Making a Tech Change in a Law Firm