From case plans to employee turnover, advice to keep more green in your jeans.
This issue of
Law Practice offers up some great technology tips. Inspired by the tips theme, we’ve picked the brains of some of our colleagues for their favorite profitability tips. Specifically, we turned to friends who also work for bar associations and professional liability insurers, providing information on practice management issues every workday. And our colleagues didn’t disappoint. Their advice will appeal to lawyers of all stripes, but much will be particularly valuable to solo and small firm practitioners. So here, without further ado, are pointers to make your firm more profitable.
Pretend It’s a Rainy Day
From Patricia Yevics, Director, Law Office Management, Maryland State Bar Association
Manage your expenses as though money were perpetually tight. I knew a managing partner who said, “If we had managed the practice as well when times were good as when times were bad, we would not have noticed that times were bad.” Unless there is a compelling reason to spend more with a particular vendor—such as its outstanding service, it was a business referral from a key client, or your sister owns the company—then if you can get it for less, do it.
Develop “Case Plans” in the Form of Timelines for Your Clients’ Benefit (And Yours, Too)
From James A. Calloway, Director, Management Assistance Program, Oklahoma Bar Association
When you are setting up a new matter, here’s a way to add value, clarify fees and be cost-effective at the same time. Let’s say that in a probate case, for example, a consumer client indicates she will likely hire Main Street lawyer. She then asks about the fee. In response, the lawyer produces not an intimidating document titled “Attorney-Client Fee Agreement,” but one called “Case Plan.” This document appears in the form of a timeline and is more graphically designed than the standard legal document. The lawyer explains the anticipated chain of events—drafting and filing documents, sending notices and so on. The document clearly notes the fees at each stage of the proceeding. Because it will also include many typical provisions and disclaimers, much of the document can thus be preprinted as a form. Of course, the outcome of some steps in the matter may determine certain variables along the way (such as the proceeds from sale of property within the estate), so it should contain blanks that can be completed with ranges or examples as you review it with the client.
Make Every Minute of the Day Count
From Peter Roberts, Advisor, Law Office Management Assistance Program, Washington State Bar
Most lawyers don’t realize that every little bit of time during the day matters. Making use of time between appointments, while traveling or while waiting for hearings can really add up. For example, just six minutes more per day (that’s just 0.1 on the timesheet) billed and collected can equal about $4,000 per lawyer in a year.
Make Your Accounting Paperless
From Catherine Sanders Reach, Director, ABA Legal Technology Resource Center
If you don’t already have one, buy a good accounting software program, so you can enter all your income and expenses into it. Scan all paper receipts and store them in appropriate folders on your computer. It’s nice to have a backup copy and it will also make it easier to bill clients and prepare tax filings. While you don’t need special hardware, if you have a giant floor-model office scanner and you keep putting off the task because you can’t manage to get away from your desk, consider a receipt scanner that comes with its own business and tax software or can scan directly into QuickBooks.
Draw a Line in the Sand
From Reid F. Trautz, American Immigration Lawyers Association, Washington, DC
Build a reputation for not tolerating any nonsense around getting paid for your work. Make sure you fulfill your part of the bargain by setting fair and reasonable fees that have been fully and carefully discussed with the client in advance and throughout the course of the file—and then insist that the clients meet their obligations to you. Don’t cut deals. Don’t accept excuses. Subject to your ethical obligations, don’t keep working for clients who fail to pay. After a while, you will find that clients who don’t want to pay will screen themselves out of your client base. Remember, it is a myth that it is always better to have more clients; what is critical to success is to have more of the
Save Money by Reducing Employee Turnover
From Ellen Freedman, Law Practice Management Coordinator, Pennsylvania Bar Association
Check out Web sites devoted to calculating the cost of employee turnover in firms. For example, take a look at the sites of Bliss & Associates (
www.bliss associates.com) or Advantage Hiring (
www.advantagehiring.com). Or do a Google search on “cost of turnover.” Experts agree that the true cost of turnover is equivalent to somewhere between 1.5 to 2.0 times the annual salary of the exempt departing employee. For a nonexempt employee, the cost averages about 0.75 times the employee’s salary. Plus, there are hidden costs like the loss of institutional knowledge and lowering of employee morale. Keep this in mind when reviewing your benefits package, or when considering the percentage for the next salary increase. Take advantage of opportunities to make improvements by performing exit interviews regularly.
Keep Up With Your Time, Even If You Don’t Bill by the Hour
From Deborah E. Gillis, Risk and Practice Management Advisor, Lawyers’ Insurance Association of Nova Scotia
Even if you are working on a contingency fee basis, keep good time records. This way you’ll know how much it really costs you to provide a particular service—and you’ll have what you need to know should you decide to move to flat-fee billing in certain types of cases. Plus, tracking all your time in detail can help if you are asked to justify your account based on a time-spent basis. Also, your time records can corroborate when (by date and hour) advice was given and instructions received, which is particularly helpful if the client has a different recollection. And be sure to have an effective billing and collection process in place to avoid having to sue for fees. Actions to collect fees regularly result in either negligence claims or professional responsibility (discipline) complaints by current or former clients.
If You Can’t (Or Won’t) Draft a Budget, Let Your Checkbook Help in the Scramble
From Laura Calloway
I used this tip very effectively when I was a solo practitioner and found myself always scrambling for the money to pay quarterly taxes. This is what I did to resolve the quarterly panic: Each month, on the first day of the month, I would deduct one-third of the estimated quarterly tax amount from the balance in my operating account ledger. I wouldn’t write a check, I would just deduct the amount from the balance. Then on the day the estimated quarterly tax payment had to be put in the mail, I added back the amounts I had deducted and wrote the check. This way, I was always sure to have the amount needed because I couldn’t “see” it sitting in the account in the interim (burning the proverbial hole in my pocket), and it was earning interest for me the whole time.
Calculate How to Work Smarter and Not Harder Using Your EHR
From Dave Bilinsky
My favorite tip starts with knowing your true effective hourly rate (EHR). Take the amount you collected (versus billed) in 2007 and divide it by the total number of hours you logged, including administration, CLE, pro bono and similar activities. The resulting figure (say $200,000/2,000 = $100) is your true EHR. Compare it to your quoted hourly billing rate. Look at the difference. Now do the same calculation, but this time deduct out the hours spent on office administration. Notice how your EHR has improved. Now, here is the last and most important part: Why are you spending all this time on administration? If you can hire someone who can do the work for less than it costs you to do it at your new improved EHR, you will be working smarter and not harder—putting more green in your jeans in the bargain!