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Question: We’re all working hard to increase revenue from new business and reduce overall spending, but we just can’t seem to improve the bottom line. What is the best thing we can do to improve the profitability of our law practice?
Dean R. Boeschen: To see bigger profits, leverage the work by getting the right level of talent on the job. I always preach to push the work down and fill up the associate and paralegal ranks so that you free up partners’ time to go out and get more business. Paralegals and associates are generally cheaper for the client and more profitable for the business, too. So it can be a win-win.
If you don’t have a deep bench of paralegals or associates to help with your workload, consider looking at a contract attorney or independent contractor relationship to assist on cases. If you are a sole practitioner, the only way to grow beyond the amount of work you can do is to fill someone else’s plate. There are many qualified lawyers in the market at reasonable rates looking for something other than the standard law firm experience. These folks can be utilized as needed, depending on their skill set, to help your practice. Many work from home and are mobile, which can eliminate most of their overhead.
Finally, look for ways to be creative with alternative fees that first meet the client’s needs and second can lead to increasing your profit. If there is a project you have already done for clients, look at doing this at a flat fee. The more you do it, the more efficient you will become with forms or templates to help in the process. The client is happy because they have a set amount they can budget, and the more efficient you become, the less time you spend on the matter and the higher the profitability. Be careful to outline the scope of work covered by the flat fee. Nothing can reduce profitability more than “scope creep.” At some point, you could also consider hiring a contract attorney to handle some flat fee work.
Dean R. Boeschen is Director of Operations at Husch Blackwell LLP in St. Louis, Missouri. He is responsible for managing and advancing the strategic initiatives of the Technology, Manufacturing & Transportation (TMT) industry unit through collaboration with firm leaders. Dean is also responsible for financial management in the unit as well as assisting attorneys in cultivating and enhancing client relationships and strategic planning.
Pam Woldow: On the top line, the revenue generation side, multiply the time you presently spend on dedicated business development activity by a factor of 10. Rather than a random free swim, make it planned, disciplined marketing outreach with an intense commitment to follow-up.
To increase bottom-line profitability, you have to do the following:
1. Embrace metrics to measure both your present profitability and the margins you realize as you bring greater discipline to your practice going forward. If you don’t measure, you will not know if you are improving profitability. And ignorance is not bliss when it comes to profitability.
2. Next, use legal project management principles to enhance work efficiency and reduce the costs of legal service delivery. Construct a realistic action plan for each significant matter and hold fast to the basic components of that plan: Careful scoping, realistic budget, prudent staffing, monitoring and measuring.
3. When a matter starts, involve your team early. Consider both hard and soft factors (i.e., functionality and morale): buy-in, commitment, assigning the right people to the right tasks, assigning tasks thoughtfully and delegating tasks specifically (be particularly rigorous here!). Leave no one in the dark free to wander around randomly or reinvent the wheel. Search out and eliminate bottlenecks, dropped balls and process inefficiencies.
4. Next, monitor work progress and actual-to-budget figures regularly and religiously. If you blow the budget, you’ll blow your profits. Buy or build detailed metrics that measure as you go, not just when you’re done.
5. Finally, keep the client constantly in the loop and avoid surprises. Unhappy clients = low realization = lowered profitability.
Happy client, happy bottom line.
Pam Woldow is a Principal & General Counsel with Edge International. Woldow will be speaking at ALA’s Finance Conference for the Legal C-Suite on Sunday, May 17 in Nashville, Tennessee. Find her on Twitter @pwoldow.
Not every law firm has a full-time administrator or professional management to guide them. Send us your questions via email, or use the comment section below, and we’ll pass them on to the experts at the Association of Legal Administrators. Watch for the best ones here in “Ask the Experts.”
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It sucks when clients take advantage of us and don't pay their bills.January 15, 2019 0 0 0