Business Basics for Law

Mary Juetten Sept 29, 2016 1

Mary Juetten Business Basics


AgendaWhat are after Law School Aspirations? – solo, small, large, tech, other?Business Basics Start with Clients TechnologyQuestions

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Business Basics

Mary Juetten Sept 29, 2016

4Mary Juetten Sept 29, 2016

BUSINESS 101Law firms are businesses regardless of sizeAccounting, payroll, KPIs are in addition to the practice of law & can be overwhelming for small lawOutsource or use technologyKPIs are for all size firms & big firms will appreciate business savvyBig Law: more zeros and support but still a business & appreciate business acumen


CASH | CLIENTNumber one reason for business failure is lack of cash flow.

Cash is King Clients bring cash & repeat business

Develop KPIs that support positive client experience and collections.Don’t dwell on billing; focus on happy clients and collections.Use the KPI data for creating pricing and billing models.


Thomson Reuters Small Law Firm KPI and Benchmark SurveyParticipants:

• 690 surveys sent out to customer panel June 2016• 62 Firms Responded: 10 Solos & 50% under 10 Attorneys

Stats:• 81% use technology • 58% do NOT use KPIs beyond traditional billable hours• Only 6 or <10% use more than 4 KPIs

• 19 use Collected Billings by Attorney• 15 measure overdue Accounts Receivable (A/R)• 14 track Matter Profitability• 3 measure client satisfaction (less than 5%)


SOLO | SMALL

58 responses to TR Survey, 31 firms reported using either of the two profitability metrics:

Take-home dollarsBank Balance

KPIs need to be timely to allow for corrective action.Matter profitability was an option for responses.Large firms are now using KPIs but still slow to adopt.


USE KPIs Key Performance Indicators are metrics for measuring all aspects of business and are beyond the traditional billable hour.Law can borrow from other professional services and industries for KPIs.Focus on outputs, client experience, collections rather than inputs such as hours billed.Also RECORD EVERYTHING otherwise cannot judge budget versus actual.


PEFORMANCE KPI: Misplaced Focus on Billable Hours.Allan focused on billing, not collecting

At the end of the year, Allan was a billing machine at 116.25% utilization but 86.22% collected.

For one month he was at 88% using Billings Collected KPI

Align your KPIs with firm goals: Cash is King.

Have timekeeper’s focus on collections, not billing. 160 hours does not matter if only 120 hours are collected.

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Start with Clients



Focus on Clients

Value of deliveryTransparencyAlternative FeesClient Input & Feedback


CLIENT EXPERIENCE: Net Promoter Score (NPS)Net Promoter Score (NPS) (%)

The percentage of total clients responding to the survey question who are promoters less the percentage of total clients responding who are detractors.

Q: On a scale of one to ten (with one being not at all likely and ten being extremely likely), how likely are they are to recommend your firm to their friends, family, and colleagues?

Survey must be tracked, not anonymous.

Technology:

Google Documents or Survey Monkey.

Set up Excel for responses.


Focus on CollectionsProfitability on paper only if you never collect the cash.Stats show that small law firms collect cash from 90 to 150 days after recording the hours.If you have to pay all your bills within 30 to 60 days, you have a problem.Focus on lowering the days that your cash is ”locked up.”Important to calculate lock-up days for both WIP and A/R. Check on percentage of ”old” A/R.Deeper dive depending on results.

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Options for Workflow

Use Technology: Be Early Adopter



Workflow

Client Development Cost of Client AcquisitionProductivityProfitabilityPerformanceClient ExperienceFirm Culture


Time is finite; Technology is notInfinite possibilities:Potential client calendaringClient Development – automationPractice Management including time & billing Accounting Client Feedback Excel Document Signing & StorageLegal Research E-discovery


Choosing Tech

Demand MetricsMeasure ROITrial or free demoLess is moreFeedbackEvaluate Client ExperienceStart small and buildBe open to change


Continuous ImprovementDashboard Approach

Like the workflow and matching KPIs, improvement requires constant monitoring.Change and experimentation mentality.Learn to delegate and outsource. Budget should not be just revenue divided by 12, build up costs and revenue, including pricing.Enhance your Practice with enabling technology. Measure KPIs regularly on Dashboard.Review and Act upon the results, adjusting targets, workflow, resources, & technology.


Small Law Firm KPIs: How to Measure Your Way to Greater Profits

In print October 2016Order your copy today:http://legalsolutions.com/Juetten

Practical Guide to implement KPI framework as a Dashboard requiring only spreadsheets

Mary Juetten@[email protected]

http://legalsolutions.com/Juetten

mailto:[email protected]