I’ve said it countless times. Your law practice is also a business and its success depends on you treating it as such. So, when you’re trying to increase your firm’s profitability, it’s useful to consider the factors that directly relate to profits. Let’s look at three of them.
Are your bills getting paid?
Pay attention to the difference between how much the firm bills and how much is actually collected. In accounting terms, this is referred to as realization. Until clients have paid for the services provided, your potential revenue has not been realized. When trying to reach full realization, there are two main points of consideration. The first represents the client’s perspective. Are you providing the highest level of service, by communicating regularly and meeting expectations? If the client sees the worth of your services, he will be more likely to pay your bill at the price that you have set. The second perspective is yours. Is your firm billing according to the true worth of your services? Under billing leaves money on the table that your firm has rightfully earned.
How much time is spent on non-billable tasks?
In accounting speak, utilization measures the financial contribution of each employee. In a law firm, this is often measured by the amount of billable hours logged by each attorney and support staff member. If partners and associates are spending large amounts of time on non-billable tasks, your practice is not reaching its full utilization. Time that can be billed to clients is essentially being under-utilized. To the greatest extent possible, non-billable tasks should be reserved for support staff, not the firm’s attorneys. If delegation is not possible, look for methods and technologies that can assist with reducing the amount of time that these tasks require.
Learn profitable benefits of Legal Project Management
Do you fully understand the value of your services?
If you are not taking a comprehensive look at what a case requires, your firm is leaving profit on the table. A simple estimation is not adequate to determine the value of a matter. Instead, take the time to truly evaluate what will be required for successful completion of the case. Predetermine which firm members will work on the matter and what tasks each will handle. Legal project management (LPM) utilizes this strategy to accurately plan out each matter for optimal profitability. When paired with the features of TimeSolv, LPM offers a valuable opportunity for increased profitability in your firm.
Profitability doesn’t just fall from the sky. You have to do the work and take a hard look at the billing practices of your firm. Ask the difficult questions to ensure that your firm is valuing its services correctly, billing accurately, and experiencing full realization of your bills.
About Erika Winston:
Erika Winston is a Virginia based writer with a passion for all things legal. As a former domestic relations attorney, she understands the challenge of determining the best fee structure for your practice. Erika is a regular contributor to TimeSolv and a variety of other publications.