Knowsley Management Services
Legal Practice Management Consultants
I hope this January 2019 edition of KMS “Robservations” finds you very well, well-rested, and very focussed for a flying start to the new calendar year (or, for a few of you, your new Financial Year)…
Either way, here’s to a great year in 2019!
When this issue is distributed I will be in New Zealand working, so many thanks to Heather at my end for all her usual good work in running the distribution process…many thousands of emails…and the other database work with the usual few unsubscribes…and apologies in advance if I’m a little slower than usual in responding to feedback and enquiries you may have…
The strongest thread from our consulting in the past two months has been in assisting a number of firms to deal with a significant slow-down in available work. As usual, this at the same time as other small-medium firms are coping with the various pressures of being buried in work.
Too many firms are clearly not capturing and closely monitoring enough basic information on levels of leads/enquiries, and rates of conversion to new matters, to have early awareness that their business development “afterburners” need to be flicked on.
Often firms only realise they have a significant problem via anecdotal evidence from various team members that they are not busy, and surprise, surprise, this is often about the same time that cash starts to tighten sharply.
It happens fast because the work that disappears first is always the very critical work needed to generate a margin. It stands to reason that if a firm is targeting 15% of revenue as real profit after Principals’ salaries, a 15% reduction in new instructions by revenue value will, in quite a short period, push a firm’s revenues down towards break-even…no real profit at all….with all the associated stress.
The signs are usually there quite early in the file opening numbers, and fee estimates arising therefrom, and basic monitoring will allow earlier response, and earlier success in averting a big problem, or in rectifying one while it is still small and more manageable.
The reaction must not be to start marketing, as that should have been consistent and appropriate all along, but to accelerate it, with particular focus on beefing up proven activities to higher levels where sensible blue sky is apparent, especially targeted to areas of greatest need for additional files.
Very often marketing is a pretty simple numbers game, in the sense that if you are doing the right things, more of the right things will again be very useful.
However, you need to be sure from analysis of your statistics what the right things are!
Where market activity slows down, firms that increase their own activity will get a better share of the reduced work that is presently available, and that may be the difference between reasonable profit and none, very poor cash flow and acceptable cash flow.
With considerable market uncertainty in Australia, and some upcoming elections (Federal and some States) that always tend to slow activity in some market sectors, things could get a lot worse in the first half of 2019 before they get better.
With this in mind I have devoted the Marketing tips in this edition to the basics of monitoring leads and new matters, and to some practicalities in terms of revving up activity…
It is important to capture leads/work enquiries and not merely new matters.
New matters come after conversion of new leads…and conversion is not handled as well by some team members as it is by others. Areas for further training may need to be identified.
Sufficient data needs to be captured for the purposes of assessing potential conflicts of interest, and there will be standard data that is important for cross-referencing within your systems…each firm will decide what it MUST collect to achieve its objectives in this regard.
Other information to be captured at this early point will allow analysis of effectiveness of various processes and initiatives, and point to where further activity would be warranted.
A simple example is in tracking referrals…where established patterns of contact with particular referrers may be ramped up to see if referral levels can be even better, or reinvigorated where there is a trend emerging that reflects a decline.
Whether you capture data manually or electronically it is important to make data capture as easy as possible, so data entry processes need to incorporate drop down menus and boxes to tick, both to save time, and to suggest categories of data to busy team members.
Potential work types should be recorded, and early estimates of likely fees, along with the source of the lead in terms of type and person’s name…
Thank referrers appropriately for their act of referral…do not wait for paying work to eventuate, or otherwise.
When looking to “beef up” business development activity a good starting point is reviewing what you decided earlier would be good things for each team member to do. Have they consistently done them all? Have they done them enough?
Do they fully understand what of their efforts have been producing the best results?
Have all appropriate opportunities been taken to provide relevant helpful information to all suitable contacts to give the heads-up about other areas of the firm’s services that may be beneficial to a contact or a contact of a contact? Referral increases with level of education of potential value in services you can provide.
It is interesting that so many lawyers dislike business development, and will do almost anything to bury themselves in client file work to avoid having to skill up and deliver as expected from their available FirmTime™. It follows that where there is not enough client file work, these same team members will not re-double their efforts to ensure more new files come in.
Rather, they may do nothing extra, or may spend additional time on client matters (recorded or otherwise) that will in the main never be able to be recovered.
It is ironic that often lawyers who think they are busy have low Realisation rates on absorbed WIP, record less Raw WIP than you would think appropriate, have higher levels of write-off of fees billed, and much higher numbers for average days to collect what is billed!
A perfect storm of poor financial performance, but of course they can also be the most self-important team members (maybe not team players?) who cannot understand (or certainly profess to not understand) why their remuneration and status are not tracking upwards steeply.
Law firm disruption is all around us and both widening and deepening. Those who are not interested in being adaptive , open-minded, players in your team, contributing what they can at every level, may be much happier elsewhere. Your standards are not too high per se, but they may be for some. A “freed-up” future may be good for everyone.
Q…What do too many small law firm marketing people do when they’re not getting enough traction from their efforts in assisting with generating new work for the firm’s lawyers?
A…They propose that the firm update its branding to get more “attention” in the marketplace…almost always at significant cost in time and money…and energy diverted from the real issues.
Unfortunately, it won’t make a scintilla of difference to relevant enquiry levels.
It may make some people feel good within the firm, but externally 99.99% of people won’t, “Give a rats…”! It simply isn’t relevant and helpful to them in negotiating the many challenges of life that you could have assisted them with.
The time, money, and energy would have been much better invested elsewhere in efforts that will work to deliver improved levels of enquiry, that…properly converted and priced…will generate improved revenues, and protect or strongly improve profit margins.
Here’s the great irony in terms of outbound information flow…when firms don’t have enough new instructions to keep lawyers properly busy on directly fee-producing work, the affected lawyers have even more time than normally allocated in their WorkPlans™ to generate draft content, that can then easily be made relevant and readable for clients, prospects and referrers who can benefit from it.
Alternatively, subscribe to a demonstrably proven out-sourced content generation service such as LegalRSS as part of the solution…leave re-branding exactly where it belongs…in that overflowing pigeonhole…”Seemed like a good idea (the only idea?) at the time, but it wasn’t”.
In each issue I look to introduce comment about a management issue that revolves around “the numbers”.
If more small law firm principals and managers truly understood profitability numbers and how easy it is to improve profit, they’d be much better able to attack the problem correctly.
Profit numbers work very, very, differently to the numbers on improvement in many other areas of life.
Scoring in dressage is a powerful comparative example.
Even at a modest competition level, a five and a half-minute dressage test can be made up of 17 different movements that are judged out of a possible ten points each. To complicate matters, up to 6 areas are considered especially important enough in measuring your progress in training your horse for your awarded mark out of the possible ten to be doubled.
11 movements x 10 is 110 points available potentially, and 6 extra important movements at 10 X 2 is a further 120 points…a total of 230 potentially.
Obviously if you scored 230 you’d have a percentage of 100…but at most levels 70% is considered pretty good! That is roughly 161/230 points.
75% is considered very good indeed for amateur riders like yours truly and his principal “strapping interest”…my wife!
If you wanted to go from 70% or 161 points out of 230…up to 75%…you’d need to score 11.5 points more somewhere across the 17 movements…not at all an easy thing to do, and you’d lift your performance just 7%! NB Focussing successfully on improving in the 6 key areas mentioned above would double your point increases therein!
The difference with profit is huge. Lift your revenues 7% without increasing expenses (and that is not at all hard to do), and you can lift your profits in the range 45%-100%…
Test your own figures…Revenues less expenses (including a proper salary for owner Principals) is your real profit…usually in the range 10%-15% of revenues.
Say, one owner Principal and Revenues of M$1…profit after salary, say $150,000.
Revenues up 7% to $1,070,000. Profit lifts to $220,000. Just the 7% increase in this basic example lifts profit over 45%.
Pity they won’t change the scoring system for dressage…it would help me a lot!
NB There is a massive proportion of the small law firms in the so-called “First World” that do not generate a real profit at all… some Principals know that, and yet do not know how easy it is to do something very effective about it.
Sadly, many Principals do not realise that what they think is profit is actually less than they could earn as a reasonable salary working for another firm, without all the investment and stress!
Time is precious in so many ways…junk emails that end up in your In-box take time to deal with and are irritating. I resolved this year to take the few seconds needed to unsubscribe from all lists that I cannot justify being on, and it has made a big difference to that aspect of the daily grind.
Interestingly, as the total volume of junk decreases I’m noticing more and more the emails that I had hardly realised I was getting but that added to the sheer bulk of daily rubbish…gawd knows how I got on the lists of some, but thankfully most professional businesses operate very good, quick, unsubscribe systems, as they should!
The ones that are the greatest pests are the ones I have asked unsuccessfully over the years to stop emailing me, without success…seem to be based in Hong Kong in many cases…and often providing tailoring services!
I’m very privileged to be asked to join an impressive list of 12 other speakers at the inaugural Small Law Industry Summit in Sydney on Thursday 14 March, 2019.
Full day Agenda can be found HERE
Incredible value at just $86.36 plus GST for Early Bird registration, with 6 CPD points available, and 50% of ticket sales go to a very worthy charity.
Quote from the Summit webpage…
“The Small Law Industry Summit will convene some of the legal community’s most prominent thought-leaders to discuss key issues of leadership, risk mitigation, practice management and innovation, high-performance cultures, and the fundamental role of technology in shaping the future of the legal profession.
Take-aways and extensive networking opportunities from each session can be applied to the challenges and opportunities you face within your team, your firm and the industry”.
Clients who are members of KMSManagementSupport™ and wanting to tee up dates for visits in early 2019, at your heavily discounted member rates, now is the time to jump on that as we have now locked down all visit dates until late December 2019 with our KMSRetainer™ clients.
Dates can be locked away for general site visits to deal with particular challenges or team member training, or for planning sessions.
Upcoming KMS workshops…March.
Every day I get feedback from lawyers in Australia, New Zealand, Canada and the UK that they are concerned about where the Profession is heading, and what they need to do to best respond and avoid severe loss of income, or worse…
“Disruption” and “Innovation” are words heavily bandied about…but, beneath the voluminous verbiage, what are the practical realities?
There are special challenges for small-medium firms that do not have resources of larger firms that can be dedicated to doing the hard yards to come up with the answers, and to implement appropriate activities…
You know many of the issues, and no doubt have some special worries of your own within the large grab-bag…
Fortunately, I’m working closely with numerous small-medium firms that are clear market leaders, having responded smartly year after year for a long time, and continue to do so…
In March I will be running a number of discussion sessions in Australia and New Zealand for small groups of lawyers interested in better understanding what may need to be done, refreshing or changing focus, seeing the wood for the trees, and, in particular, what to deal with, how…and in what priority…
There will be plenty of time for in-depth discussion of areas of greatest interest or concern…and as an extra bonus for your investment, of your time and a modest attendance fee, I will be available for telephone discussion, gratis, for two sessions of up to an hour each to suit you during the first half of 2019.
The outcomes…you will go away stimulated, with clarity on what issues are priority for your action in your firm, how you may best attack them, and knowing you can touch base with me a number of times to discuss progress between the workshop and 30 June.
N.B. All sessions will be four hours plus a break, and will be at CBD venues to be confirmed…
Melbourne… Monday morning 25 March
Sydney… Tuesday afternoon 26 March
Brisbane… Wednesday afternoon 27 March
Good discounts apply for multiple attendees from one firm…see Registration form for details…
Payment by EFT only upon registration.
For Registration form to be sent by email, please click on relevant link above for your preferred location.
This program involves membership of a small exclusive club, established by us at KMS in 1988, with a strict cap on memberships. The longest membership is currently 28 years and continuing.
Broad, fast, access to undoubtedly the most experienced Legal Profession mentor available for small-medium law firms…whenever needed…by email or telephone…
Unlimited assistance with considering appropriate approaches to day-to-day practice management challenges.
Unlimited review of draft articles submitted in Word, and suggested embedded/marked-up changes based on readability and genuine helpfulness to clients, referrers etc.
Massive discounts on standard rates for site visits…or special projects outside the scope of KMSMS membership benefits.
We now have two memberships opportunities again available…on the ”first-in, best-dressed” basis…
Very affordable subscriptions can be paid quarterly, six-monthly or annually in advance, to suit member firms’ cash flows, with the largest discounts for annually. KMSLoyalty™ benefits apply to membership, and continuous membership guarantees that membership fees will not rise for at least three years!
Membership subscription is based on current practice size…please email details so we can advise terms specific to your practice.
Testimonials from your peers available at this link… https://www.linkedin.com/in/robknowsley/
With all the commentary about Legal Profession disruption even those Principals who would be prepared to make changes to adapt and prosper can find great difficulty deciding what things should be done in their particular circumstances, and with what priority.
Views within a firm can differ greatly, risking paralysis in taking important action promptly. In this market in particular, delay can be deadly.
The KMSPracticeHealth™ Report is a simple process that brings our great experience to your firm, quickly getting to understand where you’re at, and what you’re hoping to achieve, and giving you clear recommendations on what we would do, in what order, if it was our firm.
As usual, getting quality perspective from outside the firm can unlock logjams in ways that seemed impossible to achieve internally, and get the firm rolling forward strongly again.
If some of this content has been of interest and value for you in your practice, you will find other related content here…
My LinkedIn articles…I’m delighted that my non-public LI posts are now going to over 7140 Followers, with excellent, much-appreciated, feedback.
KMSWebsite includes an archive of all earlier newsletters…including all issues of “Robservations” and the earlier “KMSProfitPower Tips™” back to 1996.
My LinkedIn Discussion Group… Excellent Management In The Small Law Firm