Knowsley Management Services
Legal Practice Management Consultants
I hope this July edition of KMS “Robservations” finds you in good health and prospering…
I have again briefly covered for you a few more issues that are impacting lawyers in small-medium firms in Australia and New Zealand…
I trust you continue to find the content of interest and value to you in your practice…
The strongest thread from our consulting in the past month has been the impact on management effectiveness of lawyers as a result of being time poor and not making enough quality time for the important aspects of financial management.
This is particularly the case for lawyer/managers, who are trying to manage the firm as well as maintain high standards in handling even a reduced caseload.
However even non-lawyer managers suffer from an inability to juggle workload pressures, and outcomes suffer badly from the lack of attention to important details.
The obvious danger is that “management” will become knee-jerk when problems surface, rather than consistently following a good process.
Principals thinking that they are ok leaving the management to managers often find out far too late that the management they hoped was happening has not been happening, and that the investment has been wasted or worse. A bad manager is almost always worse than no manager at all.
Often a very busy Principal may be busy being busy while employed resources that could be generating exceptional revenues are languishing without enough work or guidance, or both.
The beginning of a new financial year is a great time to re-visit all key processes with determination to plan correctly and monitor carefully. The review should start with Principals!
These days there are more and more businesses offering marketing services to law firms. Interestingly I do not see any significant improvement in the marketing performance of firms in terms of worthwhile new files coming through the door.
In fact, surprisingly, many Principals I talk to have not given any real thought to the numbers and types of files they expect to eventuate from the extra investment in marketing, and in what timeframe.
My own approach is pretty cut and dried so to speak.
Analyse what files of what types are coming in at present and where from.
Consider if those files are all desirable in that you can do the work well and make a reasonable profit.
Consider if common sense suggests those opportunities are already exhausted?
They will not be.
Consider if there are obvious opportunities to source desirable files from places you do not currently get any.
Set some priorities for communicating with the obvious market segments.
Get on with testing the additional communication.
Monitor all enquiries carefully, and all new files, and either continue the program or tweak it as seems sensible.
Sometimes the flow of new files is good enough in a particular area that you may wish to re-double efforts/investment and monitor further to determine with greater sophistication the cause and effect.
Above all…keep it simple.
In each issue I try to introduce comment about a management issue that revolves around “the numbers”.
The short item this issue is whether the numbers generated by reports from your PMS actually mean what they say…it leads into the next item on upcoming PMS Intensives.
A big start in managing well is understanding the really important data.
Most law firm managers are time poor, and managing people is tough enough without risking rushing to conclusions created by poor data or misleading descriptions.
Terms…it’s important to really know what you’re looking at.
In some systems, “billing” actually refers to time recorded on client files.
Sometimes “Average Days Debtors” is actually only the average of what has not yet been collected, or can be the average of what has been collected.
A proper calculation of the average time it takes to collect your bills will involve opening and closing totals and amount billed in the period, month, quarter etc.
“Realisation Rate”…many PMS calculate the relationship between WIP used in creating a bill and the amount of the bill, and at first blush this seems logical.
However if you’re really interested in what percentage of Raw WIP written in your firm makes it into bills, you also have to take into account Raw WIP removed from the PMS outside the billing process, by write-off for example.
A simple example will suffice. If $40,000 Raw WIP gets written down to a $38,000 bill, apparent Realisation Rate is 95%.
However, if a further $5000 in Raw WIP was written off outside the process of billing, the real R/Rate was just 84.5%…an important difference when profit margins in many firms are small and declining.
“Days worked”…many systems treat a day as “worked” if any time is recorded on that day at all. This can have a very big impact on assessing daily production averages.
Don’t place too much emphasis on fee targets for a month if the targets are simply an annual target divided by twelve, as is the case in many systems.
The longest months of the year have 23 business days (and they are not consistent year to year) and the shortest 17 days…approximately 25% less.
In some firms these differences are fully taken into account for fee targets and production targets, and actual days worked by the team member are used to create a much more accurate picture. It is not at all hard to do.
In at least one PMS I’ve seen there is a dashboard that includes a tracker for a team member to monitor their activity capture against targets. Unfortunately it misrepresents the position, and “scores” the team member as having achieved target when it is not necessarily the case.
For those who (unwisely in my view) work to targets it can be a bit of a shock and disappointment to discover through proper reporting that they did not in fact hit their target at all.
Practice Management Systems (PMS) are supposed to be of great assistance in legal practices, saving time, assisting with accuracy, and boosting profit.
So why is it that I hear constant complaints about their PMS from law firms who have trouble getting the data they want, can’t generate bills the way they want, or can’t produce accurate meaningful reports?
At least once a month, year in year out, I’m told by firms that their PMS cannot produce reports (usually confirmed by the vendor’s helpline) that are being happily generated by other KMS clients using exactly the same version of that PMS!
Frequently I encounter firms changing from one PMS to another, at the very same time I have clients proposing to change in the exact opposite direction.
I have seen firms change from one PMS to another, only to change back six months later, at great expense and with an awful lot of disruption.
Whether you have LEAP, Practice Evolve, Affinity, InfinityLaw, Open Practice, LawMaster, BHL, ZenoxLaw, PCLaw, or one of the many other systems on the market, it appears that most problems stem from poor understanding of how to set up to get the reports firms really need.
Pretty much every PMS can deliver what is needed, if set up correctly.
To assist firms to get what they need from their current PMS I’m holding a series of two-hour Intensives with representatives of no more than five firms, to pass on my knowledge of what firms should be getting, and can get, from their systems.
This is an opportunity for firms’ relevant Principals, Managers, Bookkeepers etc to come along with all their issues and questions, and share experiences about where they’re struggling with their PMS or failing to take full advantage…to help them make real forward progress, and get better value from their present investment.
Your investment is $345 plus GST.
To register your interest please just reply to this email with Yes Please Adelaide in the subject line and we’ll be in touch to make arrangements.
To register your interest for an Intensive in another city please just reply to this email with Yes Please (Your preferred city) in the subject line and we’ll be in touch to make arrangements.
Lawyers unfortunately have a deserved very poor reputation for being effective marketers.
Their core training doesn’t align well with skills and attitudes needed for good marketing.
In almost every new small-medium law firm I look at marketing is relatively unstructured and scatter-gun, record-keeping is poor, and Customer Relationship Management non-existent.
Lots of opportunities to grow delivery of services, revenue, and profit, are going through to the keeper.
This reality is a little odd when you consider that most of the lawyers I’ve ever met have been highly dedicated service professionals, regularly going the extra mile to try to get clients the best possible outcome.
Clients are absolutely front and centre in the service sphere, in terms of current files, but not front and centre in other key aspects of relationship management.
In my experience almost all lawyers can be shown how to relatively simply lift their marketing efforts…with great outcomes for their clients, existing and new, and great outcomes for themselves.
For a fully-rounded service professional, marketing is simply a tool to improve customer experience, particularly through effective delivery of relevant, helpful, information that is already freely available in every practice.
By being consistent in providing the right people with relevant helpful information, good lawyers position themselves in the eyes of the clients, and others such as referrers, as capable, generous, organised, experts, in the relevant areas of law.
That will lift the rate of instructions from clients and those referred by them. Increased demand for services will tend to reduce pressure on fee estimates, improving fee per file.
Lawyers all have at least some time to lift their marketing efforts a few percentage points, and need to be shown a few key things to focus on with whatever time they are prepared to regularly allocate.
Learning from experience is very valuable in marketing, so lawyers need to learn to set up good tracking systems and to use them consistently. The information flowing about trends in enquiries will both give encouragement and better inform future allocation of time and money.
It is important for lawyers seeking to up the ante in marketing to get guidance from those who can show that they have done it successfully before. There are plenty of “textbook” marketers about who will appear to understand marketing and seem to have lots of good ideas.
To help interested lawyers get on the right track, at KMS we offer a service called KMSMarketingPower™…
For a small fixed fee we will analyse a number of key aspects of the firm’s existing situation and the efforts of the firm in marketing, and point to key areas where we would add things or do things differently if it were our firm.
Our focus will be on areas where firms can learn to generate more of their particular desirable instructions at very reasonable cost.
The advice we give will provide a hard-hitting assessment, and clear guidance for a few simple things the firm could do better, and we provide a telephone conference to discuss any issues arising from our advice, within the fixed investment.
There is no further obligation or pressure to use us to assist beyond the provision of that advice.
To get the ball rolling please just email me and let me have your name and phone contact details, and preferred contact times, and I’ll get back to you promptly.
You will know that I’ve been vitally interested in assisting small-medium law firms improve their profitability for well over forty years.
Larger firms have big budgets for training and many specialised management/marketing people in-house…resources small firms (and many medium-size firms) simply do not have.
Large and mid-tier firms are actively looking for help in the areas of profit improvement and business development, and the time is certainly ripe for a serious refresher for many small-medium firms in Australasia…
There are many issues facing firms in these challenging times and strong profitability is essential to provide the funding needed, not to mention the confidence, to invest in all appropriate aspects of the inevitable change.
Firms need to focus on:
> better business management
> getting resourcing right
> correct application of technology
> better marketing
> much more sophisticated pricing
> and most critically, better human resource management and revenue budgeting…
…to deliver profits that will reward owners properly and sustain practices well into the future.
To address the issues I’m again holding four-hour intensive workshops on Profit Improvement/Practical Business Development. All sessions will be morning starts, and run from 9am to 1pm.
NB We run these sessions in-house as required anywhere in Australia.
For guidance, the first 1.5 hours of each session will focus on Profit Improvement and the next 2.5 hours on Practical Business Development.
CPD points available… 4…in the category of Practice Management and Business Skills…category varies slightly in different jurisdictions.
At present we are in the planning stage for the next series. Please email to indicate initial interest in an in-house session or the alternative workshop…maximum 15 attendees.
In-house numbers…experience shows that these sessions in-house work best from 4 practitioners upwards…
Your Investment…tailored to each firm’s particular situation… for further information, pricing, registration, please email us at …
firstname.lastname@example.org or phone Freecall 1800 621 270 (within Australia only).
In New Zealand please contact Mary-Ann Robertson at The College of Law, Auckland email@example.com
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 posts…
KMSWebsite includes an archive of all earlier newsletters… www.lawfirmprofit.com
My LinkedIn Discussion Group… Excellent Management In The Small Law Firm