I hope this June 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…

Robservations…

The Profession continues to slowly educate itself about an ever-widening range of fee arrangements beyond fixed fees and billing by the hour.

A few brief comments from me this month on the potential power of well thought out “retainers” …

A lawyer of course enters into a “retainer” with every client, but I’m talking specifically here about periodic retainers to be available to deliver specified services as required by the client over an agreed period for a lump sum agreed in advance.

When a lawyer agrees to charge a client by the hour, even if the actual hourly rate is charged in full, the margin achievable is fixed.

In fact, very long experience shows that most lawyers don’t record all the time spent, and seldom charge all of what is recorded as spent.

With periodic retainers clients get the certainty of knowing in advance their legal spend on the services covered by the retainer, and lawyers get the benefit of the extra certainty of cash flow.

Lawyer and client can agree on a very wide range of things to be covered by a retainer to suit the client’s circumstances. Preferably things excluded should be limited, but clearly defined. An example might be a significant piece of new litigation arising during the course of the retainer.

Many sophisticated clients value greatly the degree of certainty they get around their legal services spend from these types of arrangements, and there is real potential to structure the fees such that the return is better than achieved by charging by the hour.

Of course this does not mean that the fee thus agreed is not fair and reasonable!

Some of the arrangements I see of this type require periodic payments by the client in advance, and there remains debate as to whether the funds can be deposited into General Account, or must be placed in Trust and drawn against only when the services have been performed.

The latter seems anachronistic in a situation where little or no work may be performed in, for example, a particular month, and an awful lot in another.

That is unless the agreed legal services are, in effect, being available to handle work as it arises and not taking on conflicting work. Presumably that service is “provided” immediately.

If in any doubt at all in your jurisdiction I suggest getting clear guidance from your Law Society Ethics advisers. There are clearly strongly divergent views on what is allowed.

It should be noted that in pretty much every jurisdiction a client who had entered into such a retainer, and had even agreed to forgo detailed bills, would still be entitled to request in effect an itemised bill.

This is because the client has to remain in a position to have enough information to make an informed decision about having the costs independently assessed, and the Assessor must have enough information to be able to make the assessment.

Further, it goes without saying that billing a client in accordance with a Costs Agreement does not prevent disciplinary action for charging excessive costs.

While I would argue that if you structure it correctly the agreed monies are yours when paid, you still need to be aware that if for some reason you do not render the agreed services or part of them, you may still have to refund some of the fees paid. What part will depend on the facts of each retainer.

Many lawyers worry about agreeing to a lump sum retainer and having to do an amount of work that makes the arrangement a financial disaster.

In practice, if you scope as well as you can, provide for reasonable review periods, don’t sign up for too long, and maintain a good working relationship with the client, the swings and roundabouts generally work out acceptably.

Continue to keep good records of your inputs into the work, maintain a quality dialogue with the client, and suggest tweaking of the arrangement where it is in danger of being substantially unfair to either party.

There is definitely a fair dose of trial and error involved in developing a good suite of rewarding retainer arrangements, but the effort is well worth it.

 KMS Common Sense Law Firm Marketing…short sharp thoughts from the trenches…

These days Social media rightly plays quite a big part in the marketing efforts of many small-medium law firms.

However pretty much every business day I get asked if, for example, LinkedIn is “worthwhile”?

My answer is that it certainly is, if it is used well.

Far too many people are “in LinkedIn” but have very few connections, and have never posted any content potentially useful to other members.

They do not participate in any useful LinkedIn Discussion groups.

Unsurprisingly they do not have any planned approach to growing their LinkedIn network.

Three suggestions from me…if you want to move to making your involvement in LinkedIn worthwhile.

Have a plan to grow your LinkedIn network…it’s very easy to do, and does not take much of your allocated FirmTime…Business Development…each day. Some like me find it an undemanding effort over coffee.

Don’t wait until you have any particular number of connections before starting to post useful content. The process of building your network is never-ending…it should happen, according to your plan, alongside your program of posts.

One easy way to grow your network is simply to allocate ten minutes a day…over that coffee if it suits…to consider LinkedIn’s suggestions of people you may know.

On the LinkedIn home page there is a prominent tab called My Network. There you will find a substantial list of people for you to consider.

You are offered two options to click on…Dismiss (X) or Connect…as you chose one for each suggested person you are automatically presented with the next one from the list. The process of working through the suggestions list is quick and simple.

When the list ends if you haven’t finished your coffee simply refresh the page and a new (usually shorter) list of suggestions will be presented.

Posts…write about things you believe will be helpful to one of your target audiences. Consider LinkedIn guidelines, and do not sell.

To avoid “Writers’ Block” my technique is to always keep a file of short thoughts that enter my mind throughout every day…these will be the kernels of future posts.

Regularly diarise some time to write a post, and draft it in Word for example, then cut and paste into LinkedIn…follow the instructions to add a hashtag, or two, to help members understand what your post is about…that will help with surfacing your content for readership by the right people.

Post it and be amazed by how quickly it gets read…and how the level of readership grows for the next few days.

Be aware of comments made by members and respond to them as appropriate.

NB I decided on the above draft approach after losing a long post or two before completed while working live in LinkedIn…as with so much IT it’s incredibly useful when working smoothly and incredibly frustrating when the gremlins get in!

Suggestion three is to be persistent about building a quality LinkedIn Profile…following the procedure to set up your profile, and subsequent tips provided to you from time to time by LinkedIn. Where appropriate ask connections for testimonials.

Putting your best foot forward is seldom a poor strategy!

Lies, Damned Lies, and Statistics…

In each issue I try to introduce comment about a management issue that revolves around “the numbers”.

The item this issue is contained in a recent LinkedIn post entitled “The Single Most Important Piece of Financial Information In All Law Firms… The Real Key To Profitability…”

Here’s the link…

https://www.linkedin.com/pulse/single-most-important-piece-financial-information-all-rob?trk=v-feed

Simplicity in Small Law Firm Business Planning…

In this day and age of potential information overload it’s important to keep the KISS principle front and centre. Read a little more…

http://lawfirmprofit.blogspot.com.au/2017/05/simplicity-in-small-law-firm-business.html

Thought for the day…

From time to time you may have come across the term, “Sticker shock”.

It has varying usages and meanings, but I use it particularly in circumstances where I see normal human reactions to large numbers automatically generated by otherwise quite normal KMSWorkPlans™.

March 2017 created some interesting examples of that sticker shock because there were 23 available business days in some jurisdictions (but not all)…

If a very capable Family Lawyer had a WorkPlan™ that planned for Client file work to be done 6.5 hours out of total daily eight on average, and they were recording hours spent (irrespective of the agreed charging basis with various clients) at $465/hr “potential value”…the total “potential value” if they worked all 23 days would have been nearly $70,000…$69,517 to be more precise.

Simply turning up to work (at an office/court/home, or wherever) and working on average to the agreed WorkPlan™, with enough Client file work to make it happen, the Raw WIP production would be there at the desired/planned level.

However I have no doubt that discussion in a vacuum about the fact that in some months WIP would be expected to be written at around $70,000 would have generated a real degree of sticker shock in many lawyers.

I’m pretty sure I can detect questions in cyberspace already from some readers, including about the $465 average target rate.

I agree that $465 is just a target number. In fact the particular lawyer I derive this example from tends to actually recover value at an average of 117% of that rate…year in year out…around $544/hr.

Billing by the hour may be a very slowly-dying billing approach, but understanding pricing strategies, and being able to plan utilisation of key resources using basic maths, is not only full of life, but essential to generation of proper profits for valuable advice consistently delivered.

Don’t let simple sticker shock get in the way of sensible business planning and operations.

Your CPD etc…

Four-hour In-House Workshops on Profit Improvement/Practical Business Development…

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. Melbourne is slotted for 25 or 26 July 2017. 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 …

robkkms@bigpond.com  or phone Freecall 1800 621 270 (within Australia only).

In New Zealand please contact Mary-Ann Robertson at The College of Law, Auckland mrobertson@collaw.ac.nz

 

More??

If some of this content has been of interest and value for you in your practice, you will find other related content here…

Blog… lawfirmprofit.blogspot.com.au

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