I hope this January edition of KMS “Robservations” finds you in good health, well-rested, prospering from your team’s efforts in 2017, and looking forward to an even better year in 2018.
I have again briefly covered for you a few more issues that I observe 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…
Best wishes for a very rewarding year in practice in 2018!
Robservations…
The strongest thread from our consulting in the past month has been related to the very practical, and critical, intersection in firms between employees having enough paying work to do and the firm’s efforts in Business Development.
I used “employees” above advisedly, as in my experience most Principals not only have enough to do, they have too much, and some of their workload they should not be dealing with at all.
Often they are on the back foot in getting through even the most pressing priorities from time to time, and that often has serious impacts on their ability to take time to identify what to delegate, to manage others, on velocity of their files and ability to get to the point of invoicing, on confidence in pricing, to identify, research and implement technology advances, and to drive Business Development…the list goes on.
Importantly, there are almost always gaps, some very big, in the workloads of some employees.
Principals who are too busy can also (not surprisingly) suffer from being mentally tired, and are therefore not often on the front foot in refocussing the firm’s resources towards far better outcomes.
Very few employee lawyers are confident and effective self-starters in Business Development…those that are can be described in the vernacular as, “the gems”.
Very few employee lawyers can in a relatively short period impact new client uptake and new files sufficiently to move themselves from under-utilised, to having a healthy backlog of interesting, rewarding and remunerative work.
Even a 10% gap between a proper workload and an actual workload can easily impact profitability by over 50%.
It follows that for a firm to grow, and develop its client base with the right types of clients, Principals’ efforts in Business Develop are critical, so they need the right skills, and they must not be already over-burdened and/or too tired for this important and exciting aspect of their core role.
Principals who are tired and over-burdened are similarly highly unlikely to be confident in experimenting with value pricing that will improve Revenues and profits, so the firm may well miss out on the important learning and pricing leadership by example (and training) that will flow from that.
Principals are by definition supposed to be leaders. A key focus of every Principal must be to ensure that they are using their time in the right balance between serving the right volume of the right clients, and managing with wisdom and strength of leadership.
KMS Common Sense Law Firm Marketing…more short sharp thoughts from the law firm trenches…
The typically long break in the Southern Hemisphere affords opportunities, after celebrating, resting and so on, for re-thinking the practise year ahead.
My tip this month relates to LinkedIn, and distributing your articles etc.
LinkedIn is a very useful forum, and it allows great reach for those members who bother to keep learning how it works.
I suggest at least ten minutes a day adding contacts, joining suitable discussion groups and sharing good content you come across with relevant contacts, followers and groups, and a separate 30 minutes a week writing articles. They can be relatively short…after all, who reads really long content on LI?
It is important to take notice when LinkedIn makes substantial changes to the way it works…they will go to some lengths to inform you but if you aren’t a regular user you can allow a lot of such messages to “go through to the keeper” so to speak.
A key change in nomenclature for example…I got used to “posting” my content material, which included my articles…blog pieces and otherwise. Now LI calls what they used to call a “post”, an “article”!
The screens where you input content have changed accordingly and they’re quite simple…you “share” material you like from others, or you publish an article.
“Sharing” has much lower character limits for your message, while limits for “articles” are high enough to fit in pretty much anything you feel people will have the time and interest to read!
Importantly, if you publish an article you want to get to, for example, LI discussion groups you are a member of, you can easily “share” your own article with them!
The process is easy to follow, and to insert groups you want to share with you just start typing the name and immediately one or more drop-downs will appear that you can click on. You can insert multiple groups you belong to.
Networking using LinkedIn involves belonging to groups that have members who fit the profile you want to network with and supply relevant helpful content to. Often there are numerous groups that overlap…in Australia for example, I am a member of ten discussion groups, with good examples where there are certainly membership overlaps being “Oz Lawyers”, “Australian Legal Community”, “Linked Lawyers Australia”, “Law Firm Profitability”, “Law Firm Management Professionals”, “Excellent Management in the Small Law Firm” and, “ALPMA”.
Collectively these groups had, at time of writing, 32,059 members. By way of interest and comparison, the “UK Solicitors” group alone has 25,511 members.
Not every article will be usefully shared with every group you are a member of, but if an article has content relating to Legal Practice Management generally, rather than Marketing, I can very easily see that I can currently share it (in less than 60 seconds) with 142,544 fellow group members in my target markets.
My LI tips for 2018…
- In addition to growing your selected contacts and your followers (I passed 6000 in early December investing on average ten minutes/day), grow your membership of suitable groups aligned with your Business Development plans.
- Be aware of what features you get with different levels of LI membership. Free membership of course has considerable benefits, but benefits do scale up as you invest in more expensive options, benefits that will flow provided you use LI actively and thoughtfully.
Lawyers and Pricing… The myth of Penetration Pricing…
Penetration pricing involves setting low prices in an effort to build client base, with the intention of increasing prices to proper levels later.
Unfortunately, it takes tremendous skill to pull this off, and the big majority of law firms who try it find they have attracted a client demographic heavily weighed down by people who will simply not accept “proper” prices in due course.
Margins are slim to non-existent even if somehow you have substantially lower expenses than your competitors (and that’s seldom likely in fact).
What tends to happen is that firms find they need ever-increasing volumes to survive, but don’t generate the profit to be able to invest in staffing levels needed to turn the work around quickly. Existing staff who stick around just have to do more and more work themselves to put through the volume and keep the clients happy.
It is one of life’s great ironies that clients who are getting low fees tend to still expect high levels of service…and who is to argue that they are entitled… you set the prices after all even if you believed they set them by posturing to walk away if your prices weren’t low!
High volume with a 5% margin isn’t smart for lawyers. Far better to reduce clients/transactions by 25% and hike prices for all new instructions. You’ll still be busy enough, but have a lot less stress, reduced staffing/space needs, and dramatically improved profits.
This issue’s pricing tip…Be aware of the big impact of price points in getting clients over the line on your fee suggestions…
I’ve stressed before how important buyer psychology is in perceptions of value…
One easy issue to address in your pricing is in terms of price points…
An example…you have scoped a proposed piece of work for a client and think it is worth around $8000 plus GST (does anyone know what it is “worth” exactly to this client in his particular circumstances…and does it actually matter)?
You are comfortable with the profit you can make at that price. You expect that the client will see value at around that pricing, but you are very keen to get the work right at this time.
In your proposal, break the pricing up similarly to this…an initial deposit upon retainer of $3,940 plus GST, and the balance of $3,945 plus GST on completion. Set out the terms clearly in all aspects, especially completion, and when payment is due thereafter.
Your price is actually pretty close to $8,000…at $7,885…but you have increased the chances that the client will see the value in your suggested price because you have avoided the price point of $8,000 and the potential impact of that number on the client’s decision to proceed.
I agree it can be an annoyance that $115 could maybe make the difference, given your skills and experience, but in the particular circumstances, why take the risk?
The flipside of course is that some clients who would accept a figure of $8,000 would not have been put off by $8,885! You need to experiment and develop skills around price points.
Your bottom-line will reflect your willingness to be thoughtful about price thresholds!
Lies, Damned Lies, and Statistics…
In each issue I look to introduce comment about a management issue that revolves around “the numbers”.
The item this issue is on the usefulness of dashboards in communicating aspects of team member performance against WorkPlan™, and firm performance against Business Plan and Budgets for Revenues, Expenses and Cash flows…
Why is it so important to firm financial health?
Because in so many firms profits are much lower than they could be…there is insufficient performance above break-even…between what is actually being done and what could be done if the team member had enough work, at the right pricing.
Team members are being paid and supported by all the firm’s resources, but their potential is being wasted in the critical “profit zone”, where break-even has been reached, but not enough is then done to tap into the profit that now awaits.
Revenues fall below what they should be because management isn’t concerned enough about the dramatic impact on profit, and doesn’t react early enough and effectively enough to get each boat in the fleet back properly on its own track…their WorkPlan™.
Every 10% of Revenues thus lost takes a huge bite out of profit…in fact, in many firms, a mere 10% shortfall in Revenues will eliminate ALL true profit.
The really scary bit is that 10% wastage within the ClientTime™ sphere is very easy to “achieve”!
Managers taking their eye off the ball for quite short periods will do it, without much effort at all!
So, what is a dashboard for our purposes here?
Typically, a dashboard is a single screen that displays key data about aspects of performance in a selected area, in real time.
The most important thing to remember is that dashboards should not be about simply reporting automatically from your PMS data.
A good dashboard needs to effectively communicate powerful insights into key issues that are impacting likely achievement of critical areas of performance. Many PMS will not do this…so putting the same information in an additional dashboard will clearly not add value.
Further, what you decide is critical must be soundly-based, from your firm culture, Business Plan and strategy.
There’s not much point communicating well, in real time, information about aspects of the business that don’t matter much, and will not make a real difference!
Disappointingly, that’s exactly what most small-medium law firms do, whether they use dashboards or after-the-event reporting.
The bottom line…review what your key issues are and whether your dashboards focus properly on them, and set up a proper basis for discussion with those involved…then actually have the discussions…always, whenever needed for optimal performance…
Quality, relevant, real time data should empower people to perform and to manage…reviewing data then not following through with your revised performance or management of others to achieve fully is a complete waste of everyone’s time.
KMSProfitPower™…
Moving about the Profession over the past month I’ve encountered a number of Principals in firms expressing a gut-feel that their firms are not as profitable as they should be for all their effort and investment.
Of course, this has been a fairly common refrain since I started consulting to small-medium law firms in 1988, but over the last two or three years it seemed to be a little drowned out by a greater concern about the rapidity of change, new types of competition, and the overwhelming focus on the need for innovation.
The issues of agility in adapting to changes, and the real need to innovate, are of course important for your future, but they should never obscure the imperative to operate wisely and effectively in the short term…profitably.
Firms that allow poor business practices to develop while management is focussed on the big picture will inevitably run headlong into a cash flow problem that will depress energy and innovation, and rob the firm of necessary funds for investment in long term strategic gains.
The entry-level service that we offer to help firms quickly identify actual or potential problem areas is the KMSProfitGapAnalysis™.
The info on KMSProfitGap Analysis is on our website at this link…and standard fee $2,885 plus GST is set out there.
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.
KMS Out and About…
Since last issue we’ve helped firms with all team members’ KMSFeedBack™ Reports, advised on potential value of a small town firm where the Principal is looking to retirement, commenced reviewing a suburban firm in an Australian capital city where the Principal is wanting to establish plans towards gradual reduction in involvement, addressed another Regional Law Society CPD event on the Business of Law and on Career Development for lawyers, organised more filming sessions for on-line CPD provider Bench Television, covering more practice management subjects. We’ve also provided advice and support to Principals in numerous firms that are members of KMSManagementSupport™.
The State of Play in Small-Medium Law Firms…KMS Workshops Jan-Feb 2018
Anyone who isn’t deeply aware of the immense change happening about us in the Profession at an increasing rate is surely already retired, switched off…or worse!
Lawyers keen to stay ahead of the game, or even “in the game”, need to have an awareness of what is happening, and how they may need to react, depending on the circumstances, plans, and aspirations of their particular firm.
Here are “one or two’ issues that face all lawyers in private practice…
# Numbers of practicing lawyers are rising…and Law Schools are continuing to pump out graduates at alarming rates.
# Competition is expanding rapidly from traditional firms getting smarter and up to “2017 speed”, and from “virtual” firms operating totally online in a big variety of ways…
# Cheap on-line legal advice is expanding rapidly…
# Artificial Intelligence is not merely something interesting coming down the pipeline…it’s already here, and being used in various ways by early-adopters in small-medium firms in New Zealand and Australia to serve both clients and prospects better…more cost-effectively. Smart contracts are well-advanced, and robots can at least “rough out” some advices already. Who is across Blockchain and what it offers?
# Clients are segmenting strongly…with many choosing perceived cheaper fee options, while others truly value relationships and will pay more for what they perceive to be greater value. How do you decide where to be in the markets, and how to achieve what is necessary?
# Many firms are getting smarter with their pricing and sophistication of service offerings…are you doing enough to upskill to benefit from huge changes in the way legal services are priced?
# Professional staff with experience, and the right attitude, are harder to find and keep, and firms need to be wise about how to remunerate, how to provide career paths and professional satisfaction, while making a proper profit in the practice… to properly reward Principals, and generate sufficient funds for all the necessary investment in adapting and growth.
# Smart out-sourcing to lower cost-centres continues.
# Secure Digital Signing is here…
# Other Profession-disrupters are popping up each week…including those offering opportunities for lawyers to operate ultra-flexibly as freelancers.
# The Internet is rife with possibilities for the smart and careful to get helpful, relevant, content to appropriate targets…
# Social media is clearly not going away, even if it is constantly morphing (sometimes it seems overnight while we sleep), but what to use, and how to use it, is challenging lawyers everywhere…ROI is important to keep front of mind…
# New IT options become available to us seemingly every day, many of them ultra-practical in making life easier, usually cheap (even free), and easy to use.
# Team members are seeking more flexible working arrangements…are your strategies and processes set up to cope, assisting in keeping team members you want to keep, happy, and fully productive?
# New firms are emerging whose younger Principals consider effective Marketing a business fundamental…as it is…and some traditional firms are also well-awakened from their slumbers and doing very well in all aspects of Business Development.
# We are being urged daily to innovate, and being deluged with examples, but what really makes the most sense to hang our hats on?
# The Internet of Things truly is connecting everyone with everything…are we usefully tapping into the immense power?
# While many litigious matters are involving mind-boggling amounts of e-documents and hard copy material, all of which may need to be carefully reviewed for useful evidence, courts are trying to force the costs of litigation down, and intelligent software solutions need to be mastered.
# Cyber Warfare…Data security is under daily threat, and the risk to firms without proper precautions for data protection and privacy is immense…in terms of the costs of disruption, ransoms, and potentially, damages/prosecution!
# The experience of clients, prospects and referrers is changing their level of expectation in terms of service from lawyers… “great service, great communication, now” is becoming the norm!
# As most of you will already have discovered, hopefully not to too great a cost, there are lots of “false prophets” out there, with promises of help that turns out to not be deeply rooted in practical experience.
# Thinking about how to react to all the above (and more I’m sure you’re already thinking of), while remaining fully Professional, ethical, charitable, resilient, healthy, and profitable…
I’m working closely with law firms and law firm stakeholders throughout the year, and have been in the law for 47 years. Having assisted 1348 small-medium firms in New Zealand, Australia and Canada as a consultant in the last thirty years I’ve been deeply involved at a practical level, assisting some of those firms continuously for well over two decades.
I bring a depth of awareness to the management of the small-medium law firm that my clients find particularly helpful.
In January and February 2018 I will be running 4-hour CPD workshops on “The State of Play in the Profession for Small-Medium Firms” in Wellington (31 January), Sydney (February 21st), Melbourne (February 27th), and Brisbane (February 28th). Plans are moving ahead for these to be followed by Toronto and Vancouver in the Northern spring.
In some jurisdictions the content will be eminently suitable for you to claim credit for one of the mandatory CPD requirements in Practice Management and Business Skills.
As usual for the last thirty years, numbers will be strictly limited to ensure maximum participation, and question/answer flow…
All locations will be at a CBD venue to be advised…9am-1.15pm (4 hours exclusive of refreshment break). NB Sydney special time 10.30am start.
This is a great opportunity to hear and discuss what is happening, reassess and re-focus before the new calendar year gets too deeply underway in earnest after the Festive Season and holidays…while the mind is extra clear.
Your investment:
Single attendee…AUD$245 plus GST in Australia only. Further attendees from the same firm (or get a few Sole Practitioner peers together and register as a group) benefit from significant discounts.
Your money-back Guarantee:
As usual for the last thirty years our unique guarantee means you have absolutely nothing to lose…if for any reason you are not completely satisfied with the workshop…email me with your concerns within 24 hours after the workshop concludes, and if I cannot rectify the situation for you promptly at my cost, I will without further question refund you as much of your registration fee as you think reasonable.
I look forward to working with you in January or February!
To request a Registration Form please click HERE…and pop your preferred location in the email subject line. We are not offering on-line registration at present.
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…
My LinkedIn posts…
KMSWebsite includes an archive of all earlier newsletters…including all issues of “Robservations” and KMSProfitPower Tips back to 1996.
My LinkedIn Discussion Group… Excellent Management In The Small Law Firm
