August 2001
by Edward Poll, J.D., M.B.A., CMC
In order to identify the areas of possible improvement, you've got to identify and collect data to ascertain the following items, among others:
- Profit per matter
- Percent of total firm revenue generated by the top 20% of attorneys
- Percent of total firm revenue represented by the top 20% of clients of the firm
- Average number of partners/associates involved per matter
- Profit per partner
- Annual retention rate of clients
- New client origination
- How many new clients and total percentage of new clients' revenue per year
- Profit per Practice Area/Department
- Three year trend to spot declining or increasing trends
These are among the statistics necessary to transition from being busy to being profitable. As in law school, much of my education was learning what questions to ask. Once I knew the questions, I could find the answers by looking in the books. But, the great fear was that we didn't even know the right questions to ask. The same is true in accounting ... and in business (oops! There's that "dirty" word, again. <g>)
If you seek the information suggested by the items noted above and review it in detail, I suspect that your future course of action may become quite obvious to you ... then, it will be a matter of making the right choices ... some hard decisions, I am sure ... to improve your revenue and profit. If, for whatever reason, the path doesn't become clear to you, please call me; I'd like to know why not and, more importantly, to help.
