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How Much Is in the Till?
So you've raised your rates, you've stopped discounting—now all that's left is to count the fees as they come rolling in. Keeping track of what's in the till is fundamental to The Business of Law®, but if you're a sole practitioner without an office manager it can be a daunting task—especially if, like many lawyers, you have minimal business background.
Fortunately, today's financial information systems and software can and do produce extremely detailed assessments of law firm financial performance. The most practical approach to understanding your firm's finances is to use software that makes the assessment process virtually automatic and points out major variances for attention. New tools from companies like Juris and Redwood Analytics can replace static financial information with a continuous flow of automatically collected current operating metrics.
These companies, among others, take the raw accounting information from individual firms and compile them with similar accounting information from other law firms. Then the information can be filtered into quartiles so that all law firms that participate can assess where they are relative to other firms. For example, using key metrics, a law firm can review PPP (profit per partner), billing turnover rates (how frequent is the accounts receivable turning,) and a host of other important financial measurement tools.
Financial software typically provides both accounting and disbursement modules (with the latter including firm expenses, client expenses, trust transactions, receipts from clients, and disbursement write-offs). It should also be able to compare actual performance to budget, changes from prior years, and reports on accounts receivable.
The most practical first step to assess what software is right for you is to go to the web sites of the main providers:
1. www.juris.com
2. www.redwoodanalytics.com
Both offer product previews and interactive features that will help you decide which direction to go.
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By Edward Poll
(6x9", 143 pages + with CD of forms soft cover, ISBN: 1-59031-153-1, Published by American Bar Association, 2003)
The CD contains forms for intake, engagement letters, status report, budget, sample bills and collection letters, accounts receivable aging reports and more.
Click here to purchase the book and CD for only $79.95
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Personal Commentary
Dreaming has a poor ROI—start building!
As I was riding my bike the other day, I saw this phrase on the side of a van, "Dreaming has a poor ROI—start building." I was so struck by it that I had to stop and look again. Clearly these folks had a sense of business, speaking in terms of return on investment. The real question to ask for every action one takes should be "what is the return I will receive for the action I'm about to take?" What are the consequences of what I will do? As a psychologist said to me, "we can control our own actions, not those of others." Thus, unintended consequences may be beyond both our knowledge and our control. But, certainly, we should know what we expect to happen by what we do.
Thus, if we want to build our careers, what are we doing to educate ourselves? To enhance our competency to meet the needs of our clients? To stay current with the changing legal environment? What are we doing to meet our target market, to put ourselves in front of those folks who need our services, to let them know we are available and able to handle their challenges?
What are we doing to change our dreams from ethereal ideas into practical realities? I believe dreaming is appropriate. But, as the saying above goes, we must start building our careers in order to make those dreams realities. What are you doing today to achieve your dreams?
Best wishes,
Ed Poll
lawbiz.com
800-837-5880
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What Readers Are Saying...
"Ed Poll has done it again. He's created a down-to-earth guide for lawyer to collect his or her unpaid bills. The book is full of practical advice such as, 'if you don't create a collection policy, your clients will create one for you.'
"The book offers lots of good advice on engagement letters, detailed bills, fee agreements and intake forms. Plus it's loaded with useful forms.
"If you read this book, you'll have a lot less trouble getting paid for your work."
-Larry Bodine, Web and Marketing Consultant
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