Credit score is an important, but seldom discussed, criterium by which banks and other creditors make decisions about whether to do business with you on credit. See the recent TechnoLawyer article for more information.
Revenue from new clients paid within 60-90 days at a law firm is nearly impossible, as the average billing cycle once you do new work is 120 days.
If you really need revenue in 60-90 days, you should look to collecting existing accounts receivable as the first threshold, then focus on doing work for existing clients who pay their bills promptly. To be more effective, you must manage accounts receivable and focus attorneys’ attention on doing work for “paying clients.” (more…)
The Fair Credit Reporting Act amendment, effective December 1, 2004, allows banks to report information about your accounts to credit bureaus. This is new. It is an option, which makes good banking relations even more important!
Many law firms are experiencing increased revenues and profits.
Profits-per-partner, which has become a benchmark of firm performance in recent years, could eclipse $1 million in 2004 at six firms either headquartered or originally started in Los Angeles. In 2000, not one L.A. firm reached that level. (more…)
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See The Best Surprise by Kevin Salwen on Travel who said that those of a certain age will certainly remember the Holiday Inn ad campaign “The best surprise is no surprise.” But lately, I’ve been surprised many a time in my hotel stays — and almost always to the upside.
— In New York, at the Dream Hotel (a New Age-style place with Deepak Chopra themes — I’m not kidding), the Gideon’s Bible has been replaced by The Teaching of Buddha. For the first time in years, I actually started reading.
— In Santa Monica, at the Loew’s Hotel, there’s a remarkable computer-screen jukebox in the lobby with 3,000 songs that allows guests to “program music for the entire hotel.” I tossed on a Sheryl Crow tune.
— In San Francisco, at the Adagio, a great basket of Aveda products adorned the bathroom. Mint and rosemary shampoo, anyone?
Hotels are scrambling to be more distinctive — and I should quickly note that these are mostly mid-priced places. Some openly tout 300-thread-count sheets, others in-room high-speed wireless, still others plasma TVs. Is there another industry that is working as hard to out-unique the other guy?
I agree with Kevin. And certainly the airline industry is one example of negative surprises. My travels continue to emphasize for me the airline industry’s total disregard for their customers … It is not surprising to me that there is only one airline that has made money in the last 30 years! Southwest continues to focus on its core mission and treats its employees as members of the family in a way that encourages them to treat their customers likewise. Read the book, Nuts!
One industry that abhors surprises is the banking industry. When a customer borrows money, the bank expects to be repaid! Funny about that. Tip: When you know in advance that you will have a problem making the loan payment, go to your lending officer and explain the circumstances. Bankers are people, they want to help and will do so if approached in advance of a problem. Suggest alternative ways in which you can handle the challenge and ask for their input and advice.
The worst thing you can do in such situations is ignore the problem and fail to let them know in advance.
At a Managing Partners Forum currently being held in San Diego, CA, Larry Bodine Regional Diretor of PM Forum, writes that R. Bruce McLean, chairman of Akin Gump in Washington, DC, said that next year will mark the first time a lawyer charges over $1,000 per hour. He said that law firm pricing and client demands for lower rates are on a collision course. (Haven’t we heard this before?) “There is a real opportunity to be a market leader in alternative pricing,” he said.
You may want to review our earlier discussion about alternative fees becomes even more important. In Law Practice Management Review: The Audio Magazine for Busy Attorneys, we interviewed six major corporate General Counsel and Outside Counsel; they shared their concerns and expectations for future billing relationships. Now may be the time for you to review their conversations again.
A new approach to collecting your fees, that is, those fees that have already been billed but are languishing in the aged accounts receivable file, was suggested by Sean Carter.
His wife wanted to refurbish their house and he thought he had a clever way around agreeing … Tell her to collect the outstanding bills and she could have anything she wanted! A novel approach, indeed.
Sean highlights, in a humorous way, one of the most significant challenges facing today’s law firm: Collecting Your Fee.
Another significant challenge that comes before collecting is billing. Studies have shown that unless the lawyer bills his/her time as she/he proceeds through the day, there is a minimum 10 to 15% loss of revenue. Couple that loss with the further loss by having a realization rate on collecting that is less than 100% and you have a most deplorable situation.
With diligence and a greater focus on self-interest, the lawyer can increase his revenue and earn that to which he/she is legitimately entitled — and the client agreed to pay!
Managing the risks of a law firm is essential. One of the best paradigms to work under is:
Under the rubric of Homeland Security, banks now have the authority, as of October 28, 2004, to send you a “substitute check,” which is a printed copy of your check after it has been imaged. Thus, clearing of checks (and withdrawal of funds from your account) no long depends on transporting a physical piece of paper from one location to another. The theory is that commerce can continue irrespective of attacks on our country.
From a management perspective, this is a “red flag” alert. While your revenue will come in later than the date billed, your expenses will go out almost immediately upon mailing/delivering your check.