In Law Practice Today, current (September) issue, there are two articles dealing with financial yardsticks you can use to review and know how your law firm really is working, well or not so well.
And, in the same issue, see the article about collecting your fees … just in case you are not collecting 100% of your billed fees.
At a conference last week in Nashville, TN, sponsored by Juris, Inc. and Citigroup Private Bank, among others, the topic was financial bench marking for law firms.
Kudos to those involved.
Benchmarking, according to the presenters, can be used for several purposes:
a. Explore operating deficiencies in the law firm
b. Understand where you are currently relative to your goals
c. Fact-based information to gain consensus among your colleagues
Is this a new fad? Or a new management tool? Industry has used this technique for many years. Several studies in the legal community have given us measurements in the past … but, there never has been the concerted effort there is today.
As the contrarian that I am, I will assert that this information is helpful … Helpful, but should not be controlling. The only thing that matters, in my opinion, is what your goals and strategies are … not what someone else’s may be. Yes, we live in a competitive world. And, to some extent, their performance may impact us. However, we must act in accord with what fits with our firm’s culture, with the capabilities of our personnel, and with the aspirations we have, not those of our competitors. Fortunately, there are enough clients in the world that there is room for us to live nicely. The benchmarking should be used as a guide to suggest areas where we might improve … but not as a mandate for change that is inconsistent with our firm’s culture.
Phishing scams – What are they? And some suggestions from my bank on how to avoid them:
Phishing attacks are "spoofed" e-mails and fraudulent websites designed to fool recipients into divulging personal fianancial data such as credit card numbers, account usernames and passwords, social security numbers, etc. By "hijacking" the trusted brsands of well-known banks, online retailesr and credit card companies, phishers are able to convince up to 5% of recipients to respond to them.
I’ve been tempted on a number of occasions and, having been burned a couple of times with credit card fraud, have learned to think twice about who is seeking this information. Even now, if in doubt, I forward the information to my web master or my accountant to ask their advice. Most recently, this occured with an e-mail from the Internal Revenue Service — NOT — and my accountant told me to delete the e-mail. (more…)
If you purchase ads on the Internet to boost your web site or blog traffic, you may be overcharged. Business Week.
This is a major challenge for Google Ads and Yahoo ads, but, of course, they are financially benefitted.
In an apparent attempt to protect the public, a State Bar committee is proposing a new rule of professional conduct and rule of court: This would require all lawyers in California to tell their clients if they do not maintain professional liability (malpractice) insurance.
The problem: The 30,000 lawyers in this category (who don’t have malpractice insurance) are primarily sole practitioners and attorneys of color.
The following is the Statement of Opposition filed on September 14th with the committee: (more…)
There is a cycle for every work project: Getting the work (sales); doing the work (production – operation); and finance (getting paid). Cash, being the grease that makes this wheel turn, has to be considered at every stage. In the selling process, what will be the terms of your agreement? Most lawyers forget about this and merely focus on getting the client. If the client fails to pay on time, most lawyers let the client slide, forgetting that the agreement is a two-way street.
Cash is also important in the production cycle. Paying staff – they can’t wait, they have families to feed; vendors, however, can be encouraged to wait a bit.
And, of course, in the finance segment, getting paid is what it’s all about!
Then, we start over with a new cycle.
Collecting fees is always one of the most difficult issues for firms. If their realization rate is not 100%, you need to read further.
Embezzlement in law firms in not so uncommon, as noted by Tom Collins who reports the following:
"As a CPA that worked with businesses of all types before founding Juris, Inc., I can say that I have never encountered a single case of embezzlement outside of the legal community and found it relatively commonplace among law firms. There are several factors making law firms more susceptible to misappropriation of funds—part-time executive management, absent or weak financial management, inadequate internal controls, high volume of pass through disbursements, decentralized approval and signing authority plus a tradition of deadline or crises driven transactions.
A recent Juris, Inc. survey of midsized law firms disclosed that partners in the top performing 25 percent of these law firms earned twice the income of the next twenty five percent and more than 7 times the per partner income of the bottom twenty five percent.
Rees Morrison suggests a very interesting concept … sort of a blend of hourly rate billing and value billing … Perhaps we need this intermediate step to get to true value billing.
"What would be the result if a law firm asked its lawyers to charge their time not at a single hourly rate (say, $400 per hour) but at three levels. At the lowest level, where the service was simple or inefficient or travel, perhaps the rate would be 20 percent less ($320 an hour). The typical rate, for work in the comfortable sweet spot of the lawyer, would be at the standard rate. For work over the weekend, rushed, or demanding special teamwork research or creativity, the rate would be 20 percent above ($480)."