By Brenda Barnes bio
Practicing law is a tough gig. There is always so much to do to ensure your practice is successful. Focusing on your clients is your first priority, but are you also keeping an eye on your firm’s financial health? After all, staying profitable is not only crucial to your success, but is also important to your clients’ success.
To help you keep profit on your radar, here are 5 ways to track it to keep your firm on target:
#1 Track Prospects & Leads
- Stay engaged in finding new business or cultivating new matters from existing clients.
- Measure the number of touches on a weekly basis.
- Track your progress and hold the partner group accountable for follow up.
- Build up your database.
#2 Track Number of New Client/Matters
- The firm dashboard should include the number of new clients/matters the firm has opened on a monthly basis so you can contrast/compare.
- Know the expected dollar value of each new client/matter by teaching the attorneys how to budget. This measurable is critical to cash flow forecasting.
- Knowing your number of client/matters also establishes proper staffing utilization.
#3 Track Timekeeper Productivity
- Billable Hours to Total Hours Worked should be 80% or higher depending on class of attorney.
- Collections – Should be based on budget & profitability.
- Originations – Compensation plans often require tracking of originations and splits.
- Profitability in Billing Rates
#4 Track Realization
Know the RULES!
- Realization – How much is ultimately collected versus the effort expended?
- Utilization – How do timekeepers utilize their time on billable versus non-billable activities?
- Leverage – Ratio of Associates or Non-Equity Partners to Equity Partners in the firm
- Expense Control – A planning process or budget that supports a firm’s goals
- Speed – Gap between time charges are incurred and date payment is received
#5 Reporting
Make a point to review the information you have at your fingertips
- Standard Set of Financials – Balance Sheet, Income Statement (P&L), Statement of Cash Flows
- Budget and Cash Flow Forecast
- Productivity Report
- Dashboards
If your current software cannot produce your financial information in a useful way, consider other software that can.