The Dirty Word Which Increases Law Firm Profits & Client Happiness
The following article is based on a talk I gave at a legal technology conference, MILOFest, in Orlando, FL.
Numbers. The mere mention of the word causes many lawyers to recoil in horror.
Profit. I’ve been told not to use that word with attorneys. There is decorum in the field of law, they say, a thousands-year old tradition with client service at its core. Profits are crass and are from the business world.
Folks, we have to change this. We need to wake up to the beauty of numbers, and embrace the concept of profit in the legal community.
RELATED: Download the Guide: Law Firm Revenue Growth
Most lawyers are involved in running a business, and making money and representing clients to the best of one’s ability are not mutually exclusive. In fact, they are mutually dependent, or at least more complimentary than most attorneys are comfortable admitting. An efficient practice means you are able to spend less time on administrative stuff and focus more on client work. Better client work leads to more word of mouth, which leads to more business.
Numbers are awesome. They are not to be feared, they are your best ally.
Numbers remove ego from decision making. They allow us to operate our endeavors following the principle of the scientific method – we try something and measure it with numbers, as opposed to sticking with our assumption that the earth is flat. We no longer have to be tied to hunches and initiatives based exclusively on our prior experience and pattern recognition.
For example: at Rocket Matter, do we argue and fight over the best design for our website? No, we try multiple versions at the same time and we see which one results in the most lawyers signing up for our web-based legal software. Do we think we’re doing awesome at customer service? Yes, but we have the data and customer satisfaction surveys to back up our suspicions.
Imagine if you could answer the following questions, all of which a handle on the right numbers will reveal:
- Is it really your marketing that is to blame for your law firm not collecting more revenue?
- Or is it, instead, your inability to collect on the cases you’ve closed?
- Or is it that you are too slow to close your cases and issue invoices?
- Are all of your matters created equal?
- Or are some more profitable than others?
- Same with your associates and partners: there are some that are more efficient than others. Do you know who are your stars and who are your laggards?
Ask yourself this one question: can you use Excel competently? And by competently, I’m not saying you need to be a whiz, but you should be able to sort and filter data as well as compute basic sums and averages. If you cannot, there is a good chance that you don’t have a handle on the most important numbers in your business.
And if you don’t have a good handle on the numbers of your business, then there’s a good chance you are not optimizing your client representation.