When you think of growing your law practice, the first thing that comes to mind is most likely gaining new clients. But it’s not the only way. It may not be entirely obvious, but quality practice management software will allow you to bill more, collect more, be more productive, and make informed, data-based business decisions.
Increasing the number of clients you serve takes more time, energy and capital than maximizing the profit on your existing clients. So it only makes sense that before you invest in expanding your client base, you should make sure you’re using your practice management software to its fullest potential to maximize revenue.
Ensure Accurate Time Tracking & Billing
On my first day of work as a lawyer, my boss handed me a stack of blue sheets of paper that neatly broke my day into six-minute increments. Armed with a pen and wristwatch, I was ready to start making money. But I knew I wasn’t going to enjoy this time tracking thing, and I know I’m not the only one who felt that way. Even though things have changed for the better in the more than 20 years since my blue paper experience, a recent study estimated that law firms collect only 71 percent of the fees they earn. There is no good reason to give up nearly one-third of your revenue.
Accurate time tracking remains a weakness for many attorneys, but there is a seemingly infinite number of time tracking apps available for Windows, Mac and mobile devices. If you’re using a legal practice management system such as Rocket Matter, you’ll find many opportunities to enter your time. Whether you’re sending an email, performing a task, working on a document or attending an event, there’s a place for you to record your time. You also have the ability to keep multiple time trackers open simultaneously, so you can more easily track more than one matter when switching between tasks. When you’re not at your computer, you can access the time tracker in their mobile app. No more excuses for not accurately tracking your time.
If you bill by the hour, it’s easy to see the correlation between time and money. But even if you don’t bill by the hour, accurately tracking your hours has advantages. First, including all of your time on a statement lets the client know you’re not trying to nickel and dime them, and you are, in fact, giving them some slack. This can only help in lessening billing disputes.
Second, in litigation matters, even if you are working on a contingency basis, you may need to show your hours to the court to collect your fees, and accurate, detailed billing records make it more likely that the judge will accept the hours you claim it took.
Third, the only way you can truly know what kind of profit you’re making on specific types of cases is to keep track of the hours of all your staff. It could be that a practice area you think is highly profitable is taking a lot more time than you realize. I will expand on this idea later in the article.
Streamline & Increase Collections
The other side of the billing coin is collections, another area where many lawyers aren’t doing their best. Billing practices that include sending long-delayed or unclear statements lead directly to challenges, delayed payments or no payments. The longer it’s been since you helped your clients, the more likely it is that they’ve forgotten how much you helped them. The fewer details you include, the less clients will trust what you say you did for them. Law practice management software can help you avoid these mistakes by making it easier to record your time as you spend it. That means timely, detailed statements with less effort.
A positive thing you can do to increase collections is to make it as convenient as possible for clients to pay. While there are dedicated online invoicing services, integration won’t be as tight as if you use the bill payment feature included in your practice management system where you can create and send and invoices from your already entered time and expenses. Another benefit of using your practice management software’s online payment processing feature is that the client will be more comfortable going to the same portal they already use to share communications and documents.
The more productive your business is, the more time you can spend on activities that increase revenues, like billing time on other matters or working to attract new clients. Here are some of the key ways in which legal practice management platforms increase law firm productivity.
Document Assembly – Many attorneys create the same documents over and over, from retainer agreements to document filed with the court. Automated document assembly is an easy way to cut down on time, and just as importantly, errors. There are many dedicated programs to choose from for document assembly, but most practice management programs have document assembly capabilities built in.
In general, document assembly works by creating templates (typically in Word) for frequently used documents, and substituting a special code for the areas in the document that change depending on the matter. When you match the template with the case you are working on, the information is pulled into corresponding fields from the matter based on the codes it sees.
Workflows and Templates – One of the most efficient way to increase productivity is to create automated workflows for tasks that recur from case to case. As with document automation, this not only saves a lot of time but can prevent errors and oversights as well.
It is likely you are repeating the same group of steps when handling matters of a similar type. Instead of recreating this set each time you open a new matter, you can create a template of steps and then apply it with one click when needed. The list of repeating items usually consists of tasks and due dates, but you may also find that your cases need different sets of fields based on the matter type, including pre-made tasks, calendar events, contacts and custom fields.
Get Firm & Client Insight With Analytics
Many firm owners only look at how much revenue a practice area generates, without considering all of the costs involved to acquire those clients and to service those cases. Without knowing the full picture, you may be focusing your efforts in the wrong areas. Fortunately, it’s now easier than ever to gather useful data with a legal practice management system.
Origination – When you create a new contact or matter, be sure to enter precise information on how this person came to you. If through a referral, enter the name of the referring person, the company, and a category such as accountant or real estate agent. If the lead is from a marketing or advertising campaign, be specific as to which campaign, what keywords, etc.
If you’re using Rocket Matter, you should take advantage of its advanced analytics package. This allows for reports on sources of income, complete with expense data related to the matters, so you can easily assess the profit margin associated with a type of case.
Costs – The reason Rocket Matter includes matter-related expenses in its reports is that revenue is only half the story. What actually matters is net income to you and the firm. If your gross revenue is eaten up entirely by costs, you’re working for nothing. Thorough record keeping is essentia. Be sure to relate everyone’s time to a matter or category, and be sure to record every expense that is related to a case.
Collections – As I’m sure you know all too well, invoicing a client doesn’t necessarily mean collecting on an account.
Collection reports, like those Rocket Matter provides in its aforementioned analytics package, will give you accurate insights into which clients pay and which don’t. Don’t be afraid to fire a client if you find it’s not worthwhile to work for them financially. Collection data also yields useful information about the types of cases and clients that are most likely to pose problems in the future.
When you compare the revenue collected with the cost to acquire a client and the cost of handling the matter successfully, you’ll know exactly how much money you made from each client, each case type, and each practice area. Armed with this information, you can make informed decisions.
Don’t get stuck thinking that growing your practice begins and ends with attracting new clients. That is just one part of the picture. If you take advantage of your practice management software’s full functionality, you can grow your firm. Increased productivity and revenue, cost savings, and better business decisions are all achievable outcomes.
ABOUT THE AUTHOR
Bob Godnik is an attorney with a passion for technology. He helps attorneys grow their practice through legal technology, website design and digital marketing. Website: The Legal Techie | Twitter: @bgodnik