Every lawyer is different, but a few things hold true for just about every law firm, big or small: You need more cash flow and more clients. Period.<\/p>\n
There are a lot of pressures on the average small firm or solo lawyer, but a data-driven approach can ensure you\u2019re taking an objective look at areas for improvement and making changes to make your firm more efficient.<\/p>\n
Mary Juetten of Traklight and Sam Glover of Lawyerist<\/a> spoke at the 2023 Clio Cloud Conference<\/a> about how lawyers and legal professionals can use data-driven decision-making to make their practices more profitable. Here are a few tips from their talk.<\/p>\n Use Clio and QuickBooks Online<\/a> to find out how much you’re billing each month, but don’t stop there. Find out which clients owe you money and how long their invoices have been past due for. Organise these invoices from oldest to newest to see how much money is 90 days past due, 60 days past due, and 30 days past due, so that you have a clear picture of your accounts receivable.<\/p>\n Tip: Clio\u2019s Accounts Receivable Aging Report<\/a> can help with this process.<\/em><\/p>\n Once you see how much you’re owed, take time to create an effective process for following up with clients who have past-due invoices. “It\u2019s not good enough to record the time and bill the time. You have to collect the money,” said Mary.<\/p>\n For example, you may want to send an email reminder to clients when an invoice is 30 days past due, and you may want to call to follow up if an email is over 90 days past due. Although collection agencies aren’t popular with lawyers, Mary recommends considering them for persistent collections.<\/p>\n What gets measured gets managed. To see where your time is going, track how much time you’re spending finding new clients (including answering the phone and consultations), how much time you’re spending tracking hours, invoicing and collecting payments, and how much time you actually spend serving clients. Record every task you spend time on, and categorise it within one of these three areas (or more, if needed) using a spreadsheet, software, or even just a whiteboard with post-it notes. Look at which tasks are taking up way too much of your time, and which ones might need an efficiency tune-up.<\/p>\n Suppose you\u2019re finding that you\u2019re spending more time on administrative tasks than on billable work (as, according to the 2017 Legal Trends Report, many lawyers are). In that case, it may be time to hire a legal assistant or to use technology to make some of your administrative tasks more efficient.<\/p>\n How did you pay for the Starbucks in your hand? What about the laptop you’re typing on? How about the Spotify Premium you’re currently jamming to? The answer to all of those questions was likely not \u2018by check\u2019, but \u2018online.\u2019<\/p>\n “You can\u2019t walk into your office and then suspend your normal day-to-day life, which is what I find a lot of lawyers do,” said Mary. “They\u2019re on their iPhone and their iPad constantly\u2014until they walk into their office, and then they want to revert back to paper.”<\/p>\n Implementing a system like Clio Payments<\/a> is simpler than you think, and it can make for a much better client experience. Bonus: The Legal Trends Report also found that lawyers who accept online payments by credit card get paid 39% faster on average.<\/p>\n It’s reasonable to be wary of a fee structure change, Mary advised, but it’s worth trying something new that will simplify your billing<\/a>. But, tracking your time won’t totally be a thing of the past. “It is a fallacy that if you bill flat fees or fixed fees that you don\u2019t have to track your time anymore because, of course, you need to figure out how much to charge,” said Mary.<\/p>\n For example. If you\u2019re looking at charging a flat fee instead of an hourly rate for a certain type of service, first track how long it takes to complete the task, so you know you\u2019re not losing out when you no longer charge by the hour. Then, continue to track your time to ensure that the time you spend on these tasks doesn\u2019t creep upward.<\/p>\n Speaking of your hourly rate, it’s not cheap. As Chelsea Lambert says<\/a>, \u201cA difficult truth of running a law firm is that you need to \u2018fire\u2019 yourself from the jobs that rob your law firm of revenue.\u201d<\/p>\n Take another look at how you\u2019re spending your time\u2014tasks that are below your pay grade should be kicked back to an administrative professional or a service. These could include answering your phones to vet new clients, invoicing clients, following up with clients, or other essential business tasks that your data shows you spend way too much time getting done.<\/p>\n Just like you mapped your time, map out how a person or company goes from being interested in you to becoming a client. What are the ways that you can more effectively check for conflicts before wasting time? In Sam and Mary’s solo lawyer role-playing example, Sam (who played the solo during the presentation) learned that his client vetting and onboarding process was pretty backward.<\/p>\n “I realise that I\u2019m meeting with everyone, which means I\u2019m spending a lot of time in meetings, \u00a0and not all of my meetings turn into clients,” Sam discovered.<\/p>\n In other words, stopping to take an objective look at your client onboarding process\u2014or any process in your firm, for that matter\u2014can give you valuable insight into what might need to change.<\/p>\n Collecting more data upfront is one of the easiest ways to reduce the number of calls and meetings you have to take on while evaluating potential clients. Think of it this way: Your hourly rate still applies, even if you’re not billing it, so any way you can make non-billable tasks more efficient is a win for your firm\u2019s revenues.<\/p>\n Try beefing up the \u2018Contact Us\u2019 form on your firm\u2019s website with relevant vetting questions, or consider hiring someone to field clients before they get to you.<\/p>\n In marketing, the term \u2018cost per acquisition<\/a>\u2019 assigns a numeric value to the effectiveness of a marketing campaign. It\u2019s important to try to keep your cost per acquisition low\u2014in other words, you should be trying to get the maximum number of potential new clients (aka leads) with the least amount of spend. But you\u2019ll only know what your cost per acquisition is if you keep track of your promotional efforts.<\/p>\n “I want to know how many former client referrals I got; I want to know how many visits I get to my website that have turned into the number of calls and where they came from,” said Sam.<\/p>\n Tracking leads in a legal CRM<\/a> or client intake software<\/a> will help you find out which channels actually result in consults and new matters. That’s where more of your time and marketing money should go.<\/p>\n Your conversion rate<\/a> is another important number to track, as it tells you which channels are actually bringing you worthwhile leads.<\/p>\n “Let\u2019s say Sam, you get five leads that come from a speaking engagement,” said Mary. “So a lead is someone who calls Sam and says, ‘I want to talk to you.’ And so you get five of those and three of them turn into clients. That\u2019s great. That\u2019s a 60% rate of converting from a lead to a client.\u201d<\/p>\n Mary also gave an example of a not-so-great conversion rate:<\/p>\n “Alternatively, let\u2019s say the same week you have 25 people who come through your website because you\u2019re paying somebody for search click optimisation, and only two of them turn into clients. So that\u2019s about 8%. That\u2019s not so good.”<\/p>\n Keep an eye on your conversion rate: A certain campaign or channel may have a low cost per acquisition, but a different method with a slightly higher cost and a much better conversion rate may be more worth your while.<\/p>\n As Mary explained, it\u2019s important for lawyers to have a clear view of how their clients see them: According to the Legal Trends Report, 62% of consumers find their lawyer through a referral from a friend or family member, so if your clients aren\u2019t willing to refer you, you could be missing out big time.<\/p>\n “As a lawyer, I would want to know if my clients would refer me,” Mary said. “[With referrals], there\u2019s none of that business development time that has to go into getting them as a lead. It\u2019s the same for any business, and I do believe that as law firm owners you\u2019re all business people. It\u2019s smart business to make sure that you\u2019re finding out whether your clients are happy with your services.”<\/p>\n1. Get ahead of your accounts receivable<\/h2>\n
2. Don’t just create a system for billing\u2014create a system for collecting<\/h2>\n
3. Map out how you’re spending your time<\/h2>\n
4. Make it easy for clients to pay with online payments<\/h2>\n
5. Explore flat fees by tracking your time<\/h2>\n
6. Delegate some tasks to a less-expensive person<\/h2>\n
7. Rethink your client onboarding process<\/h2>\n
8. Collect more data to make client intake more efficient<\/h2>\n
9. Find out which marketing efforts are most cost-effective<\/h2>\n
10. Know which marketing efforts bring in more clients<\/h2>\n
11. Know definitively whether your clients are happy<\/h2>\n