Seldom a day goes by in which I do not encounter
someone involved in law firm ownership/management getting very focussed on the
wrong performance indicators for their firm, including data that does not
really indicate good performance at all.
Many Principals tend to be very short-term focussed
on, for example, fees rendered for the month, and the current month Profit and
Loss.
Even supposedly professional managers regularly
overlook the most obvious and fundamental issues, and devote far too much
energy in areas that are not the powerhouse of profitability, and therefore ongoing
financial stability and strength.
The source of all Revenue is the effective effort that
the firm’s human resources invest working at the firm’s Business Plan.
In any given period pretty much all of the firm’s
Expenses are invested into making those resources available, to work mainly on
clients’ files, ClientTime™…and to a lesser degree on the firm’s own “matters”,
FirmTime™.
The ongoing Revenue potential, and therefore profit
potential, can be quite reliably calculated, using indicators that can be
continually reality-tested as the months unfold.
Investment of ClientTime™ will, in shorter or longer
timeframes depending upon the work type and firm’s credit polices etc., ensure
clients can be billed according to the terms of each retainer.
Investment of FirmTime™ in planned areas like
marketing, knowledge management, training, processes, supervision etc., will
ensure the firm has future work in the right volumes and can process it
efficiently and deliver value to clients for the fees sought to be rendered and
collected.
The real key to profitability is in properly planning
the FirmTime™/ClientTime™ mix for each team member, and then ensuring that it
is consistently achieved or exceeded.
View the complete short article and graphs here...
https://www.linkedin.com/pulse/single-most-important-piece-financial-information-all-rob
