The Lawyer’s Office
Prepare for your future by reviewing the past year
By Paul J. Sullivan
The beginning of a new year is a good time to reflect on the past and plan for the future. If you have good reporting systems in place in your practice, you can more easily determine if 2007 was a successful year.
Whether successful or not, you should be able to make a plan for 2008 to either repeat the success of 2007, or strive to make a turnaround for the new year. Following are some questions you should ask yourself.
1. What is my primary goal for 2008? Everyone has some idea of what they’d like to achieve in the near future. By thinking about a realistic goal, and then writing it down and reviewing it along the way during the year, you will have a good opportunity to actually make it.
2. What areas of my practice are most profitable and why?
3. What areas are least profitable and why?
4. What changes must I make to increase the profitability of these practice areas?
Some practice areas will be more lucrative than others. Knowing which areas are profitable and which are not is essential. A good billing and reporting system can help you determine this.
Consider cash flow (are you required to cash-advance expenses for long periods, and how quickly do clients pay?). How much of your time is actually billable, and what economies are inherent in high volume. Unprofitable work for one or two files can become profitable because of a large volume.
Economy of scale (the ability to use more efficient procedures because of repetition) can make the difference. Assessment and then analysis is the key. Unless you document, you may be losing money without knowing it.
5. How is my practice perceived by clients in my market?
6. Why do clients purchase legal services from me or my firm?
7. Why do clients purchase legal services from others in the same market?
Knowing how you are perceived by your clients could make a big difference in your plan. Clients come to you for specific reasons. Do you know what they are? Taking the time to survey your clients can return tremendous rewards.
You can conduct a formal survey, but one-on-one contact is better. Picking up the phone or visiting a client in person and just talking about things (without the meter running, of course) can enhance your credibility with the client and give you an opportunity to discover the answers to these key questions.
8. What forces within my control could affect my law practice?
9. What forces beyond my control could affect my law practice?
10. What are current trends in these forces? Sometimes, no matter how good your plan and its execution, forces beyond your control can affect your practice. Knowing what these forces are and what the trends are can prevent surprises down the road.
In the practice of law, perhaps the biggest potential force is legislation. Staying active in both your local and state bar associations can keep you abreast of these changes and give you a way to have a voice. Capitalize on the things you can control, but be prepared to adjust for the things you can’t.
11. Who are my major competitors?
12. What are my competitors’ strengths?
13. What are my competitors’ weaknesses?
14. What are my strengths?
15. What are my weaknesses?
Every business has competition. Competition creates an environment where consumers end up with the greatest return on their dollars. If a business provides inferior products or services or overcharges, it’s only a matter of time before someone else challenges it.
To compete with others in the same market, you must know your competitors and how you compare to them, both positively and negatively. Once you do, you can take the steps required to gain advantage.
That advantage translates as direct benefits to your clients. Be sure your clients understand the benefits you can provide that your competition cannot.
16. What technology do I need to adequately serve my clients?
17. What technology will I need to adequately serve my clients? Technology is an emerging force in the practice of law. Many clients demand that general correspondence and billing be in electronic, rather than paper format. Customized billing on a client-by-client basis is becoming the rule.
Technology can make your practice more efficient for you and less costly for your clients. More and more clients are demanding that you use a given technology if you want to be their lawyer.
Keeping up is a full-time job that takes away from billable time. Use the resources in your community, such as law office administrators, your local bar association, and the ISBA to keep you abreast of the trends in law office technology.
18. Are my profits (income less expenses) increasing or decreasing, and why?
19. What changes must I make to operate at highest efficiency?
20. How can I be a better lawyer?
If you seriously take the time to reflect on the above questions, you will be developing a strategic plan for your future.
If you can’t answer many of the questions because you don’t have the data, then the first step in your plan is to find out how you can get this data in an ongoing, accurate and affordable way.
Best wishes for a successful 2008 and beyond.
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Paul Sullivan, past chair of the ISBA Committee on Law Office Management and Economics, is office administrator for the Peoria firm of Quinn, Johnston, Henderson & Pretorius. He may be contacted at (309) 636-7252, or mailto:sullivan@qjhp.com for answers to management and economics concerns.