Page 57 - Strategic Planning for Law Firms

Strategic Planning for Law Firms
Profitability
Study your firm’s profitability, firm wide, client wise, practice group wise, partner wise, associate wise and any other metric you use. You want to see where the money is coming from, who
is making it, how it’s being made and where the profit and loss centers are. This process always leads to one or more surprises. Good budgeting is at the center of this issue. Too many firms operate without legitimate budgets and when that is the case, they are leeching profit. Furthermore, many firms lack good management reports to enable them to actually see their profit and loss. Ideally, your firm should have the software to allow you to view the profitability of the book of business of each originating lawyer.
From Where Does the Firm Get Its Money?
Which are the firm’s biggest clients? What percentage of the firm’s income comes from them? What efforts are made to keep them happy? What’s the contingency plan if you lose a major client? What clients pay the highest rates and pay bills faithfully? Which generate the most number of hours? The greatest number of cases? The biggest cases? Which partners are responsible
for this work, and what happens if that partner dies or becomes disabled? How
are they compensated? What is the firm’s relationship with them? What efforts can be made to diversify the firm’s client portfolio? Dig deep into where the money is coming from. List your clients by gross revenue each year and compare the list year over year.
Where is the Firm Leaking Money?
Whatarethefirmexpenses? Beyondsalariesandthelease,whatareitsexpenses?Whatdoes it spend on marketing? Where do those dollars go? What does it spend on firm events? What monies are spent on partners’ personal expenditures? What money is spent on the “little things”? What money is spent impulsively? You want to capture all the firm’s expenses to the nickel.
Do you track writedowns on bills? Do you have a program to minimize internal writedowns before the bill goes to the client? Do you have training as to why writedowns are occurring? Do
©2021 Federation of Defense & Corporate Counsel
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SECTION 08 WHAT SHOULD YOUR STRATEGIC PLAN ENCOMPASS