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7 Law Firm Profit Killers - Law Firm BI

Posted by Daniel Pasquarelli on Thu, Jun 08, 2017

7 Law Firm Profit Killers - Law Firm BI

by Daniel Pasquarelli / June 8, 2017

Law-Firm-Profit-Loss

The website, called the Difference Between, does a beautiful job of explaining how efficiency and productivity differ. Here’s what they have to say:

Key difference: Efficiency is the ability to do something or produce something without wasting materials, time or energy. It is the quality or degree of being efficient. Productivity is the rate at which goods are produced or the work is completed.

The two terms have a direct influence on each other, much like acceleration has a direct impact on speed. Good efficiency contributes to higher productivity which contributes to building a successful law firm with high profits. The other side of the coin? Inefficiency leads to low productivity which is a major factor in low-performing, low-profit law firms.

There are many mistakes in processes that you conduct on a daily basis in your law practice that can lead to inefficiency and result in low productivity and profit loss for your firm. Let’s discuss these top profit killers.

Profit Killer #1 - Mistakes in Staffing and Task Assignments

One of the biggest profit killers in law firms is when attorneys spend time on tasks that don’t earn revenue. Even in small offices, when lawyers answer non-screened phone calls, schedule appointments, or waste time on other non-revenue generating administrative tasks, profits are literally being flushed down the toilet. Smaller firms must think like big law firms. How?

By assigning administrative tasks to staff members who don’t generate revenue so that attorneys can spend time on tasks that do generate revenue and other fee-producing work or client development pursuits.

Make sure staffing resources are handling tasks best suited to them. Big law firms make sure that administrative assistants are cross-trained. In addition to the extra coverage when somebody is sick or on vacation, nobody sits idle. This becomes increasingly important, if one administrator moves on. If you find that attorneys continue to spend time on administrative tasks, ask why. If it’s because of a need for control, have a frank discussion. If it is because work isn’t getting done, find out why. If you need to hire another assistant, it is money well spent.

If hiring staff for your law firm is not in your budget, consider automating at least some of your non-billable tasks with one of the many software programs on the market designed particularly for law firms. Virtual assistants and part-time workers hired on a project basis might also be a viable solution.

Profit Killer #2 - Sticking with Paper

It’s no news that the legal profession is paper-heavy due to the amount of reading, writing and research involved. But sticking strictly to paper has some major disadvantages: finding what you need is difficult, it’s expensive (the paper itself, printers, ink cartridges and filing requirements) and contributes to high maintenance costs and delays.

In addition, without the right administrative personnel in place, it’s not uncommon for documents to go missing due to poor version control, organization or filing.

How can a paperless (or at least less paper) create more efficiency? Probably the most important benefit is how easy it is to search for documents and case files using keyword searches, especially for big law firms. In addition to online search capabilities using keywords (which means you can search on virtually anything), it’s much cheaper to maintain and store data online than it is in a paper environment. This results in reduced labor and cost for the firm. In a paperless practice, sharing files is a breeze and client communications and efficiency improved.

Profit Killer #3 - Using Manual Billing

Going hand-in-hand with old-school, inefficient ways (such as sticking with paper) is manual billing. Manual billing processes are time-consuming and tedious and prone to error. Besides being inefficient, manual billing can lead to cash flow problems for your law firm due to uncollectible invoices. 

If you are still using a manual billing process, you are most likely losing money due to errors. Not only can you lose income by billing clients too little, but if you accidentally overcharge a client you could be looking at potential lawsuits against your firm. Remove the risk and save time with an automated billing and time billing system.

A good automated billing and timekeeping system will handle most aspects of money matters, including: retainer management, billing against hours, tracking hours, trust accounting and recurring billing. What should you look for in a billing system? Look for an integrated, flexible timekeeping system with easy to use invoicing. For big law firms, make sure the system has the ability to integrate hours from multiple attorneys.

Profit Killer #4 - Refusing to Go Mobile

Lawyers who ignore the potential benefits of anytime/anywhere access are not just leaving money on the table, but throwing a barricade on their road to efficiency. With mobile access to cloud-based case and document management systems and time management/ billing/accounting software, desktop computers are fading into a thing of the past. Lawyers can easily capture time-related data on the go with smartphones, tablets or laptops where and when it happens. There’s no need to record the data later, eliminating the chance of overlooking the entry. Mobile devices can also capture expenses, ensuring efficient record-keeping and more accurate billing.

With access to your firm’s business intelligence resources whenever you want, you will greatly improve your efficiency.

Profit Killer #5 - Settling for Obsolete Technology

Failure to adapt to new technology will cost you the success of your law firm. If your law firm is using obsolete or out-of-date technology, it will have a direct impact on the firm’s efficiency.

If you perform an assessment of your current systems, do they do what they were designed to do? Better yet, are they doing what you need them to do? Technology grows in leaps and bounds, and hopefully so has your law firm. Can your current technology handle your current needs or are there newer, better technologies and systems on the market that can provide improved solutions and better suited features for your law firm?

For example, can your current system allow you to easily set up new client and case information, schedule tasks and deadlines, quickly locate records, share information and communicate among other attorneys and office personnel, update the status of tasks related to a case, and create customized reports? These features are standard for most big law firms using cloud-based systems. The right technology can significantly improve and enhance your efficiency.

Profit Killer #6 - Working with Piecemeal Software

Many law practices have “fragmented” or “piecemeal” software that has been bought and implemented bit by bit, over a period of time. Even big law firms have separate software programs for billing, documentation, reporting, time management, and other functions. The problem is that because these programs are not integrated, you end up re-entering a lot of the same information (for example, contact information and case information) over and over. The information is not automatically populated from one program to the next, resulting in a waste of time and in many cases, certain inconsistencies.

Rather than converting to a one-solution, totally integrated software, both small and big law firms alike, continue falling down the rabbit hole. They try to make do with what they have by adding new components here and there, afraid to take the leap of faith. Luckily, with today’s legal software solutions on the market, conversion is not the complicated undertaking that they fear.

Profit Killer #7 - Docket Control/Task Tracking

When it comes to the legal profession, nothing can ruin a lawyer’s reputation quicker with clients and partners than missing deadlines and filing dates. Without time management and calendar software, staying abreast of time-critical steps in just one case is difficult. Multiply that by all the ongoing cases assigned to you, and you are sure to have certain missteps or time conflicts along the way.

And when you consider all the cases in a big law firm, it’s no wonder things fall through the crack without proper calendar management. If you are using non-integrated or manual calendars for attorneys in a big law firm, one of the easiest ways to improve efficiency is to have access to online, shared calendars.

If you want to increase productivity in your law firm, the first step is to identify the processes that are stymying efficiency. Better efficiency means better productivity which leads to greater profits. If you stick with old habits and outdated technology, you will fail to manage your practice in the most efficient way possible, risking profits.

Instead, you need to do what big law firms do by deploying smarter technology so that your law firm staff can work at their most efficient, productive level. Don’t let these profit killers infiltrate your law firm and you are sure to see rising revenue. Download our free Viewpoint Document, The Keys To Successful BI For Law Firms, to learn how to implement smarter technology that will lead you to higher profitibility!

 

BigSquare is the leading provider of Business Intelligence for law firms and professional service organizations.  We focus exclusively on law firm reporting, law firm BI, law firm profitability and law firm analytics.

The Keys to Successful BI for Law Firms

Tags: Business Intelligence Law Firm Profitibility

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