Make More Rain : technology, margin

Cash Flow An Important Metric For Law Firms

Admin — Thu, 10 Apr 2008 07:00:03 GMT

No matter how much you work, until you convert it to cash it is worthless. The average days in the law firm cash flow cycle (from worked to collected) is 169 (source: 2007 Law Firm Economic Survey from LexisNexis). Shortening your cash flow cycle has a positive impact to liquidity and thus your cash flow cycle should be measured.

There are two metrics that need to be measured: days to bill and days to collect. Determining these numbers on a timekeeper level identifies those timekeepers who are efficient and those who aren't. The opportunity then is to set a standard and work towards compliance by all timekeepers.

What is this standard? It depends on the area of practice. Many insurance companies just won't pay under 60 days of accepted electronic invoice and will only accept these invoices quarterly. In this case, 150 days isn't so bad. Some areas of law (many domestic relations situations come to mind) should, by default, be prepaid. Any work in process should be billed immediately and applied against the prepayments. In these cases a cash flow cycle of 60 days should be cause for concern.

Tools such as Juris from LexisNexis' Active Information can help you track this key performance indicator so that you can improve your liquidity.

We have begun taking submissions for the 2008 Law Firm Economic Survey. If your firm is interested in participating, please contact Brian by clicking here.

Eight Legal Technology Trends For 2008

Admin — Thu, 06 Mar 2008 08:00:56 GMT

Dennis Kennedy, in an article published February 27, 2008 on llrx.com, writes of eight trends in technology that will impact the legal industry this year. Although he predicts a "sleepy year for legal technology", Kennedy believes "[f]irms that are good at technology will take advantage of opportunities to widen their technology advantage over their competitors and position themselves well for the time when economic recovery comes."

The trends for 2008:

Making Better Use of What You Already Own.
Expect budgets to tighten and firms to look at what is on the shelf and spend more effort in making what they already have work better for them.

Lawyers Win Round 1 in the E-discovery Battle . . . by a Wide Margin.
E-discovery isn’t going to be nearly as big a hit inside law firms as it is inside of tech shows in 2008. "Electronic discovery remains a trickle rather than a flood in today's litigation world."

Security Begins to Matter . . . Really.
Kennedy expects clients, particularly in healthcare and finance, to press firms on security. He notes the lax policies at law firms related to sensitive data (something I too have observed). Hot topics include drive and folder encryption, remote access, and more stringent password policies. Email encryption is notably absent from this list. Speaking of email . . .

The Death Throes for Email?
Email has proven an unreliable mechanism for communication, says Kennedy. Because of the problems inherent with email (spam for example), communication tools like instant messaging and file transfer protocols will increase and use of email for quick communication and file transfer will decrease. In my opinion, the same security concerns are present in other online communication protocols, not just email. I am not betting on widespread adoption of more secure standards in the legal community in 2008, however.

Going Mobile.
For those who haven’t already moved to blackberry devices and other mobile devices, Kennedy predicts the productivity gains by those who already use the technology will lead others to adopt them. He also notes the widespread use of tools such as remote access that many attorneys now take for granted. I will add that I believe more and more firms will demand web-based applications to expand their mobile workplace.

Opening Audio and Video Channels.
In addition to the increased use of blogs and RSS feeds, Kennedy predicts a higher use of podcasts and streaming video by law firms in 2008. Several companies that cater to the legal market, including Martindale Hubbell, are implementing use of social networking tools such as this into their offerings. I think it is still a few years away before more widespread adoption by law firms, but it will certainly be something to watch.

Dancing with a Recession.
Sometimes you can talk yourself into a recession. Enough has been said about it ~~(though the media has been curiously silent lately)~~ and the indicators are still pointing downward. Kennedy predicts that firms will want to delay large investments and will look into ways to meet their needs without costly hardware upgrades. Kennedy expects Software as a Service (SaaS) and Open Source software use to increase in 2008 as cost effective ways to upgrade their technology.

Smart Ways to Work Together – Collaboration Tools.
When it comes to productivity tools, Kennedy writes, “2008 will see the growth of ways for lawyers to use technology to work together with clients, colleagues, courts, opposing counsel and others.” Kennedy, along with Tom Mighell, co-authored a soon-to-be published book called The Lawyer's Guide to Collaboration Tools and Technologies: Smart Ways to Work Together. The book can be pre-ordered by clicking here.

Read the entire article by clicking here.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

Law Firm Pricing Management

Admin — Thu, 21 Feb 2008 08:00:46 GMT

One of the more common questions I hear asked by attorneys is how to set their rates. Many attorneys raise their rates periodically but not as part of a strategy to maintain or increase margin. Pricing management is addressed in detail in an article in Managing Partner Magazine titled Pricing Management. Noting that most firms still use a "reactive" approach to pricing, the article suggests instituting a pricing management function within the firm closely tied to the finance and marketing functions. A systematic approach is recommended that positions pricing with your strategic goals.

According to the article, firms should prioritize consideration of the price it will charge for its services and to ensure that the firm’s value and pricing propositions are constantly reviewed and improved upon, and communicated to clients at all levels of the firm. Firms should manage the pricing function around three levels: industry, practice and engagement level.

Industry Level: invest in understanding how variables drive supply and demand for legal services in your particular industry of practice.
- Systemic drivers: focus on short and long term considerations in the industry affecting client demand.
- Service delivery: leverage your firm's technology and skills as value that sets your firm apart
- Client patterns: how often they are a source of new business, how well they pay, etc.
- Talent supply: look into alternatives in how services can be delivered to be more cost effective.
- Pricing Czar: A finance director or equity partner should be dedicated to reviewing these drivers and organizing a pricing strategy and structure that meets the financial needs of the firm.
Practice Level: understand the markets that your firm and its practices operate.
- Testing client perceptions: client interviews, surveys, etc to better understand client need and provide better value.
- Discriminating among clients: develop rates that fit the client and practice area, not one-size-fits-all.
- Objectively reviewing fee schedule: periodically check market position as well as reputation of key partners by conducting blind study of key clients.
- Central pricing function supporting practice-group leaders: remove discretion in pricing except at practice group level - discounting should be first approved by pricing czar.
Engagement Level: getting the best price for each matter
- Training: partners need to understand the effect even minor discounts have on the bottom line; develop skill in communicating value.
- Tools: having proper tools to measure performance so as to maximize profitability based on comparison of historically similar matters.
- Systems: develop processes to review efficiency and improve on it to better price similar matters in the future.

Though some feel trapped in their pricing scheme, firms can and should plan how they price their services. With a well-conceived and implemented pricing plan, firms can be proactive and systematic in developing a pricing structure aligned with their strategic plan.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

A Warning For Law Firms (And Business Clients) Using Facebook

Admin — Wed, 20 Feb 2008 08:00:41 GMT

There has been some discussion in legal blogs regarding the use of social networking tools such as Facebook as a marketing tool. Kevin O'Keefe notes the potential of Facebook as a growing force for lawyers and businesspeople. Larry Bodine writes [w]hy lawyers can't ignore Facebook for networking.

The Birmingham Post (UK) writes of a reason why there should be caution in using Facebook. In an article titled Facebook May Blow Up In Your Face, several potential "minefields" are noted:

Facebook is for personal use only: In its terms and conditions, it states in the first sentence under User Conduct:

"You understand that except for advertising programs offered by us on the Site (e.g., Facebook Flyers, Facebook Marketplace), the Service and the Site are available for your personal, non-commercial use only."

In the terms and conditions, every user agrees not to register for more than one user account, not to register a user account on behalf of another, or register a user account on behalf of any group or entity.
You can be banned from Facebook for a violation of terms, subject to "final and binding arbitration" under Delaware law, likely in California.
Facebook has a license to do whatever it wants with content you provide. In theory, you could upload a photograph and Facebook could sell it without you receiving a penny. If you write lengthy notes about business related issues, these could be turned into a book by Facebook for its gain, not yours. Relevant wording from terms and conditions:

"By posting User Content to any part of the Site, you automatically grant, and you represent and warrant that you have the right to grant, to the Company an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to use, copy, publicly perform, publicly display, reformat, translate, excerpt (in whole or in part) and distribute such User Content for any purpose, commercial, advertising, or otherwise, on or in connection with the Site or the promotion thereof, to prepare derivative works of, or incorporate into other works, such User Content, and to grant and authorize sublicenses of the foregoing."

Bodine cites Joshua Fruchter, in a more recent post, citing methods of using Facebook as a marketing tool. Particularly in regard to posting copyrighted content, this should be re-assessed.

Bodine and O'Keefe promote Facebook as a networking tool. Facebook does have a section for businesses called Facebook Pages that serves this purpose. However, there is no pre-screening process to ensure that the entity is in fact who it states it is (read: Wikipedia-ish). There is an additional terms and conditions (which incorporates the original terms) that doesn't negate any of the above concerns (apart from allowing commercial use). If you plan to utilize this tool, make sure you follow the guidelines of Facebook's terms and conditions. [poll=7]