There have been many news articles recently surrounding the performance of law firms in light of the economic downturn. We are seeing an increase in firms closing and merging, and of the SRA intervening in struggling firms.
Recently published research has highlighted an increase in matters being carried out on a fixed fee basis and Des Hudson recently said at the Law Society Management Section Annual Conference, “I don’t think there is any salvation in going down-market, nor do I think a price-led strategy is a sustainable solution for our members.” Which prompted us to ask our clients; ‘How do you ensure you are profitable?’
Despite the increasing trend towards fixed fee work, it seems firms are able easily to provide hourly rates for their fee earners but struggle when it comes to knowing how much a job actually costs them to deliver – and if this is the case, how can you accurately set your fees to ensure you make a profit?
Business Intelligence, from Redbrick Solutions [1], is able to provide some very powerful information to ensure firms monitor and develop strategies to ensure sustainable profitability. Reports include:
- Billable and unbillable hours – This shows how much time has been recorded as billable / unbillable and allows you to ensure you are maximising your billable time;
- Premium / write-off on invoices per Matter – A comparison between the original unbilled time recorded and the invoiced amount. This helps highlight possible gaps in your processes. If you are writing off work in progress, you may not billing in a timely fashion and are discounting your fees as a result.
- Activity Report by Fee Earner – Detailed list of fee earning activities per day; knowing how your fee earners perform daily is vital to ensure you have the right people carrying out the right tasks.
- Office Debtor Age Analysis – Full Office balance age analysis on all matters; this highlights matters where fees are not paid in a timely manner and shows repeat offenders. It also allows fee earners to have more responsibility to ensure fees are paid on their matters.
- Unbilled and Pending Disbursements – This report highlights the value of work in progress that has not been billed and pending disbursements per matter: This focuses on profitability and productivity. Any work not being billed negatively affects your profitability.
- Key Performance Indicators – Key performance indicators for each fee earner; this accurately reflects how each of your fee earners are performing by analysing their work in progress, billed time recorded and deleted, credit notes passed and monies received. This ensures you have a reliable level of cashflow in the business.
- Fee Target Progress – An analysis of fee earner’s progress towards achieving their fee target. This report should be analysed on a weekly, if not on a daily basis. You’ll be able to focus fee earners much earlier in the month to reach their fee targets.
All of these reports can be set up to run automatically and be emailed to you at an interval of your choosing, not only making sure that you have powerful, accurate business information at your finger tips but also removing the hassle of generating that information, freeing you up to set sensible strategies for sustainable growth.
If you would be interested in seeing a 15 minute online overview of how Business Intelligence can assist you in running your business more profitably, please contact us on 0845 166 2629 or email jhodges@redbricksolutions.co.uk [2]