Whilst strolling through the Internet one day, I came across this post by Peggy Gruenke at Attorney at Work. Twenty simple ideas that are timeless and critically important if you want your law firm to succeed. Here are a few of my financial-themed favorites with thoughts of my own.
Peggy’s five financial tips – greatly condensed
- Write a business plan
- Create a budget
- Know your overhead costs
- State your fee with authority
- Bill early, often, and strategically
Money and goals
As the business owner, your goal is to see the big picture. Who are you? Why are you unique? Who are you best equipped to serve? This is the purpose of a business plan, according to Peggy Gruenke.
My input? Don’t be intimated! Your business plan does not have to be a magnum opus. You can get it done in a few pages. Creating a business plan will give you:
- Clarity about what you want to do
- Control over your own fate
- A strategy for staying organized and on track
- A way to measure and monitor your progress
- A path to help you move forward
Want help? See my business plan checklist – originally designed for law students, but easily conformed to active law practices.
Budgeting and costs
Budgeting can be as simple as a basic spreadsheet. Track what comes in and what goes out. Don’t bother with incorporating prior years (unless you have a driving reason to do so). Just start now. Toward year-end use your 2018 data to create projections for 2019.
As Peggy says, “You should know (by heart) how much money you need to make to keep the doors open.”
To get started, revisit this article by yours truly, Dee Crocker and Sheila Blackford. As motivation, consider this excerpt:
Every law office should have a budget. Without one, it’s easy to overspend and hard to plan for future purchases. Knowing your overhead costs will help you decide how much revenue you need to make and how much you need to charge to bring in that amount. Failure to budget can cause financial problems. Lawyers with financial problems may take on new clients who have money in hand, leaving the work for existing clients unfinished. This can lead to disciplinary complaints from clients whose work is not completed.
I guarantee that your monthly “budget to actual” report, which compares actual spending against budget projections, will become your new best friend.
Stating your fee with authority
When a prospective client tells you that Lawyer Smith is willing to do the same work for $2,000 less, tell the person kindly that he can then retain Lawyer Smith. When you reduce your fee, you will have lost the trust of your prospective client. Odds are, in time, that client will leave Lawyer Smith and retain you to handle the mess that Lawyer Smith made.
Set a fee and stick to it! I know this can be hard, especially if you’re new to solo practice. Know in advance what you propose to charge, don’t make it up on the fly. Be matter-of-fact, business-like, and deliver the number without hesitation. You’re always free to make adjustments with the next case, but don’t waiver with the client sitting in front of you. For help in getting started, see this post.
Bill early and often
When you are ready to bill, issue invoices as soon after the event as possible: “As each day passes after an event, the perception of your value is diminished. If you send out the bill even two weeks afterward, the client won’t perceive the value to be as high.” (Peggy’s words of wisdom.)
There is no reason you can’t deliver your final bill with transactional documents. Take advantage of the arc of client gratitude while it is still in your favor!
Looking for more billing tips? Check out this resource.
All Rights Reserved 2018 Beverly Michaelis