In a competitive market where legal clients demand more for less, law firms need to become more efficient and maximise their billable time to generate greater return. There are simple ways to make your law firm profitable, without the need to attract new clients or expand into new areas of practice.
56 per cent of legal practitioners from small and mid-size firms admit to underestimating their billable time by up to 40 per cent*. By streamlining your internal practice management processes (think timesheets, record keeping and billing) you can create efficiencies and identify areas where you can maximise your firms profit. Here are six ways to streamline your practice management processes and improve your firm’s bottom line.
1. Accurately capture billable time
If you’re not using an automated system of time recording, it’s likely that you’re missing out on hundreds of billable hours every year. Thirty-seven per cent of senior legal practitioners are still capturing time manually, according to Thomson Reuters research from 2013, and 56 per cent admit to underestimating their billable hours by anywhere between 10 and 40 per cent. That’s hundreds of hours of billable time that is going to waste each year.
A sophisticated practice management system, such as InfinityLaw, provides automatic clocks that integrate seamlessly with your telephone, documents and matter management system, allowing you to capture time as you go. It even integrates with your mobile phone so that you can capture time when you’re out of the office. Keep track of exactly how much time your fee earners are spending on matters and make sure it’s all accounted for at the end of the month.
2. Cut administration
Capturing time as you work removes the need for admin staff to carry out the laborious task of manually entering fee earners’ timesheets every day. Free up your support staff to do what they do best – support you – and use their higher-end skills for more critical tasks that will improve productivity.
3. Avoid data entry mistakes
Humans aren’t perfect – especially when it comes to processing numbers. We tend to burn out over time and make an increasing number of mistakes (depending on whether we’ve had our morning coffee). Don’t let a data entry typo rob you of thousands of dollars. Technology maintains its accuracy no matter how long it runs.
4. Track your costs against the client’s budget
By speeding up the way information enters your system with automated entry, you always have an accurate snapshot of work in progress and unbilled disbursements. Because entries are updated instantly, you can see clearly how you’re tracking compared to the client’s budget and discuss any overruns with the client before they become an issue.
5. Run detailed reporting
In addition to watching how teams are tracking to budgets, you can also manipulate the data to run a variety of reports that will help you to optimise the profitability of your firm. Look for the best way to structure your fees, find profitable areas of the business and identify any cost overruns or anomalies.
6. Save on printing and paper consumption
This type of workflow has the added benefit of reducing your paper consumption and physical storage space, saving you thousands of dollars a year in consumables. Because entries are updated instantly once they are entered, you can view and save reports or print them only when you need them.
Using an automated practice management system that connects to your matters, documents, telephone and customer relationship management software will help you streamline your internal processes and improve the profitability of your firm. Let technology do the grunt work so you don’t have to.
A quick checklist – Six ways to make your law firm profitable:
- Use automated time capture software to avoid underestimating billable hours.
- Save on administration costs by enabling fee earners to enter their own time as they work.
- Avoid undercharging clients due to data entry mistakes by automating time entry.
- Stick to your budget by viewing WIP and unbilled disbursements as soon as they happen.
- Run regular reports to help identify profitable areas of the business and how best to structure your fees.
- View reports online to save on consumables like printing and paper consumption.
Thomson Reuters Australia: Lack of time and challenges of attracting the right talent holding law firms back from true excellence