Succeeding as a solo or small-firm attorney means being not only a good lawyer but also a savvy businessperson.
Unfortunately, “law schools haven’t done a very good job … of helping law students know how to do budgeting and finance and how to treat the firm as a business,” said Janis Alexander, chief operations officer at Ambrose Law Group LLC in Portland, Ore., and a frequent speaker and writer on law firm finance, technology and operations issues.
Laura A. Calloway, director of service programs at the Alabama State Bar in Montgomery, Ala., agreed. She advises small-firm lawyers “to really focus their practice on creating an environment that’s very technology-oriented in order to reduce costs, save money and get clients that normally would only go to big firms.”
Here are some other suggestions for improving your firm’s financial health:
• Bill early. Infrequent billing is an area where attorneys can get into trouble, said Calloway.
When lawyers get “really busy doing legal work, they won’t send bills out,” she said. “Have a time and billing program. [Attorneys] can enter their time easily, edit it easily and produce a bill easily.”
She also suggests timing your bills to accommodate your clients.
“Ask them when is best,” she said. “If you send the bill when the client has the money to pay … they will pay you.”
• Watch the books. Have a financial management system that tracks your finances, said Calloway, and learn to make use of underutilized features.
“Most billing programs will provide you with aged accounts receivable, but a lot of lawyers never bother to look at that report,” she said. “It shows you if you sent a lot of bills, and it will show you how much money is owed [and for how long it has been outstanding]. If it’s over 90 days old, there’s about a 2 percent chance of collecting it.”
It’s also important to keep an eye on write-offs.
“If you’re writing off a lot of work before you even bill it out, that’s an indication that you need to tighten up the work processes in the office,” Calloway said.
• Minimize paperwork. “For all files you close, scan all documents … send the originals back to the client and then shred the rest. This saves tons of money by not having to use offsite storage and then take the time years later to retrieve and dispose of files,” said Alexander.
You can also go paperless to cut down on time spent looking for documents, Calloway added. An easy way to do that is to “use your computer filing structure to mirror the paper filing structure that you used to use. If you name your documents starting with the date … all of your documents within a folder will order themselves chronologically.”
• Automate document production. Calloway recommended using programs that do most of the work to create common documents. That frees up your time, and it also frees up your assistant’s time to do more than typing.
• Leverage existing talent. Small firms can have the most tech-savvy person handle minor troubleshooting issues and software upgrades without calling third-party vendors, said Alexander.
She also suggested offering a regular “tips” presentation, where each employee of the firm presents a discreet tip on how to improve the firm, such as a new use of existing office equipment or software or a marketing idea.
“At the end of the tips presentation, [pick] the best tip and give the employee a $20 bill for his or her efforts,” she said.