How flat fees ensure profits

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Legal Project Management (LPM). It’s a buzzword you hear a lot in the legal industry as the “next big thing.” In fact, managing a matter as a lawyer is as old as the profession itself. What’s different now are the tools available to manage your matter more efficiently and even achieve higher profits. Properly planning a matter ahead of time will also allow you to move towards charging fixed fees, a highly desirable thing for many clients which ultimately will strengthen your relationship.

So let’s look at the profitable benefits of LPM and five tips to successfully implement.

Not every practice is right for fixed fee billing and LPM, but it is hugely beneficial for intricate matters that have many milestones and tasks. Even if you have no intention of setting a fixed fee, your firm will benefit from detailed planning. With proper implementation your project plan means you can assess profitability before you ever start and adjust in real time if needed.

Major Benefit: Higher Profits

We know lawyers didn’t go to law school to learn how to run a business. But to fully appreciate the opportunity for maximum profits and large revenue growth from project planning, we’re going to ask you to put down the scales of justice and pick up the abacus.

Most other professional service industries wouldn’t think of starting a new project without first having a detailed plan. Do you think HKA Architects planned US Bank Stadium on a whim? Of course not! And while that’s an extreme example, the idea of starting a project for a client without a well thought-out, well designed plan would be completely foreign for engineers, IT professionals, architects, etc.

Attorneys can learn much from these industries about best practices for planning, managing and utilizing resources.

With LPM, attorneys can offer flat fees while at the same time ensuring profitability. Read that sentence again. That sounds like a foreign concept for many lawyers, but it is true and many progressive firms already know it. No longer do you have to look BACK at a matter to see if it’s profitable, LPM means calculating the profitability of the matter BEFORE you ever start!

Is some part of the matter taking longer than what you budgeted for and throwing off the profitability? Instead of taking a loss on that research task that took longer to complete than expected, with LPM, you can correct the issue on the fly and ensure the matter stays profitable.

Looking at Matters Through a Different Lenses

Here’s where the rubber really meets the road with LPM. Once you’ve completed several matters using LPM, you’ll start seeing where you can increase profitability of similar matters. Let’s say it took you 35 hours to complete that real estate matter. With LPM, you broke down every task and how long it took. This is your flat rate now for similar matters. You’ll become more efficient as you repeat that matter, but you’re still charging the flat rate you established in the beginning, meaning you are now increasing the firm’s profit margin on each additional real estate matter you handle.

Profitability analysis will help your firm’s bottom line in the following ways:

• Allocate marketing resources to promote the highest profit matters
• Become leading expert in the area you know generates the highest profits for your firm
• Know which matters are better handled by lower compensated associates based on profitability
• Allocate your resources with the goal of balancing between client’s objectives and your firm’s profitability

Healthy Partnership

It shouldn’t be forgotten the other main benefit of LPM. Client relationships. We all know that haggling over bills is the single most contentious part of the client-attorney relationship.

When you plan a matter ahead of time and are able to show your client each and every task along with how it’s budgeted, clients see the value they’re paying for. Transparency to your clients can not be emphasized enough.

Five Tips for Successful Implementation

1. Tools and technologies

There are all sorts of technology tools to help you plan, budget and execute your matters. The best and easiest to work with in today’s environment are cloud-based. Data security has become less of an issue and more and more firms love the convenience of accessing their information from any device, any location, any time of day.

The best LPM software you use should be tied closely to your time keeping and billing solution. This allows oversight to ensure matters are staying on budget and timekeepers are billing time appropriately. Most importantly, look for features that warn or limit timekeepers for exceeding their task budget. This real-time analysis of your budgeting matter is crucial.

Features to consider:

• Breakdown a matter into specific tasks
• Assign timekeepers to a task
• Define budgets for each timekeeper to complete the task
• Establish critical milestones
• Reuse a plan across multiple projects
• Easily review performance
• Meets LPM needs in a user-friendly and cost effective way

2. Creating a project plan

Ok, this seems obvious when talking about something called Legal Project Management. But this is the crucial piece of making LPM work for you. A key part of planning correctly is a work schedule. Start with tasks and then build milestones when a series of tasks are completed. This not only helps associates know when things should be done, but it holds them accountable as well.

When employees see the amount of time they’ve been allocated and they see when it must be completed by, they are much more likely to complete the task on-time. Your firm is now on the path to higher efficiency already!

Some important steps to consider in creating a schedule:

• Understand the overall time frame of the project
• Develop a list of specific tasks and estimate how long each task should take
• Configure the most obvious order of completion for your tasks
• Assign the tasks to project members (hint: this is important in determining best resource allocation for your office)
• Analyze the profitability along with the effort and resources needed to meet your client’s expectations

Your project tools should allow you to create, assign, and view your budget as granular as the task level, so you can really refine your costs.

Now that you’re creating your plan, the schedule and allocated resources, it’s time to start the actual process!

3. Regularly Review Progress

Way too often, companies and organizations will create fantastic plans but they end up collecting dust on a shelf because there’s no process to review the plan regularly. Firms should be at a minimum reviewing matter plans weekly with all involved members of the team.

It’s even better if the technology you’re using can track your progress in real time as employees are entering time, expenses, etc. This gets back as to why it’s so important to find a tech solution that is aligned with your timekeeping and billing.

4. Communicate

This tip cannot be emphasized enough! Communication means not just internally but with your clients as well. LPM allows upfront communication with your client where you can manage expectations and with your regular reviews, identify and inform your client if tasks within the matter are exceeding budget. Now they can be part of the decision-making process on whether to up the budget to meet this new need.

This proactive approach is much more efficient than just spending more time on a task, billing your client who may be dissatisfied with this outcome and refuse to pay your firm, resulting in a client-lawyer relationship breakdown.

This is one more way your technology solution can be dividends. Progressive billing and timekeeping solutions that are tied to the project plans should offer some type of client access that allows them to view time entries, bills, etc. This promotes transparency and reduces the administrative headaches of constantly answering the questions from clients on the phone. The result is more time actually practicing your craft.

5. Proper Training

This is often the Achilles heel of project planning. You have the best software available to plan, measure and execute your matters but if you don’t take the time to properly train your staff, all these cool tools go for naught.

Everyone in the firm, from partners to associates to staff members and administrators need a clear vision of the LPM method and hoow it’s to run in your firm.

Here’s brief checklist for training:

• How to utilize the project management features
• How to utilize the billing and timekeeping software
• Clearly communicate the firm’s goals with LPM
• Establish clear guidelines for performance and compliance

The Road to Higher Profits

Legal Project Management, when implemented properly, can become a powerful tool for your firm. With active planning and monitoring of your matters, there’s no reason your firm can’t realize higher profits and even get to the promised land of fixed fee billing. Your client relationships will also be greatly enhanced while you become more efficient as a business, allowing you to do what you do best, practice law.

Scott Clasen is the director of marketing at TimeSolv Corporation, a Minnesota-based company providing leading class billing, timekeeping and project management tools for law firms since 1999. TimeSolv’s web-based platform is compatible for both PCs and Macs, and offers an iOS and Android app.