The End of the Year Push is On - By Legal Strategies Group LLC
With the end of the year fast approaching, now is the time for law firms to make a push for current year collections as well as prepare for next year. It is an excellent time for firms to reflect on 2017 and plan for 2018 and beyond. The following are 10 tips that will help firms close the year well and start the new year on positive footing.
In order to collect current work in process (WIP), send October bills by November 15. Ask clients to pay the invoice by end of year. If not paid by December 15 the billing partner should follow-up with the client. Also, send November bills, especially to clients that pay quickly, no later than December 10.
Create a list of expected collections as of October 31. Send the list to all partners and update it daily. Involve practice group leaders and members of leadership committees to keep pressure on partners to make client calls. Partners need to be involved in collections. They should not delegate this important task.
It’s not advisable, for collection purposes, to give discounts to continuing clients. The discount will become the norm instead of an exception.
Write-off uncollectible receivables and WIP that will never be billed. There is no benefit to keep them on the books.
Aggressively increase 2018 standard billing rates for new clients and where feasible, for existing clients. The realization percentage may decrease but effective rates will improve which will ultimately increase revenue.
Mandate daily time entry. If not already doing so, this alone will increase hours and profitability >5%.
Budget using zero-based budgeting concepts to ensure expenses are necessary and do not grow unless related to revenue producing or cost reducing projects.
Establish strategic initiatives including measurable goals, especially in marketing and business development. Monitor progress to ensure there is a positive return for effort and expense.
Develop technology projects to increase efficiencies in both the delivery of legal services and in administrative areas. Stay abreast of funding and progress. Many firms overspend in this area.
Culture is paramount. All of the above and any new policy or procedure must fit within each firm’s unique culture.
About Legal Strategies Group LLC
The Legal Strategies Group LLC (LSG) is a consulting firm that provides objective, strategic business advice to law firm leaders exclusively. We help firms improve their business operations including realization and profitability. LSG is a proud affiliate of the GLC Law Firm Consulting Group.
About the Authors
Barry Strauss and Donna Corini are former in-house senior executives with more than 20 years of law firm experience advising leaders on issues of revenue enhancement, profitability, marketing, and organizational excellence. Barry can be reached at 202.288.2095 or firstname.lastname@example.org. Donna can be reached at 703.627.3470 or email@example.com.