During training in law school, attorneys are taught how to work complex cases and understand the law inside out, but rarely learn how to manage a law firm. However, no matter how skilled a law practitioner is, they need business knowledge to convince potential clients they are the best in the business.
This explains why law firms today must invest in modern processes and technologies to maximize their profitability. There is a wide range of business efficiency tools that are designed especially for law firms. These tools range from timekeepers and staff tools to billing software that balances billable and overhead hours.
Here is a list of the top five legal account strategies you can use to streamline operations and boost profitability.
Set Up a Legal Project Management (LPM)
A Legal Project Management tool (LPM) is an invaluable resource that modern law firms can use to increase the firm’s efficiency and boost profits, especially when dealing with complex and demanding cases. The right LPM enables attorneys to delegate, evaluate, and monitor a case’s tasks in real-time to improve productivity.
When attorneys and legal staff collaborate on a case, the LPM can calculate the potential profitability of a matter even before the case commences. It also identifies the aspects of a complex case that may negatively impact the profit margin and helps the law firm make proactive changes to stay within the allotted budget and time in a case.
The best LPM platform offers invaluable insights on how your firm can increase profits on a case-by-case basis. When used the right way, it can help your law firm deliver services to your clients efficiently and on time, and most importantly, within an established budget.
Upgrade Your Firm Technologies
Your legal practice can significantly reduce its overhead and make the most of its billable time. This move will lead to lower business expenses and increased profits. With so many business technologies in existence and new ones being introduced every day it is hard to know which one would be the best for your law firm. Here are some of the top technologies to streamline profitability:
Process automation refers to the use of technology systems that automate repetitive law office procedures and practices with minimal staff input. For instance, building document packages for clients, may need to be automated to improve efficiency and eliminate the need to perform the processes manually.
Cloud services bring convenience, ease of collaboration, and security. By investing in cloud services, attorneys can access case files anywhere and at any time, and the firm will save a ton of money running a paperless office.
Law firms handle very sensitive and often valuable documents and files. Security should be at the top of things in which a law firm must invest. A breach of a law firm’s security can cause thousands of dollars in damages and disruption of business processes. When your law firm switches to using cloud services, it must invest in advanced security to protect itself and its clients’ data from malicious attackers.
Legal Time Management and Billing Software
Time is money. How well your law firm manages, tracks, and bills its time can determine how profitable it will be at the end of the financial period. In many cases, law firms use estimates to bill clients, which often results in lower amounts charged for the billable work performed.
An accurate billing and time management tool is an essential investment to track time accurately. The best kind of time management software is managed outside the firm – most preferably by a company that offers holistic time management services.
A flexible and highly customizable time tracking and billing software keeps meticulous records of billed hours, integrates with the firm’s systems, and can even conveniently generate invoices. Such a tool is a must-have investment to improve utilization rates and to increase your firm’s revenue by tracking billable time to the second.
Streamline Working Capital Efficiency
It is important for every organization, including a legal firm, to streamline the efficiency of its working capital. One of the best strategies your firm can adopt is the automation of key financial processes such as collecting accounts receivables and paying out account payables. Firms that use manual invoice preparation and settling accounts often make costly mistakes that cost money and lose time in the long term.
With so many financial management tools available today, there is no reason why your law firm should stick to the old way of doing things. The use of excel sheets to manage clients’ cases and invoices is prone to errors that are hard to reconcile.
Another strategy your law firm can use to streamline the efficiency of its working capital is to use non-cash payment options. The firm can use a dedicated payment platform that accepts payments from vendors and clients in different forms, such as bank wires, credit cards, or even cash. The firm can then use the same platform to make payments to streamline incomes and expenses in the same place.
Set the Right Metrics
Law firms must continually keep an eye on the practice’s financial and overall performance to promote profitability. Key Performance Metrics (KPIs) are the units of measurement that businesses use to determine their trajectory performance of the organization. Just like any other business, the key to staying profitable for law firms is to constantly review performance patterns and make decisions that will help your firm remain in a positive profitability trajectory.
Some of the core KPIs your legal firm should consider include:
- Client satisfaction
- Matter profitability
- Marketing expenditures
- Return on Investment on advertising
- Realization (the rate of receiving payment for billable hours).
Streamlining profitability of your law firm is a fancy way to say improving the efficiency of its core business processes. Different firms need to do audits of their systems to determine which areas need the most efficiency to boost profitability. As a rule of thumb, automation, elimination of unnecessary tasks and steps, and simplification using technology will go a long way to help your firm increase its profit margins.
LawBillity has put together the perfect productivity and profitability tool that can save your firm as much as 30 hours in a month. Try LawBillity’s legal time and billing software free for 14-days and see how you can quickly increase your firm’s profitability.