THE NEWSLETTER FOR LEGAL OFFICE MANAGERS
LAW OFFICE ADMINISTRATOR
Volume XIX / Number 7 JULY 2010
(Reprinted with permission of Ardmore Publishing Company)
The Best Thing to do For The Partners is Set Up a Goal Plan For The Year
One of the most valuable services an administrator can provide is helping – and indeed sometimes motivating – the partners to set business goals and achieve them. And the best time to do that is now, during the first months of the year.
The job is much like a health check and healthy lifestyle plan, says JAN FRIEDLUND HENDERSON of RJH Consulting, a Jackson Hole, WY, law firm management consulting firm specializing in small to mid-size law firms.
It’s a matter of reviewing what happened last year and devising ways to maintain what’s good and improve what’s not so good this year.
JUST WHAT DO THE PARTNERS WANT?
The job starts with information gathering, and that’s done at a meeting with the partners.
Ask what their goals are. And if they don’t have any, “be the catalyst to get them going.”
Ask “what would you like to see this year?” They may want to increase the number of clients or set up a new practice area or improve the profit margin.
Whatever it is, respond with “What can I do as administrator to help you achieve that?”
Go for the specifics. Suppose they want to see a 5% increase in profit this year. Ask what they want done to achieve that. They might want to see staffing reductions. Or they might want a new marketing plan to bring in clients.
Offer to review those points along with all the other main elements of operations such as client satisfaction, overhead, attorney development, staffing, and so on to identify where improvements can be made and ought to be made.
And then offer to come back with a plan for achieving it all.
START WITH THE PROFIT MARGIN
Now it’s time to see what’s going on, both good and bad.
Henderson’s advice is to evaluate individual categories, the first one being the profitability.
For most firms, she says, a profit level between 40% and 50% is not only good but “extraordinary.” Anything below 30% is bordering on unacceptable.
But a good margin last year is not reason enough to assume the firm will stay at that level. Determine why it was good. There may have been a windfall from a single client. If so, the question is whether that client will be on board again this year. Otherwise, the firm has to adjust its income expectations or figure out how to replace the business.
On the other hand, if the profit margin is not acceptable, that should be the top goal, with the solutions running to elements such as raising the rates, reducing staff, or venturing into a new more profitable area of law.
THE BILLS AND THE COLLECTIONS
Review too the billing and collections.
Bills should be going out within 30 days of the work, if not sooner, Henderson says. And the realization rate should be at least 95% of what’s billed.
If the billing is slower or the rate lower than that, find out why. Those are areas to correct this year.
The client selection process may need filters to weed out a type of client who doesn’t pay.
Or it may be that the attorneys are at fault. It’s not uncommon for attorneys to sit on bills for several months.
But whatever the holdup, any delay is costly. Besides the fact that the cash flow is slowed down, the probability of a full collection decreases, because after 60 days, the chances of collecting the full amount diminish greatly.
SATISFIED OR DISSATISFIED?
Another area is client satisfaction. Unhappy clients don’t pay fast and sometimes not at all.
An easy way to gauge satisfaction, Henderson says, is to look at the client retention. If key clients have left, find out why. Whatever irked those clients needs to be corrected.
She adds that while it’s true some clients are one-timers, the firm should still be getting some repeat business by marketing its other services.
As to the points that affect satisfaction, beyond the quality of the legal services most are the personal ones – whether the attorneys and staff are polite, whether the client is greeted at the door, whether calls are returned promptly, whether the client is kept informed about the progress of matters. And the big one: whether the client thinks the charges accurately reflect the services.
THE TRAINING AND EDUCATION
Yet another point that warrants evaluation is professional development.
Did the attorneys meet their continuing education requirements? Are staff developing professionally? Are the associates advancing in their areas?
And on a personal level, is the administrator getting continuing education to serve the firm better?
Some of the goals for the year may need to be to send people to more seminars or set up more in-house training.
STAFFING AND PERSONALITY MATCHES
And now for staff support.
To a great extent, the evaluation here comes from asking the individual attorneys if staff are supporting them to their satisfaction. Is the work getting done on time? Is it accurate?
Ask if they are pleased with the secretaries and assistants who are paired with them. Is there a personality fit? If Overbearing Attorney A can’t work productively with Sensitive Secretary B, staffing changes need to be on this year’s plan.
ETHICS TO EMBEZZLEMENT
Review the training in ethics and discrimination. The firm may need to provide more of it.
Another concern is how confidentiality is ensured. Cover the data protections. Also cover the confidentiality training staff receive.
And look too at whether there are adequate safeguards on how the money is handled so there’s no opportunity for theft.
AND YES, SUCCESSION PLANNING
And an element that few administrators think of is succession planning, Henderson says.
Look around at who is approaching retirement age. Those people need to be mentoring others to replace them. That includes the senior secretaries and the senior paralegals. But it also includes the administrator who is planning to retire in the next year or two.
Tell the partners what retirements are coming up and “here is my plan to meet that issue over the years.”
Henderson also recommends having the senior people who are approaching retirement draw up a best-practices handbook for their positions that outline their duties, the business contacts they have set up, the shortcuts they have learned about their jobs, and whatever procedures they have put together.
NOW TO DRAW UP THE PLAN
With the review done, set out a plan in outline form. List the objectives the administrator believes are necessary and briefly tell how to achieve each one.
There can be a lot or just a few objectives, depending on the firm’s needs and what the partners want.
But whatever they are – marketing, raising the realization rate, staffing, or whatever – be specific about what the issue is, what the plan of action will be, and why it’s necessary, for example, “Last year we had a 35% profit margin. This year we will try to take it to 40%. This is what we need to do to achieve that.”
Name the person or people who can make each item happen and tell what each one will do.
For example, to increase the profit margin from 30% to 40%, the plan might be for the billing department to make calls on past due accounts, for the marketing department to search out former clients, and for the administrator to evaluate the staffing cuts.
Get as specific as possible, she says. If the plan is vague or lofty, nobody’s going to do anything. ”It’s just going to become a dust collector.”
A final note: get the partners’ agreement on every point. Don’t take any action without their approval. For example, don’t make staff cuts on the assumption that cuts are what they want. They may think their staff are stretched thin already, and staffing cuts may be the last thing they want to see.
