Lawganised

Considering restructuring to an Incorporated Legal Practice (ILP)? ....because it's harder than you think!

info@lawganised.com (Ben Deverson) — Tue, 18 Jul 2023 04:25:11 GMT

Incorporating your practice takes time and careful planning.

Is your legal practice currently trading as a Sole Trader/Practitioner, Partnership, and/or a Trust and you've been considering restructuring to an Incorporated Legal Practice (ILP)?

If this is you, then what we can tell you is that we are yet to meet a practitioner that has adequately grasped the magnitude of restructuring their practice to an ILP. The administrative, operational, and compliance factors are extensive.

A couple of years ago a law firm operating as a partnership approached the team at Lawganised seeking assistance to transition to an ILP.

It was the 20th of November, and they had set a date of 1 January to restructure: about 40 days, including a period of shutdown. Putting aside 1 January was a terrible date to implement such a change, 40 days was incredibly ambitious. Doable, but ambitious. Our Director, Ben , advised them to rethink and aim for 1 July the following year. Ben presented them with the Lawganised project plan for an ILP restructure.

The conversation then went like this:

Managing Partner (MP): "WTF?! You mean we have to do all of ��?!"
Ben: Yep.
MP: A new trust account?
Ben: Yep.
MP: All new cost agreements/retainers?
Ben: Yep. For matters that will continue in the new entity.
MP: Geez, I had no idea there was so much to it.

So, if you are considering a switch to an ILP for your practice and are keen to understand the scope and scale of the change, contact us to discuss your plans.

Attn: Law firm Principals – Are your people ‘delegating’ to you?

Thu, 27 Jan 2022 22:04:00 GMT

Upwards delegation is a major issue in professional services firms, particularly in the legal profession.

What is upwards delegation, you ask?

Upwards delegation occurs when practitioners in a firm ‘delegate’ legal questions raised during a matter to their Principals when they’re not familiar with the issue or what direction they should take.

Does this sound familiar in your practice?….

“Dear Ben, [Client] just called me and asked if he should [insert summary of client’s question or issue]. How do you think we should respond?”

What has the staff member done here?

1. The have literally forwarded their Principal a problem.
2. They have offered no options or potential solutions.
3. They have delegated the issue…upwards.

This is an issue we see repeatedly across the profession and one that impacts Principals considerably in terms of time management and stress.

So, what can be done?

You need to create a culture that ensures staff can offer solutions without fear, not just forward you problems. Sometimes the options are farfetched, but in our view, at least they considered something even if it is not reasonable.

Taking the same issue, in a high-performing team, the practitioner involved would do this:

“Dear Ben, [Client] just called me and asked if he should [insert brief summary of client’s question or issue]. I have had a quick look at the issue and believe there are a few options here:

1. Option 1 – outline option and likelihood of success / risks
2. Option 2 – outline option and likelihood of success / risks
3. Option 3 – outline option and likelihood of success / risks

On review, I believe we should respond to the client recommending he should pursue option 2. I believe it is the safest course of action given [insert some commentary to support recommendation]. If you agree, I have prepared a draft response for your approval below.

[Insert draft response]

Please advise if you’re Ok for me to send.”

We advise the staff of our clients that their goal here is to have their Principal respond to similar proposals with one word: “Approved”, or “Agreed”, or “Send”, or “OK”. Simplify the Principal’s effort and output to just settle the work as opposed to ‘doing’ the work.

Similarly, we encourage Principals to return work to their team where they feel more investigation is warranted or if additional options need to be considered. Simply absorbing the work yourself is not a good outcome for you or your people. At the end of the day, you are assisting in your peoples’ development, not just managing your own time.

If upwards delegation is an issue in your firm, let us know. Eliminating it and empowering a team to advise you, rather than delegate to you will have a significant impact on your life. We have rolled out some great programs across our client base to minimise this issue resulting in significant changes for Principals.

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Things change! Don’t be afraid to disclose a new fee estimate

Sun, 02 May 2021 01:35:00 GMT

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Despite what 2020 threw at us, the major challenges law firm principals face remains the same

Thu, 31 Dec 2020 12:06:00 GMT

If anything, 2020 certainly tested our resolve, our ability to change (or ‘pivot’ for the buzz word bandits out there (and I really hate that word)), and adapt to new ways of working. However, as the saying goes “Whatever doesn’t kill you makes you stronger.” We’re here and the year is done. It cannot be changed, and the past is the past.

2021 offers 12 new chapters and 365 new chances to make the positive change we all seek.

And as I look back, and after providing services to over 60 law firms across Australia and around the world, my experience suggests that, despite COVID, the major challenges law firm principals face remain the same.

In my view the two major and, dare I say it, perennial challenges law firm principals face remain:

And these two perennial challenges work hand in glove; having the time to achieve positive change.

The key to time is that it is the fairest resource of all; we all have the same 24 hours in a day. You cannot buy more or give it to anyone else. The key is how you use yours. And addressing the challenges or achieving the goals you strive for is not a factor of the time you have. Rather, the achievement of them is a factor of your motivation. How much desire do you have for the changes you are seeking? Are they major, strategic roadblocks or ‘pebbles in your shoe?’ Ask yourself this question on those burning issues or goals you seek: Do I really want this? Because if you do, and your motivation for change supports it, you WILL find the time and the way to make the change(s) necessary.

As I have previously written, successful change in a law firm is incremental, often in small bites, that in the aggregate can make major impacts on your firm. It takes time, support, patience, and motivation and not just one or two of these – it’s all four. When change is required or forthcoming, you need to take care to ensure an expert implementation. There are several providers to the legal profession out there that spruik their whiz-bang products and sell a very compelling dream in their regular email content. The truth is change is damn hard. I have seen so many major change initiatives fail through lack of engagement, poor scope, unforeseen IT challenges, and a general unwillingness from key staff to support the change.

The truth is, there is no panacea for everything in a law firm and you need a thorough understanding of your practice, your people, your systems, and your processes to be able to identify and address the potential incremental adjustments that will deliver positive impacts on your firm. Harry Potter’s wand is not going to work here.

And as we enter 2021, the team at Lawganised looks forward to delivering some fantastic new products that will assist law firm principals to identify ways to make incremental change, one step at a time.

All the best to everyone for a happy and prosperous 2021.

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Do you know your firm’s cost of doing business?

Sat, 19 Dec 2020 05:43:00 GMT

Do you know your firm’s cost of doing business? It’s easy, right? Look at your monthly Profit & Loss statement and checking that bold figure towards the bottom that reads, ‘ Total Expenses .’

For me, I like to get a little more surgical than that.

Knowing your cost of doing business, or CODB, is critical from several perspectives, including your pricing strategy, establishing fee targets, monitoring cash flow, and so on. Regardless of your fee methodology (fixed pricing, time-based, no won no fee), understanding your CODB, say, per hour, is critical. And I mean, per human hour. Let me explain…..

Let’s assume all your full-time staff are engaged (and remunerated) for 38 hours per week. There are 52 weeks in a year, therefore each staff member is ‘on the books’ for 1,976 hours per year. Yes, they take leave and so on, but even when they are not in your office, they are still an expense to your firm.

Extrapolating that result then means:

Yes, understanding the human hours in a workforce may not be that linear an equation given part-time and casual staff, but it can, and should be known. Furthermore, this human hours figure should be determined for all staff, not just fee earners.

To determine your CODB per hour, you need to take your ‘Total Expenses’ result from your P&L and divide it by the number of human hours in your firm for a set period. For example, if your firm had 10 full-time staff for an entire year, your firm’s human hours in that year is 19,760 hours. Let’s assume your firm has Total Expenses of $1,400,000. Therefore, your firm’s CODB is an average of $70.85 per human hour.

Let’s extrapolate that further with our firm of 10 staff:

Again, understanding and monitoring this figure is important particularly at the granular level: each hour, each day, each week. It is an effective tool to guide and develop your fixed-fee pricing models, particularly if your firm has a good grasp of the average human hours required to be contributed to each matter. Above all, it is good business to have a firm grasp of your average expenditure and what it costs you for down-time and so on.

And yes, we have a tool for that at Lawganised.

Let me know if you need any assistance in developing and monitoring your CODB.

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You won’t realise the benefits of delivering face-to-face feedback until you try it

Tue, 24 Nov 2020 10:28:00 GMT

Providing open, honest constructive feedback to members of your team is difficult.

So is your default to provide feedback via email?

As I have discussed in the past, feedback in writing is perilous; as the writer, you must be cognisant of the fact that your recipients are in total control of how they perceive your message.

So, I have a rule: Never send an angry email. In fact, if I ever believe my message has the slightest possibility of being misconstrued, I will deliver it face to face, via Zoom/Teams or a phone call.

Trust me, the outcome will be better for you and your staff. If you take your team member out for a coffee or a quick chat in a quiet room, adopt a coaching style approach to your feedback, and deliver it in a calm and receptive manner, the feedback will be taken positively and you will earn the respect of your team. Hide behind your screen and deliver your feedback via email will do the opposite; you will lose respect, you will lose trust and the relationship will deteriorate. An open, trust-based environment is what you want to create.

Of course, you may need a record of the conversation for ‘the file’, so if that is the case, your email could read something like:

‘Dear {Name}, further to our conversation earlier, I’d like to summarise our discussion and what we agreed.

It takes strong leadership and courage to have difficult conversations, however, the benefits of open and honest face-to-face conversations with your team, in the long run, will be exponential in many areas of your firm: morale, productivity and employee attrition to name a few. The flip side is an environment you can so easily avoid.

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Thank you! Two simple words that can mean so much

Sun, 20 Sep 2020 09:00:00 GMT

Do you thank your clients for their business at the conclusion of a matter, perhaps after they pay their final invoice? Two simple words can mean a lot to your client and equally your firm.

Why it’s important to say thank you.

While many firms invest heavily in business development and sourcing clients, seldom is that same investment directed towards post-matter activities for former clients. As the saying goes, it is easier to convince a current customer to buy more than to land a new one, and this article will demonstrate just how effective nurturing former clients can be.

The matter lifecycle often concludes with the payment of a final invoice. This milestone presents you and your firm with a great opportunity for a tailored ‘thank you’ note for your client’s business. Former clients are often your best referral source and concluding a matter on this courteous note can leave a lasting impression that will lead to your name being quoted at a BBQ with friends. Too often, lawyers can be labelled as the expensive money hungry professionals that schmooze, wine and dine, potential clients, to then take the cash at the conclusion of a matter and never speak to their clients again.

Such an approach today, in the potent word-of-mouth environment we live in, is wasting a prime chance to have your name spoken about at BBQs. A colleague of mine once said: “The best time to talk to a client is when they do not owe you a cent.” I could not agree more with this sentiment and an effective matter closure and post-matter nurturing approach should be adopted.

Ways to thank your clients.

A simple, tailored thank you call, note or email from the lead Partner of an engagement is a simple yet effective tool to leave a lasting impression of your firm with a client. Ultimately, clients seek lawyers to address problems and a thank you note for your client’s business is a easy and cost-effective marketing tool that shows your firm cares for your clients, their welfare and the situation they were in that you assisted resolving.

This personal touch will lead to your clients remembering that positive experience in dealing with you and will mean your name is referred to friends, family and colleagues; the best marketing of all. Furthermore, setting reminders for yourself to contact former clients is also an effective way to ensure that your firm’s name continues to permeate the legal referral grapevine. This approach is particularly important in the more personal, sensitive areas of law such as family law or personal injury.

Diarising a call to former clients at regular intervals of, say, 3 to 4 months, to simply check-in and see if they are OK is a great gesture and one clients find a welcome surprise.

Adding your client’s name and email to your firm’s marketing database is common, and often only, approach firms utilise. Whilst this is effective to ensure your former clients receive regular information from your firm as part of the standard content distribution, nothing can substitute the effectiveness of the personal touch of a phone call.

I advise my clients that their goal should be to shift the label their clients use to refer to them. The aim should be to shift from being referred to as “my lawyer”, to simply being referred to as their name. This small yet symbolic shift shows you have nurtured a strong relationship and are seen as their trusted advisor, not just a name on a business card they have thrown in a top drawer.

As current and former clients are often assessed as a firm’s key referral source, the investment in this group should form a significant part of your firm’s business development strategy. Nurturing former clients may or may not lead to repeat engagements, however it will lead to continual referrals and a growing network of more referees. And best of all, it is likely the cheapest marketing activities you will ever do; it just takes time.

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SERIOUSLY?! I dare you to read this!!

Tue, 18 Aug 2020 10:02:00 GMT

So now I have your attention, I’d like to offer some thoughts on some of the perils of communicating via email (or in writing in general).

The key message here is, unless you are a Pulitzer Prize-winning novelist, regardless of your intent, as the writer, you must be cognisant of the fact that your recipients are in total control of how they perceive your message.

As human beings, we tend to read messages in their harshest tone. Have you ever read an email and thought: “What the hell does he mean by that?!” It’s likely, unless you’re dealing with a serial sociopath, that there was no hidden meaning in the words.

Save the USE OF CAPS, tone, emotion, volume, sarcasm, humour and even one’s intent is extremely difficult to convey in an email or in the written form in general.

Has anyone ever seen an email conversation turn nasty as a result of a misconstrued message? I have, and when egos and defensiveness are thrown into the mix, it is a recipe for disaster.

For my legal colleagues, I’m sorry to say this, but some of you are the worst!! Do you hear me? … THE WORST!!!! (I’m actually kidding with that last comment, but by reading those few last words, were any of you feeling on the defensive and wanting to fire back at me? If yes, then I guess you see my point.)

So just on my learned legal colleagues, ‘with respect’ your propensity to engage in back and forth letter exchanges with the other side is not immune to the recipient’s perception dilemma. And yes, many a litigator’s letter that I have read is, in every way, designed to be delivered with a piecing, jugular slicing tone. Those emails and letters you write with the opening phrase “With respect….” being a prime example. However, have you ever considered picking up the phone or arranging a meeting with the other side to flesh the issues out? Would your client’s interests be best served by a 45-minute meeting addressing a range of issues as opposed to seven letters exchanging hands over the course of three weeks?

Yes, I get that there are some ‘other sides’ out there that simply will not speak to you unless it is written, but don’t be influenced by their low brow aggression. Play the high road, always. Keep calling, keep requesting a meeting, and be the bigger person.

And subsequent to the meeting, if you need to prepare a written summary of agreed actions, next steps, and so on, then do it. It’s far better in the context of a meeting that was just held and fresh in your mind as opposed to pinning your hopes to a recipient’s perception. It’s also more efficient than getting into an exchange of harsh toned letters changing hands over and over again.

So back to the general topic of communicating via words: email, text, Teams…whatever….

During a recent Conflict Management workshop I conducted for a client, I asked all staff to read a hypothetical email I’d written to a staff member offering some feedback on an advice they’d prepared for a client. The feedback was not glowing, however, it was constructive and offered alternative solutions and considerations. I then asked three individuals to stand up and read the email out loud in the tone they perceived the email was written.

All three missed the mark. They all tended towards a harsh, “half-time coach’s spray”, style of feedback. That was not my intent. Not my intention at all. I then delivered the message to my hypothetical staff member verbally in front of the firm. I used my calm, assertive tone, and the message was well received.

The three staff were not wrong to assume the message was delivered in the way they perceived it; they were in control of that. However, they all received the message totally differently after it was delivered face to face; they received the message in a positive fashion.

Another great example is the delivery of important messages to staff, for instance, as a result of recent COVID-19 restrictions. I assisted a few clients in preparing to deliver some difficult messages to their firms, including advising of the need to reduce salaries, reduce hours or enforce leave. My message was simple: “The staff must see and hear you say it and recognise how difficult this decision has been for you.” In my opinion, delivering such messages via email would have been disastrous and fortunately, Zoom and Teams allowed large staff meetings to be convened during the lock down. The messages were well received and staff responded in the way we’d hoped…..the accepted the decisions and got on with life.

So to all the Keyboard Warriors out there, I recommend you stop and think before sending your email or letter and ask yourself: “Will I get a better result delivering this message face to face (or verbally on the phone/Zoom)?” I believe you’ll be pleasantly surprised by the results.

No matter the context, taking the time to deliver your message via the most appropriate means will save you an enormous amount of time and stress, as opposed to managing the potential fall out of your message being received the wrong way.

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Are you in control of your firm or is it controlling you?

Fri, 07 Aug 2020 12:37:00 GMT

Operating a small practice is rewarding in so many ways. The freedom to create something and operate it in your own way for instance. However, they certainly have their difficulties like any small business. Whilst working ‘in’ the business, principals of small firms can have limited time and space to work ‘on’ the business. As a result, your firm can be missing out on critical returns from an effectively managed business.

So, I ask you, are you in control of your firm or is it controlling you? And your response may well be: “Well, Ben, I am not sure. How do I know if I am in control or not?

Good question!

To me, a firm in control has a clear vision with the right people in the right seats. That includes a well (and appropriately) resourced firm, delivering efficient and profitable client work. You are in control when you can access real-time data at your fingertips, not having to be reliant on another staff member to produce reports that can take hours. You are also in control knowing you have your risks mitigated, with controls in place and compliance requirements adequately managed. Being in control is also evident when a firm can forecast, with relative accuracy, their cash flow position in the coming months. Delivering that certainty to you and your fellow partners is a great way to maintain strong engagement.

So again, with all that said, I ask you, ‘Are you in control of your firm or is it controlling you?’

If you think you need to retake the control of your firm and get ‘Lawganised’, contact us and we can chat about your needs.

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The terms ‘Flexibility’ and ‘Work-Life Balance’. What do they really mean?

Fri, 07 Aug 2020 12:33:00 GMT

Throughout my career I have heard and tried to digest the meaning of the phrases “work-life balance” and “flexible work arrangement.”

The short answer is, that there is no one true definition for both. Sadly, they tend to be generalised as a weakness or a ‘trait’ of the younger generation of professionals in the market.

These workplace topics arose more so in recent weeks, following the requirements laid down by the Fair Work Commission . The requirements specifically address therecording of overtime done by junior solicitors,and reports by international law firm, Ashurst, responding to reports of underpaying staff . It is presumed that was as a result of the extensive hours worked during the Banking Royal Commission.

In my humble opinion, Work-Life Balance is all too often generalised as a request to work less hours. The truth is that the 260 million active users on LinkedIn today probably have all, and I mean all , of their own personal definitions of what Work-Life Balance means to them. So, when a staff member approaches you with a request to discuss their Work-Life Balance, rather than scoff and recline into your leather office chair with arms crossed, take a moment to explore what their idea Work-Life Balance really means.

It could mean a change of hours, but equally it could be a ‘shift’ in hours from, say, 11am – 7pm, a request to do more pro-bono work, or a request to do more hours in a specific industry sector, such as the Not-for-profit sector.

Work and life can, in many cases, intertwine, and the potential exists to combine passion into both areas of a person’s life.

For me, I am not a morning person. However, I have learned over more than 25 years to adjust my day accordingly so my best work is done at the best time for me; between 4:00pm and 7:00pm. I dedicate my mornings to coffee catch-ups, light discussions with colleagues and responding to phone calls.

Equally, the concept of Flexible Work Arrangements has, in my view, evolved into what could be classified as ‘Rigid Work Arrangements’, weighted heavily towards employees and sometimes causing businesses pain in the process. So, for employees out there, my message to you is this: Flexibility needs to work both ways. If your arrangement is too rigid, then it is not flexible. I have worked with numerous staff over the years to develop truly flexible working arrangements, including full-time telecommuters. However, my expectation for telecommuters was simple and clearly communicated; if they were needed in the office for any reason, they came in. Seldom did I experience issues with that.

So, when considering “work-life balance” and “flexible work arrangements”, just have a conversation and set expectations. Understanding an employee’s needs is the centre of gravity for effective working arrangements, regardless of the context. For employers, being open to ideas, and being clear and concise with your team on expectations, will provide greater clarity for your staff and better outcomes for team members. For employees, acknowledging flexibility is a two-way street and entering into any future arrangement with that mindset, will ensure you are not cast aside as ‘too difficult’ when negotiating your “flexible” work arrangement.

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Motivation dictates your level of achievement, not your ability.

Fri, 07 Aug 2020 12:23:00 GMT

I’m a strong believer in the theory that motivation dictates outcomes, not one’s ability. As Napoleon Hill outlines in his classic text, “Think & Grow Rich”, the first two ingredients to an enriched life is desire and faith.

Take this for example:

You come across a knight guarding an empty castle in the forest. The castle is surrounded by a moat filled with crocodiles, flesh-eating piranhas, and all other things you ought not to encounter in dark water. The moat is too wide to jump and the draw bridge is out of action.

The knight challenges you to get inside the castle and informs you that in the King’s vacant room, at the top of the tower, is a $10 note. “The $10 bucks is yours if you get inside”, he says. Of course, you would respond: “Pffftttt…$10 bucks!! I’m not risking my life crossing that moat for $10 bucks!” and you would storm off.

So let’s change the knight’s challenge….. The knight says to you: “In the King’s vacant room, at the top of the tower, is entire your family. They are tied up and you have 90 minutes to get into the castle and free them, otherwise, they will be executed.”

Would you try and get into the castle now?

Yes, of course, you would. You would consider every option, call in every favour, find a way to cut down trees to build a makeshift bridge, hire a catapult….whatever you would need to do to get in there.

What has changed? That is simple: Your motivation to achieve the outcome.

This is clearly an extreme example with a life and death situation, however, it does prove that your motivation to achieve can be adjusted depending on the context.

For a real-life scenario, I recently challenged a client to achieve a stretch financial target in the last month of the financial year, June. This particular client had averaged $80,000 per month in professional fees for the last three to four years. So in June, I set them a target:

“In June, we’re going to achieve $100,000 in professional fees.”

The $100k target became the buzz in the office for the month. All team members chipped in, generating new work, calling old clients to check-in, and accelerating old matters that had been bogged down. We constantly monitored the progress, and kept our eye on the prize.

On 30 June, my client completed a $108,000 month.

They’d never exceeded $100k in one month before. The Principal was extremely proud of her team.

So the moral of the story is what? Your ability to achieve a goal is only limited by your motivation to achieve it. Adjust your motivation levels and set them to achieve your desired outcome and you will be surprised by the result.

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Certainty Is Everywhere With Unique Retained Fee Model

Wed, 29 Jan 2020 23:37:00 GMT

Recently I spent some time with directors of Sydney based boutique firm, Source , Stanislav Roth and Sean Melbourne . As I do with many firms, I discussed the pleasant feelings that certainty in business delivers. With Source, I believe I have found a firm that may have found the magic beanstalk beans on certainty, for not only their firm, but also their clients.

I was drawn to Source given their unique offering in the market for unlimited legal services on a monthly retainer basis. “We offer our clients a fully outsourced legal department, for one fixed fee per month” said Stanislav Roth, “…and with that, our clients have complete access to our entire firm of lawyers. We have recently added other professional services such as HR and finance on the same basis.”

Stanislav and Sean are unapologetic in their approach to this strategy. “We create certainty for our clients, and that is invaluable” said Sean Melbourne. “Professionals should take the risk on time, not clients, as time-based work does not incentivise efficiency” said Stanislav. “The ultimate outcome is strong client relationships.”

Source’s service delivery is simple: unlimited advice and services for one fixed fee per month. “We know our cash flow six months from now,” Sean Melbourne proudly stated, “because our clients love the service and stay with us long term. It can only go up as we engage new clients.”

Source doesn’t lock their clients into a contract. Their retainer can be cancelled at any time on one month’s notice. They keep their clients by providing them with great legal support, not by locking them into a contract.

Not only does this strategy have positive impacts on clients, client relationships and cash flow, the internal cultural effects are also significant. Sean and Stanislav are proud of the fact that not one lawyer, or any professional, in their firm records any time – ever. It’s that simple. The positive vibe in their firm is quite evident, as the stress and anxiety of hitting billable hours targets each day is non-existent. “Yes, like any firm we do work long hours if needed, but we are not walking around each day with a report of units charged,” said Stanislav.

Source’s approach is very client-centric and Stanislav and Sean always take the client’s perspective when it comes to service and cost. “Having certainty of your legal budget for the next 12 months is extremely valuable to our clients,” said Stanislav.

The retainer model is not for everyone, but it certainly is a model that many firms could consider for long term, regular clients. Not only are there the immediate positive impacts on cash flow, culture and client relationships, but recurring predictable revenue can have positive impacts on firm valuations.

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Certainty in Law Firms – You Want This.

Fri, 29 Nov 2019 05:14:00 GMT

Lawganised was created with the vision of instilling certainty in law firms.

But what is certainty in a law firm? What is certainty for a principal of a firm, charged with running the business and the leader that has taken all the risk?

What I am talking about here is going to sound a little philosophical. I’m by no means an expert or trained in philosophy, however all I can do is tell you something I learned whilst being a principal of a law firm myself.

Certainty is a basic human need and in law firms, certainty is delivered by having access to critical business data at the click of a button.

Certainty is knowing exactly where your firm is today, hopefully on the path towards its goals.
Certainty is forecasting your performance with confidence that that forecast is right.
Certainty is knowing the right time to make a big change.
Certainty is handing a file to your Associate and feeling confident it is in safe hands.
Certainty is knowing that if something goes wrong in your business, you won’t lose your house.
Certainty is looking at your firm’s bank balance and knowing you’ve got everything covered with some left aside for you.
Certainty is leaving the office for a few week’s break knowing your team has got your back.

How does that feel to you? What would it feel like to list these key business achievements down on paper and respond to each with ‘Yes, that’s our firm’? Would that make you feel….well….Certain?

The opposite of certainty is of course, uncertainty. Uncertainty creates stress, fear and the potential for poor judgement. Consequently, strategies can rely on hope rather than quality assumptions and data. Our decision making can therefore be skewed towards short term, often financially oriented, goals with little regard for the effects on our staff, clients and, don’t forget the biggest one….our families.

Certainty sounds better, right?

I get it. Certainty in law firms can be somewhat utopian in an everchanging business environment filled with systemic risks, shifting market forces and ferocious competition. Things can change on a dime. Therefore, I suggest you look back at the list above and consider how certainty in each of those categories can be achieved. Are they within your control? My response certainly would be ‘yes.’ Think about it:

Do you have a good systems in place to feed you accurate reports and data?

Do you make forecasts based on sound assumptions and past performance?

Are your people trained and motivated to deliver for you and your clients?

Do you have your risks mitigated should an unfortunate event happen in your business?

Is your cash flow healthy so you can manage next fortnight’s payroll and all your creditors?

These are all within your control, it’s just up to you how much certainty you want.

All these areas of your firm, and the certainty they deliver, are why Lawganised was created. During my time as a principal, my partners and I had certainty and hence we enjoyed healthy profits, great cashflow and an enviable culture.

In conclusion, if you need more certainty in your firm, give me a call and we can chat about ways to make it happen.

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Lawganised was created with the vision of instilling certainty in law firms.

But what is certainty in a law firm? What is certainty for a principal of a firm, charged with running the business and the leader that has taken all the risk?

What I am talking about here is going to sound a little philosophical. I’m by no means an expert or trained in philosophy, however all I can do is tell you something I learned whilst being a principal of a law firm myself.

Certainty is a basic human need and in law firms, certainty is delivered by having access to critical business data at the click of a button.

Certainty is knowing exactly where your firm is today, hopefully on the path towards its goals.
Certainty is forecasting your performance with confidence that that forecast is right.
Certainty is knowing the right time to make a big change.
Certainty is handing a file to your Associate and feeling confident it is in safe hands.
Certainty is knowing that if something goes wrong in your business, you won’t lose your house.
Certainty is looking at your firm’s bank balance and knowing you’ve got everything covered with some left aside for you.
Certainty is leaving the office for a few week’s break knowing your team has got your back.

How does that feel to you? What would it feel like to list these key business achievements down on paper and respond to each with ‘Yes, that’s our firm’? Would that make you feel….well….Certain?

The opposite of certainty is of course, uncertainty. Uncertainty creates stress, fear and the potential for poor judgement. Consequently, strategies can rely on hope rather than quality assumptions and data. Our decision making can therefore be skewed towards short term, often financially oriented, goals with little regard for the effects on our staff, clients and, don’t forget the biggest one….our families.

Certainty sounds better, right?

I get it. Certainty in law firms can be somewhat utopian in an everchanging business environment filled with systemic risks, shifting market forces and ferocious competition. Things can change on a dime. Therefore, I suggest you look back at the list above and consider how certainty in each of those categories can be achieved. Are they within your control? My response certainly would be ‘yes.’ Think about it:

These are all within your control, it’s just up to you how much certainty you want.

All these areas of your firm, and the certainty they deliver, are why Lawganised was created. During my time as a principal, my partners and I had certainty and hence we enjoyed healthy profits, great cashflow and an enviable culture.

In conclusion, if you need more certainty in your firm, give me a call and we can chat about ways to make it happen.

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Cash Flow Enhancement Strategies for Law Firms

Wed, 06 Nov 2019 01:36:00 GMT

One of the key cash flow indicators of legal practices is its Lock Up days, or simply ‘Lock Up’. If your lock up days are getting out of control, implementing some specific cash flow enhancement strategies will help you get back on track.

In his recent Webinar , my good friend, Matt Schlyder, known as ‘The Lawyers Accountant’ and Director of FWO Chartered Accountants, suggested Lock Up was one of the “only two numbers you need to worry about to drive improvement!”

For those of you unfamiliar with this KPI, Lock Up is the amount of revenue your firm has earned either through unbilled or billed work that has not yet been converted into cash.

Lock Up consists of two key metrics:

Now you may think that you need a maths degree to understand this concept, but it’s simpler than it looks. Your WIP and debtors are calculated with identical formulas as follows, and is most commonly determined over a one-year period:

The aggregate of the two creates your Lock Up Days.

So, let’s take a look at a firm with the following financial performance KPIs at the end of the last financial year:

Revenue $5,500,750

Closing WIP : $1,750,875

Opening WIP : $1,950,345

Closing Debtors : $733,815

Opening Debtors : $615,875

Using our formula, we know this firm has:

As a percentage this equates to 46% or, for this firm, $2,531,852 of the firm’s revenue still waiting to be turned into cash. Furthermore, this firm has spent 46% of the year funding the costs of doing business: wages, office lease, IT, insurances and the myriad of other operational costs law firms must absorb.

You may question that we’re collecting the cash from six months ago, now? However, I ask you this: Would Apple allow you to purchase an iPhone from the Apple Store and pay for it in six months’ time? I suspect not, certainly not without some caveats.

An unhealthy cash flow performance is also perilous in the event your firm suffers a major setback. An example of this is the loss of a key partner, or a major client moving to another firm. Healthy cash flow performance is the heartbeat of any firm and unlocking your Lock Up should be a key focus to get cash in your account sooner.

Continuing with our example above, if this firm were to employ some strategies to reduce their Lock Up by a third, say to 112 days, this firm would have an additional $843,951 in their account today. This is without doing one more unit of client work than they already completed.

So, let me explain how this firm got an additional $843,951 in their account without doing any more client work. With their Lock up days reduced to 112, or 31% of revenue, the firm now has $1,687,901 of their revenue waiting to be turned into cash. This is a reduction of $843,951. Where is all that cash now? It’s in the firms account where it should be.

With some cash flow enhancement strategies involving discipline around strict client engagement protocols, file management, billings and collections processes, your firm can seriously reduce its Lock Up as well.

As a business owner, there’s little value in walking down to the store with a stack of WIP reports and bills you’ve issued and asking the cashier to accept them as security for your purchase. Cash is king and profit on paper means nothing. So, if you’re totally Locked Up, getting cash in your account should become your focus. Lawganised can help you by employing some these much-needed cash flow enhancement strategies. Perhaps it’s time to get in touch with us if you want to know the steps to unlocking your Lock Up.

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Risk Management – It’s a boring topic that may just save you.

Mon, 04 Nov 2019 00:35:00 GMT

Lawyers spend considerable time and energy protecting their client’s risks. It is their obligation as a solicitor and as an Officer of the Court. So, as a mechanic is when servicing his or her own car, lawyers can often leave themselves and their business unprotected by not adopting best practice risk management procedures.

No doubt readers will be thinking “I’m fine! I’ve got my Professional Indemnity insurance in place.” However, a firm’s risk profile far exceeds that of professional liability claims from clients.

Regulators, insurers and Law societies across the country have made lots of noise about contemporary risks such as cyber-attacks in recent years, and rightly so. However, the age-old risks remain ever-present and in some circumstances, they are increasing. According to the Governance Institute of Australia’s Risk Management Survey 2019 , professional services firms ranked Brand and Reputational Risk as their number one risk. Similarly, attraction and retention of talent ranked highly, a risk labelled as “old as risk management itself.”

In addition to cyber-crime, disruption and failure to innovate featured highly in the survey. Though, many law firm clients saw regulatory risk as the standout in 2019, off the back of the Banking Royal Commission.

Strangely, professional liability, considered among the top risks, came in 12 ^th in terms of highest rated risks this year. Yet lawyers spend most of their time and money mitigating their professional liability!

Have you considered the possibility of a claim from a staff member for adverse action as a result of discrimination or other reason? If your firm were found liable, do you have an insurance policy that may respond to the damages claim?

To self-insure is a common approach. However, the small cost of a policy to respond and rectify major business risks seems modest given the potential for loss. Of course, protection through insurance is just a small part of an overall risk management strategy, and it should be your last line of defence.

Does your firm have an up to date ‘Risk Register’ that considers scenarios across the broad spectrum of strategic risks? How is your firm placed to prevent clients or staff being enticed to move to other more agile and tech-focused practices? What IT controls do you have in place in case of a system failure? What measures are there to prevent fraud in your Trust Account or expense management?

Lawganised has extensive experience in the risk management of legal practices and professional services firms. We can assess your current profile, develop a Risk Register and implement strategies to minimise your risk. To find out more about how Lawganised can help your firm, get in touch for a free consultation.

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