Build A Stronger Firm In Your New Fiscal.
The year 2020 is in the books. For some, it was an unmitigated train wreck. For others, it was business as usual—with a few twists. Whatever your experience, you learned a few things, especially how to better protect your business against the “what ifs.” And while no one can predict every eventuality, there are six areas every firm should evaluate to identify strengths and weaknesses and make improvements. What better time to do this than at the start of a new fiscal?
1. Client Relationships
81% of law firms reported a drop in revenue during COVID-19*. There are many factors that could be attributed to this, but many firms are not adapting, operating to their capacity, or reaching potential clients.
Solution: Perform an Annual Client Portfolio and Strategy Review
Annual Client Portfolio Review
• Who is your current client base?
• Does it align with your strategy?
• What patterns are visible?
Annual Client Strategy Review
• Is your portfolio reflecting a change in your target market?
• Is there an opportunity to bring in new business by adjusting your target?
2. Financial Performance
27% of firms have seen business decline by more than half during COVID-19*. The challenge came when businesses were operating under previous financial assumptions or had no idea where to maximize profit and minimize expenses.
Solution: Implement financial best practices and know targets
Practices To Follow
• Document a long-term financial strategy and profitability model
• Ensure access to sufficient capital and cash flows
• Follow written budgets and monitor reports
• Streamline invoicing, payment and collection systems
Numbers To Know
• Revenue per attorney
• Salaries: 65% of gross revenue
• Marketing: 8-10% of gross revenue
• Rent: 6-7% of gross revenue
3. Talent
Constant turnover creates chaos and costs a firm money. Having the right people on board helps.
Solution: Perform annual talent reviews and make internal improvements
Annual Talent Review
• Review each person—with goals, feedback and accountabilities
• Review each practice segment
• Review back office
HR Improvements
• Boost existing talent through training or focusing roles
• Onboard diverse skillsets by acquisition or outsourcing
4. Culture
According to a recent survey, nearly a third of firms noted operation efficiency as their top challenge. Too often, not everyone is on board with firm or financial goals and growth performance does not align with cultural expectations.
Solution: Perform annual review of the firm’s culture and operations
• Identify whether short-term initiatives or successes have come at the expense of culture
• Take action to correct detours and be candid
• Embrace good changes, even if unexpected
• Align firm’s culture and operations with strategy
5. Succession
It’s a fact: lawyers who don’t have a succession plan leave their clients and firms in jeopardy. Setting up a solid plan can make the transition easier.
Solution: Ensure your firm has a client and leadership succession plan
• Identify a triage lawyer for your firm
• Create a checklist
• Designate what happens to IOLTA accounts
• Create a file of current business records
• Leave instructions in estate plan documents
6. Cybersecurity
According to the ABA, up to 42% of law firms have experienced a data breach. Just one breach can ruin your reputation and leave you exposed to bar complaints/actions.
Solution: Perform an annual assessment of risks and follow best practices
• Create a security feedback loop so your team is aware of threats
• Regularly update permissions
• Maintain an audit trail of data access
• Enforce strong passwords and update them regularly
• Use multi-factor authentication
• Stay updated and compliant on regulations
• Create an incident response plan to address data breaches
• Train employees on their roles and responsibilities in data protection
• Update software to ensure latest protection is installed
*Source: Martindale-Avvo
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