The Harvard Business Review is rapidly becoming my other magazine I read cover-to-cover (the other being The Economist).  In the March, 2008 issue there is a short article related to Web Retailing that I believe is a good example of why attorneys need to be spending more time blogging.  Andreas B. Eisingerich and Tobias Kretschmer surveyed online customers on what drives them to purchase from a retailer.  What they found is that online customers do more research and are more likely to purchase from a retailer that engages them than one who simply tries to sell product.  They found that "exploiting consumers' desire for engagement is the single dominant driver of superior shareholder value for e-commerce companies."

". . .[Providing informational content] helps customers search for solutions, invites them to think of all the ways the core products might add value to their lives, wins their loyalty, and entices them to buy."

How does this translate into an endorsement of blogging?  It is no different than creating a brochure or newsletter - it helps clients understand the law of their particular interest or need.  It drives them to seek you when they need someone to represent them regarding related subject matter.  Blogging is a continual dialogue, with very little in the way of up front cost (other than the pain involved in updating content regularly).  Not only does blogging display the expertise of your firms and lawyers, it is a mechanism to drive business development. 

To determine how blogging increases revenue (ie, to measure performance), you must track how clients come to you.  Make sure your business software can track source of business.  With a blog, you can provide downloadable content and require registration to download.  This also helps in determining source of business.  You can determine a lot from who visits your site as well.  You can capture location, frequency of visits, what pages they visit, what they download, etc.  All of this is valuable information for business development purposes.  For example, if your area of expertise is Estate Planning and you write a post related to a new law that fundamentally changes how investment vehicles are treated that increases hits in a specific geographic location by 30%, then you can surmise that the public in that location is interested in this topic; thus, you can focus advertising or public speaking opportunities to get your firm's name out as an expert in the area - not only for those reading the blog, but also those who aren't online. 

As clients become more web-savvy, it will be the law firms with a strong web presence that will dictate the standards by which other firms compare.  Providing information for your clients is good - providing updated analytical content written by attorneys in their specialty places your firm in a position to engage current and potential clients and drive superior shareholder value.

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A recent study by Redwood Analytics as reported by Larry Bodine identified the distinguishing characteristics of clients retained by law firms.  The absence of those characteristics and the presence of others can identify clients most likely to go elsewhere.  The study is a reminder that law firms can use their business system to create a scorecard according to attrition risk and having done so can target those clients for remedial steps.  The scoring part is the easy part; developing a culture willing to take action to improve retention is the harder part.  As for actually producing the attrition risk scores, your business software should track the necessary indicators.  To produce a scorecard you will need a custom reporting procedure.  Law firms with in-house capabilities should be able to do that internally using reporting tools but, in any case, your software provider should offer custom reporting services for a reasonable fee.  If not, you have the wrong software or wrong software provider. 

What are the attributes you want to measure?

On the plus side Redwood found that long-term clients had the following attributes:

1. Provides the firm a large amount of legal work

2. Has a mature, established relationship with the firm

3. Uses the law firm for matters involving two or more practice areas

4. Two or more partners are significantly involved with the client’s work

Redwood also found the following:

• First year clients have an attrition rate of 50% compared to 20% for clients with a four year history. 

• Clients with only one partner involved have the greatest attrition rate.

• Too much or too little partner time on matters creates an attrition risk. Morepartnerincome believes that the danger zone is anything less than 10% or more than 60%. 

• Clients most at risk have an overall realization of less than 80%, i.e., discounts don’t retain clients.

You will have to play around with this but start out trying the following:

• Give 10 points to a firm whose prior year fee revenue met the 1% test.  (To keep it simple, divide your annual fee revenue by 100.  Use the amount in your report to identify clients meeting the “large amount of legal work” test.)
• Deduct 5 points if the fee revenue for the prior three months x four is less that the 1% test, i.e., fee revenue is declining. 
• Add10 points if the client has been with the firm for three or more years.
• Add 5 points if the client has matters in at least two practice areas.
• Add 10 points if the client has multiple billing (supervising) attorneys on active matters with billed amounts during the prior three months. 
• Add 5 points if partner hours on the prior three months’ bills were greater than 10% but did not exceed fifty percent.
• Deduct 5 points if unbilled fees exceed the prior two months’ fees.
• Deduct 10 points if billed but uncollected fees exceed the prior three months’ fees. 
• Deduct 5 points if prior year collections where less than 80% of the prior year value of billable hours at standard rates.  
• Deduct 5 points if the percent of partner hours on the prior three months bills were less than 10% or greater than 60%.

There is nothing magic about the above weights for the items listed.  You can and should vary the weights to fit your firm’s experience.  There is no perfect score.  Those with the highest points are the least likely to abandon the firm within the next three years.  Those with the lowest score are the most likely to leave. 

Morepartnerincome.com is sponsored by Juris, Inc.  For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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I ran into two situations last week that illustrate why you should not settle for “no” when asking “Why can’t I?” questions about your law firm’s enterprise system. If the software is not working the way you think it should or not giving you what you want, do not accept an unsatisfactory answer from the firm’s staff. Insist that the staff member go to the software vendor and that they explain to the vendor what you want and why—what you are trying to accomplish. If the answer is still unsatisfactory, you should personally go directly to the software vendor. If you have to, go to the top—the COO or CEO. What will surprise you is that the right answer is almost always “Yes!”

When it comes to software, most of us only use a small portion of the product’s capability, and that goes for individual attorney use of the enterprise business software for the law firm. Training is front-loaded—it occurs when law firms first install systems. Unfortunately, skills are not always updated with refresher training. It gets worse. Updates to software add new capabilities and features that, without training or self-paced study, go unused. Law firms experience turnover among accounting and administrative staff, and before long, the people in the law firm with primary responsibility for the system only know what has been handed down from their predecessors.

Today’s systems have options and defaults that will change how the software works to fit individual preferences and patterns of work. What works for one person’s work pattern can be cumbersome and frustrating for another. Unchanged, those hand-me-down settings become frustrating to the attorney.

Almost all enterprise software provides the capabilities for custom reports and views. The leading software vendors offer services to design these custom capabilities for you and most include optional tools to equip the firm to do their own.

Chances are that your firm is not using all of the vendor’s products. If there is something you need, you can pretty well assume others do as well, and the vendors may have optional products or services that fill that need.

At two different firms last week with two different issues, we ran into attorneys that were upset because their system would not do what they wanted and they had been putting up with this adverse condition for months. We showed them how their existing system already does exactly what they wanted exactly the way they wanted it done. It was a simple matter of changing built-in options and defaults. The problem was the law firm’s staff only knew what had been handed down and the attorneys had accepted “No” as the answer.

There are two morals to this story. The first is, do not accept “No” as the answer. The second is that there is material value in continuing training to update and refresh staff knowledge and skill regarding the firm’s enterprise systems. The Juris team reminded me the other day that the newest Juris law firms have a more valuable system than long-term Juris customers. It is the same software, but the newer firms have been recently trained on the system’s full and powerful capabilities. The long-term clients only have hand-me-down knowledge.

It doesn’t have to be that way. Companies like Juris will go to the law firm site to conduct refresher training. They offer off-site classroom training. Training CDs are available and online supplemental training is available over the Internet. Juris, Inc. recently put in place a certification program and will take responsibility for continuing certification of key staff members in your firm. Other vendors may offer a similar program. Ask your staff for the ongoing training options offered by your vendor and put in place a regimen of ongoing training to keep their knowledge and skills updated. It will pay off. What they learn will increase per-partner income.

ASK, don’t settle, and demand the best… Several years ago the folks at Juris coined the phrase “The Power of Yes” to convey to all Juris team members and Juris law firms that saying “Yes” is the company's objective.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
 

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Regardless of how you bill (hourly, contingent or fixed price), you need to know the invested time to measure profitability. Most firms measure relative profitability as “realization”. Overall realization is the percent collected divided by the value of the hours worked at standard value.

One of the problems, however, is that some of the time invested on a case or matter is never captured. That is leakage—time worked but not reported. It happens most frequently in firms that allow legal professionals to track and report time after the fact. Some studies indicate that leakage is as high as 40 percent when timekeepers are reconstructing how they spend their time at the end of a week, for example. It stands to reason that those smaller slices of time worked will be lost to an imperfect memory.

Increased fee earner productivity for many firms is as simple as switching from after-the-fact time reporting to tracking time as worked. You can kick that up a notch with PDA devices like the BlackBerry® to provide your mobile professionals with anytime/anywhere capability. Time tracking software can also turn e-mail and phone messages into time entries with a simple click.

Check with your business software vendor for their time capturing options. There are some generic products that can be used across a number of time and billing systems. One of those is Carpe Diem from Sage Software. Another is DTE from Advanced Productivity Software, Inc. However, before you go the generic route, check with your time and billing software vendor to find out what options they offer for time tracking as you work. The law firm business software suite from Juris Inc., for example, includes the MyJuris option for the legal professional. MyJuris not only equips the timekeeper for anytime/anywhere time recording, it provides continuous reporting back to the firm’s main Juris system, providing managing partners and practice heads with current-to-moment information on billable and non-billable activity including both completed and in-process work. It uses dashboard technology to provide information that is both actionable and instantly digestible. The MyJuris option goes even further to improve law firm realization; time entries are automatically audited against engagement rules with feedback to the attorney. This eliminates rework. It also reduces client-initiated adjustments and eliminates rejected bills. Keeping current with time and expense activity coupled with engagement rule auditing means bills get out the door faster and money gets in the bank sooner. Faster billing and collections also reduces adjustments and bad debts. It all adds up to more partner income! For more information about MyJuris download the 6 page product brochure (PDF) available from Juris, Inc.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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There are important changes in the works involving the Uniform Task Based Management System (UTBMS) and for the Legal Electronic Data Exchange Standards (LEDES).

If you deal with the corporate world, you are submitting invoices electronically using the LEDES98 standard or some variations on that standard. Likewise, you are coding time entries using UTBMS codes (at least for litigation matters).

First, the group responsible for the maintenance and improvement of the UTBMS code set has merged with the LEDES Oversight Committee. That group has developed new code sets for trademark, patent and project legal work. The proposed new codes sets are still open to comment. The group plans to formally ratify the final code set prior to the end of 2006.

The big news is the move to XML by the LEDES group. This will begin to impact some firms in 2007, but widespread adoption by law firm corporate clients isn’t expected until 2010. Nevertheless, the impact will be significant, equivalent to the initial phase of electronic billing by corporate clients. What does that mean for the law firm? It means you need to be sure your legal business software vendor is one that keeps their software in synch with electronic billing standards.

The LEDES XML as a replacement of the LEDES98 standard will eventually result in demands from the corporate world for the electronic move of an expanded array of information. In addition to the new LEDES XML standard for billing information, the LEDES Oversight Committee had a new proposed standard for budgeting information. Work underway for timekeeper profile will accommodate the electronic conveyance of timekeeper information such as rates, where and when admitted to the Bar, law school dates, etc.

As it becomes easier to provide information and keep the law firm and corporate client information in synch, the hope is that friction cost is removed from the system, benefiting both law firm and client. However, make no mistake; the corporate objective is to reduce legal cost. Steven Levy with Microsoft Corp., who heads more than one LOC subcommittee, commented at a recent LOC meeting in Orlando that Microsoft saves two percent on law firm bills as originally submitted just by auditing timekeeper rates against engagement rules.

What you can expect is an increase in corporate demands for information. By 2010, you are likely to be submitting budgeting information and regular projected cost updates on work undertaken for major corporations. You are likely to be required to update timekeeper information in real time for any change to that information. Don’t be surprised when your corporate client begins to demand variable rates for timekeepers depending on the complexity of the matter or work undertaken.

Law firms with business and billing software that is not on the leading edge of LEDES developments will find they are at a competitive disadvantage when competing to gain or retain work from major corporations and financial institutions. The following legal business system vendors are on the board of Directors of the LEDES Oversight Committee: Juris, Inc., Aderant, Thomson Elite, and RainMarker.

PS: LEDES XML is also a replacement for the inadequately designed LEDES 2000, which while an XML version, was never embraced by the legal community due to its inadequate design.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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Forget reports. Today’s pace is too fast for yesterday’s news. Business Week Online let out the secret being used by major corporate CEOs to guide their business. The February 13th article reported that major corporate leaders are relying on “Dashboard” technology. The Business Week article said “dashboards pull up everything the CEO needs to run the show.” Corporate executives have learned to focus on key performance indicators that measure the direction of movement and speed of movement for their organization. Dashboards quickly point out areas that need the executive’s attention.

Dashboards provide situational awareness and couple that with drill-down capability for actionable information. The technology has given these executives the tools to change the outcome rather than just analyze, after the fact, what has happened.

Dashboards are starting to show up in Law Office Business Software suites like the Juris® system. They fit the “part-time management” style of law firms perfectly. Law firm managing partners split their attention between lawyering and managing. They don’t have time to dig through last month’s reports. They need information current as to the moment in a form that is instantly digestible. That information needs to be actionable—it should imply the corrective action needed and clearly point to the cause of the deviation from target or norms.

Successful executives understand and focus on the key performance indicators that drive their business. Dashboards are the new instruments for keeping the law firm on track. Dashboard views can be customized to provide an individualized field-of-view over the legal professional’s area of responsibility.

To ditch out-of-date reports and start flying by instruments contact your business software vendor for an update on dashboard plans or availability. Juris law firms can call 877/377-3740 or e-mail sales@juris.com for more information about MyJuris, the dashboard portion of the Juris software suite.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
 

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I try to stay away from putting commercials in MorePartnerIncome. From time to time, however, there are products  that you just have to  know about. Today, I reviewed the current status of a soon-to-be-released new Juris, Inc. offering. And, I can’t keep from giving you a peek at this revolutionary companion product for Juris_® Law Office Business software.

 

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I was once asked what I liked most and least about traveling as much as I do.  What I like most are the friends I’ve made all across this country.  Not only among law firms but, also, within the community of vendors and consultants serving law firms.  Among my favorites are the folks at CompuLaw®.  The CompuLaw team reinvented Docketing and has set a standard that no one else has matched — or even come close.

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As a law firm partner, your annual income is only half of the story.  The other half is continuity of the law firm as a going business.  If the business isn’t there,  there is no annual income and a significant part of your investment portfolio is down the tubes.

Risk management is, therefore, essential for your livelihood and for the preservation of personal wealth.  That is why you have professional liability insurance.  And that is why you should have a disaster recovery plan.

But the weakest link in your continuity chain may be little pieces of plastic tape or disc of silicon.  Partners go to bed every night betting their future on a backup process that is cumbersome and error prone and unrealizable.  Forty-three percent of firms experiencing a business interruption never resume operations.  I have seen it firsthand, over and over.  It is a tragedy that does not have to happen.

Today’s best technology for backing up the law firm’s system is continuous on-line backup services provided over the Internet.  Your data is always off-site in a secure location.  It is always available from anywhere at any time.  One of the major companies providing this service to law firms is LiveVault®.  LiveVault’s services may be available through your business software vendor as it is for Juris users.  If not available from your current vendor, you can contact LiveVault directly by going to www.livevault.com.

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