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Yesterday I received a pre-release briefing on the latest addition to the Juris suite of law firm software, Juris Active information.  While I avoid writing blog posts that are, or appear to be, a commercial, there are times when the benefits of new capabilities are just too important not to share with morepartnerincome readers.  

Juris, Inc. has been revolutionizing how business and competitive information is presented and used in the law firm.  The addition of Active Information to the Juris software suite is another example of the performance edge Juris law firms have over their peers.  What Juris has been doing through its product development program is moving the event horizon for law firm leaders to the present and slightly over the edge into the future.  Juris Active Information targets actionable and navigable information to the individual in the firm to whom it is relevant and then can provide it in an instantly digestible form.

What do I mean by “event horizon”?  Event horizon is a boundary in space/time beyond which events cannot be observed.  Managing Partners and other law firm leaders have been at a disadvantage for years because their information systems only told them about events occurring well into the past.  In other words, information available to them is out-of-date.  It is about events that have already occurred.  It is too late to take any action to change the outcomes of events that have already occurred.  

If we draw a vertical line to represent the present in a law firm, the future would be to the left of that line and the past to the right.  See the image below:

Over the years law firm leaders have had little or no information about the present or into the future.  Traditional reports are often available only weeks, sometimes months, after the period on which they are reporting.  Even if they were immediately available, they are still just historic documents—looking only backward into the past.  They give you no opportunity to change the present—your current situation.

What is needed to guide a law firm to a targeted goal is information that is:

• Timely

• Relevant

• Accurate

• Comprehensive, and

• Navigable

Most law firm systems provide accurate and comprehensive information but come up short when it comes to timely.  The less timely it is, the less relevant or useable it is.  And unfortunately the available information is usually not navigable.  It is static or inert-numbers and text printed on paper or displayed on a computer screen.  You can’t navigate through the information to more detail or to other related information.  The typical information provided is not actionable without the additional work of information gathering and analysis.  Rather than information that is instantly digestible and actionable, the individual is left to analyze information to isolate that which is relevant and then to determine if action is required.  All of this is another way of saying “information, information everywhere and nothing to quench my thirst for knowledge.”  The typical law firm event horizon is shown below:

Juris has been moving the event horizon to the present and slightly over the edge into the future.  It is targeting actionable and navigable information to the individual in the firm to whom it is relevant and providing it, wherever possible, in an instantly digestible from.  The information is dynamic versus static and inert.  It can be manipulated, extracted, rearranged and navigated through to more details.

Juris is revolutionizing how business and competitive information is presented and used in the law firm.

• Juris anywhere/anytime .NET technology tracks firm-wide client services (including activity normally beyond the event horizon in that it has not yet been submitted to the firm’s accounting department) to provide a real time view of fee earner activity.

• Juris dashboard technology provides working attorneys and law firm leaders with situational awareness over their area of responsibility.

• Active Information targets and delivers actionable information to the person for whom it is relevant—information that is both tailored to the individual’s need and that is timely, immediate, and navigable with drill down capability.

• Juris Insight automatically collects and tracks the law firm’s performance metrics against its peer group providing firm leaders competitive information and benchmarks for achieving the firm's targeted goals for the future.

And there is more on the way—including advanced budgeting and forecasting to take the present budgeting capabilities of Juris to an entirely new level for law firm management.

By moving the event horizon, Juris Law firms benefit from income increasing capabilities and resources unavailable elsewhere.  While others are digging through reports to find out what happened, Juris dashboards communicate instantly digestible information—current to the moment and in time to change the outcome.  While others are analyzing last year’s surveys, Juris law firms can view the law firm’s performance against current information for its peer group—because measurement improves performance.

The Juris team is unapologetic about the motivation behind its new product development activities.  It is a commitment to increase the income and wealth of law firm owners, the equity partners.  Doing that in a way that benefits all, clients and the firm’s non-partner employees, is accomplished by “Doing the right things and doing them right.”  One of the ways Juris, Inc. has been helping Juris clients do that is by moving the “event horizon”.  

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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What top-level metrics should you track? If you are among the 20 percent of midsized firms who have a formal planning process, what you track depends on that plan and your objectives. But regardless, there are six basic metrics that every firm should track:

Productivity or Utilization

Effective (Blended) Rate

Realization

Margin

Days of unbilled fees (work in process)

Days of billed fees outstanding (accounts receivable)

Current performance should be compared to prior periods to determine if the firm's financial performance is improving, holding its own, or declining. It should be compared to the firm’s targets to determine if it is achieving its objectives. It should be compared to benchmarks of similar firms. Doing so will most likely indicate areas that deserve attention and that represent lost opportunities.

While I have not included it among the basic metrics, leverage is still the primary factor correlating with per-partner income. For example, in a recent survey, the top performing 25 percent of midsized firms had 2.5 associates for every partner, compared with an average of 1.3 associates for all firms. The chart below appears in the Juris Law Firm Economic Survey of midsized firms for 2005. The chart clearly illustrates the dominant influence of leverage on per-partner income.

If you need help computing any of the six basic metrics, refer to the previous posts linked below:

• What is Utilization?
• What is Blended Rate?
• What is realization?
• Measuring Law Firm Collection Realization
• Measuring Law Firm Margin
• Measuring Law Firm Work-in-Process Days
• Measuring Law Firm Accounts Receivable Days Outstanding

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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Put a plan in place to reduce the time it takes to bill for services. Couple faster billing with deliberate collection efforts, and law firm partners will enjoy a record income year.

On average, 148 days pass before payment for legal services is deposited in the law firm’s bank account. That is almost half a year’s worth of fees. Based on the 2005 Juris Law Firm Economic Survey, the typical midsized law firm takes 72 days to put a bill in the mail. Another 76 days elapse before that bill is collected.

Because most law firms use the cash method of accounting, neither work in process (unbilled fees) or accounts receivable (billed but uncollected fees) appear on the law firm’s balance sheet. Combined, these represent the typical firm's largest asset.

Law firms don’t pay enough attention to cash flow in a systematic way. They aren’t in tune with the value of unbilled fees and uncollected cash, especially when cash flow seems consistent with past patterns. If you don’t get the bills out quickly and accurately, your firm is going to perform poorly relative to what the outcome could be. Slow billing and collection appears to be a problem with firms of all sizes and across all levels of performance.

There is no justification for slow billing. How do you speed it up? Start the process by asking your accounting and administrative staff for a plan to do just that. Work with them to finalize that plan. Support that plan. Give them objectives (targets) based on their approved plan. Measure performance against those targets. Recognize and reward their accomplishments. Hold people accountable (including partners) for their role in the plan.

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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If you don’t believe in strategic planning, you must read Rob Millard’s post Creating Prepared Minds. His post includes an excerpt from an article by McKinsey & Co.’s Eric Beinhocker titled Creating Strategy in an Unknowable Universe.

Breinhocker gets it right. If you think strategic planning is about predicting the future, you are dead wrong. If that is why you are not doing it, you need to revisit the issue. Assumptions (predictions) are inaccurate. If you get one right, it is just the luck of the draw. The first rule of the planning process is that you must plan to change the plan. As the future gets closer, you continually change your expectations and reactions to it until you arrive on target.

Planning gets the entire law firm team playing from the same play book. It prepares the team for the future and capitalizes on its opportunities. Rob’s post is a must-read that may inspire you to read Beinhocker’s entire article.

Chance does favor the prepared mind. Top performing firms do it. If you want a good reason to start, consider this reason: more than an eight fold difference in per-partner income. A soon-to-be-published survey of midsized law firms by Juris, Inc. discloses that the top performing 25 percent of firms earn more than eight times the per-partner income of the bottom 25 percent. That seems to be a good enough reason to start.

Three important rules for successful planning include:

• The planning plan must be to change the plan. Strategies are temporary targets based on inaccurate assumptions and estimated capabilities.
• The planning document should consist of words and phrases to facilitate frequent updating.
• The structure is a critical part of the process.

The structure for the strategic portion of the planning process that I have successfully used includes nine main areas to be addressed by the planning team in the order listed. The nine subject areas are:

1. Nature of the law firm (or activity, e.g., practice area or department)

2. Environment in which firm operates

3. Opportunities/Capabilities (SWOT)

4. Assumptions about the future

5. Objectives–Mission/Strategic Thrust

6. Policies/Procedures (changes or new ones needed)

7. Strategies–How we are gong to achieve objectives

8. Priorities and schedules for programs, new resources required, measurements

9. Organization and delegation

For more step-by-step suggestions, reread the earlier post The Structure to Structured Planning. I also suggest a reread of Consensus Building for a discussion of the role of the structured planning process in building a consensus, i.e., preparing the mind to deal with an uncertain future in pursuit of a common vision.

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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One of the blogs I especially enjoy and learn from is David Maister’s Passion, People and Principles. His recent post “Dangerous Rubbish About Leadership” is classic Maister. Maister the contrarian opens the post and the insightful and wise Maister ends the piece.

I agree with his message, at least my understanding of it. Success is not determined by our desire for it. It is determined by how we pursue it. A law firm’s core beliefs about “how” it pursues its activities are what make the difference between the merely competent and the exceptional law firm. As Drucker has noted, competence isn’t enough to survive.

The view of a leader as one who lays out a destination and says “follow me” is an outdated concept that does not work in Maister’s view. It appears that Maister discounts the importance of destination in part because the destination for most law firms is usually the same. However, if you do not know where you are going, any road will do. The law firm that has an organization pulling in many different directions is likely to get nowhere. Someone has to set the course. Sometimes the destination is defined as where the law firm is not going. There has to be focus or concentration. That doesn’t mean that the organization is not prepared to change course, take advantage of opportunities, or benefit from serendipity.

Destinations are temporary targets. Having a destination doesn't result in reaching it. I believe Maister is saying what really drives success is the core belief system that is imparted in an organization by its leader or a succession of leaders. I’m not suggesting people want to be led, but people do need a copy of the playbook. They need to know the boundaries within which they can exercise their own judgment and creativity in pursuit of the organization’s purpose.

We use the shorthand phrase “I65 North” to remind our team where we are headed. It emphasizes that each individual is an independent traveler in that journey. You can drive as fast as you can as long as you are not so reckless as to endanger those around you. You can go as slow as your circumstances require as long as you are not impeding the progress of others. You can get off and get back on. But you can not go south, east or west. As important as our destination is, where we are not going may be even more important. We are going north. If you don’t want to go there, then you need to find yourself another highway to travel.

Maister ends his post with the following statement: “Great leaders (there, I’ve said the dreaded word) get people to focus on the key elements of strategy – the standards on which the firm is going to compete. With a clear ideology to rally around, talented people get the choice of saying ‘I can believe in that. I think I’ll stick around to a part of that and be a member of a society of like-minded people operating together in accordance with common values.’ That commitment, in company after company, has led to service line and market sector choices not no-one anticipated, because they were not the guts of the strategy, but rather the outcome of the strategy – the firm’s own way of doing things. If a leader can create THAT – then I’ll agree to use the term ‘leader.’“

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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Previous posts have already identified that disappointment in self-development tops the list of reasons for lateral moves. But there are other important motives.

The second strongest reason for lateral moves is the practice interest of the attorney. This reason is probably supported by financial interest. At risk are the attorneys who are rising stars in a particular practice area. These attorneys are the major force behind a growing practice area. They are the reason clients are joining and staying with their current firm. They often feel that, given the business they are generating and are responsible for, they are not receiving the appropriate recognition or compensation.

These practice area stars, both current partners and senior associates, are likely targets for the firm that is strategically interested in entering or expanding the area. They are the same attorneys that are most likely to walk out of their existing firm’s door with a good measure to the business.

They are an opportunity for other firms and their potential loss is a risk to their current firm. They are an example of the need for managing partners and the senior leaders of the firm to engage in active evaluation and communication with their partners. This includes assessing their satisfaction and dissatisfactions with their place in the firm. It means having fair compensation systems and appropriate recognition and compensation for those responsible for generating business and maintaining client relationships. It also illustrates the risk of having a “one attorney/one client relationship”. Many firms double up—having a partner other than the responsible attorney meet regularly with the client for feedback. Doing so demonstrates through action the depth of the organizational strength provided by the law firm.

Of course, from the recruiting firm’s standpoint, the mission is to take advantage of the exiting law firm’s failure to exercise best practices in retaining its star performers. A major concern of the recruiting firm should be the issue of possible dilution of existing partners’ earnings. Will the addition of the lateral be a positive contribution to the firm rather than dilute the interest of existing firm members? Make sure that the book of business expected to follow the lateral is not overestimated. Make sure that the candidate fully understands and accepts as fair the new compensation system of his new home firm. No matter how good this addition looks, the firm should not forgo its customary selection procedure and due diligence steps. If it is too good to be true, it usually is.

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’ll take the future! That is what my wife said the other morning. I wish I had said that.

She had been listening as talking heads on TV bemoaned the changes man is causing to our environment and the need to preserve the species, etc, etc, etc. Like Peter Pan, they want to never change. I was half listening to the TV and at the same time reading McKinsey’s 10 Trends to Watch highlighting changes already afoot that will present you with either opportunities or problems.

Except for change, we would not even be here. We are living on a piece of explosion debris warmed by the tip of a burning match. According to the evolutionists, we are simply the current iteration of primordial slime. You don’t have to look far into the past to realize that the future is a worthy goal.

The point is you can’t stop change. Change is constant. It is one of the two certainties in life and business—change is constant and we are always judged by others. That pretty much sums up the laws of economics as well. You can be temporarily successful accidentally. However, Long term success depends on how well you can change, and how well you do it is determined through the eyes of those who judge you. In the case of a law firm, that includes the consumers of legal services and the talent pool you compete for.

Success depends in part on making intelligent assumptions about the future and changing to take advantage of those trends. Assumptions are, by nature, inaccurate. Assumptions are mere temporary targets that you must adjust and refine constantly, narrowing your focus as the future gets closer and closer.

Assumptions are the starting point for strategic planning. Without assumptions as the starting point, it is not possible for effective strategic planning. Your plans should include assumptions about all of the following and anything else your business depends on:

Economics

Labor force and Talent Pool

Technology

Governmental impacts

Professional Rules and Regulations

Nature of market and trends

Pricing constraints

Buying methods of prospects

The internet is a great hunting ground for tapping the insight of futurists and business experts like McKinsey & Co., that spend a lot of time and resources researching trends and thinking about the future. McKinsey offers a free registration for their McKinseyQuarterly online Journal. Your membership includes access to an extensive library of McKinsey articles and white papers.
 

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