Presented by Clio.
Every lawyer is different, but a few things hold true for just about every law firm, big or small: You need more cash flow and more clients. Period.
There are a lot of pressures on the average small firm or solo lawyer, but a data-driven approach can ensure you’re taking an objective look at areas for improvement and making changes to make your firm more efficient.
Mary Juetten of Traklight and Sam Glover of Lawyerist spoke at the 2017 Clio Cloud Conference about how lawyers and legal professionals can use data-driven decision making to make their practices more profitable. Here are a few tips from their talk.
1. Get ahead of your accounts receivable
Use Clio and QuickBooks Online to find out how much you’re billing each month, but don’t stop there. Find out which clients owe you money and how long their invoices have been past-due for. Organize these invoices from oldest to newest to see how much money is 90 days past-due, 60 days past-due, and 30 days past-due, so that you have a clear picture of your accounts receivable.
Tip: Clio’s Accounts Receivable Aging Report can help with this process.
2. Don’t just create a system for billing—create a system for collecting
Once you see how much you’re owed, take time to create an effective process for following up with clients who have past-due invoices. “It’s not good enough to record the time and bill the time. You have to collect the money,” said Mary.
For example, you may want to send an email reminder to clients when an invoice is 30 days past-due, and you may want to call to follow up if an email is over 90 days past-due. Although collection agencies aren’t popular with lawyers, Mary recommends considering them for persistent collections.
3. Map out how you’re spending your time
What gets measured gets managed. To see where your time is going, track how much time you’re spending finding new clients (including answering the phone and consultations), how much time you’re spending tracking hours, invoicing and collecting payments, and how much time you actually spend serving clients. Record every task you spend time on, and categorize it within one of these three areas (or more, if needed) using a spreadsheet, software, or even just a white board with post-it notes. Look at which tasks are taking up way too much of your time, and which ones might need an efficiency tune up.
If you’re finding that you’re spending more time on administrative tasks than on billable work (as, according to the 2017 Legal Trends Report, many lawyers are), it may be time to hire a paralegal or legal assistant, or to use technology to make some of your administrative tasks more efficient.