Looking to grow your profits? The first step is to acknowledge that you’re a business owner. Attorneys love to say “I’m a lawyer, not a businessperson.” I’ve always found that to be an odd statement. The good news for these people, however, is that they won’t have to worry about being a businessperson for very long – they’ll go out of business soon enough and the problem will have taken care of itself. The fact of the matter is that you became a business owner, and stopped being a lawyer, the moment you hung out your shingle. You own a company which sells a product and that product just happens to be legal services. Now that we’ve established that you own a business, let’s look at four ways to make your thriving enterprise more profitable.
I regularly consult with attorneys who think the key to growing their income is to “get more phone calls.” For nine out of ten of them, that statement is WRONG! There’s two parts to making money. The first is revenue. The second is what it costs to run your business along with the costs associated with earning that revenue once it hits your trust account. Attorneys looking to grow their bottom line tend to miss the second point and, as a result, will never be as profitable as they could be. Implementing these four steps will be a huge improvement for most law firms and will mean that your firm will stop doing this:
so that you can start looking like this:
Assuming you’re interested in making more money, I say “read on!” If you are not interested in prosperity then………well……..it’s been real.
Attorneys can increase profits by moving their software to the cloud
Most of the law firms I’ve consulted with were still using Outlook’s desktop client, locally storing files on their own server/computer, using local billing software (such as Sage Timeslips), and many were still using paper files. Here’s a newsflash – every time that stuff goes down you lose money! This is true if you are charging a flat fee. Time you are spending on IT issues could be spent getting a case wrapped up. You are also losing money if you charge by the hour for obvious reasons. Migrating to the cloud eliminates this downtime and makes your office far more efficient. This efficiency means more of that good money in your bank account.
I’ve previously written about why lawyers should switch from Outlook to Gmail. I’ve also discussed why switching over to Google Apps is the best move for law firms (Google Apps includes Gmail, Google Calendar, Contact Management, and online storage). Using these services, combined with the cloud-based billing and accounting options which tightly integrate into them, will help your firm quickly move in the right financial direction by eliminating down time.
Attorneys need to consolidate their IT infrastructure into as few apps as possible
Many attorneys seem to have the attitude of “why deal with one software program when I can have two at twice the hassle.” Chances are that you’re doing this and that you don’t even realize it. This means that, unknowingly, you’ve given yourself something in common with this guy:
The good news is that you can fix this problem pretty easily.
Ask yourself how many software programs you have which leave you saying “this program does a lot of things that I don’t utilize it for.” The big thing is that a lot of law firms are then paying for a second software system to do the task that the first system is capable of. This means that you’re 1) paying for software that you don’t need and 2) you’re spending time switching between apps when, instead, you could be using one. This switching back and forth is costing you efficiency.
Even if you’ve fully paid for two apps, when one would have worked just fine, it’s still worth it to consolidate. Having your information and data in as few apps as possible will increase efficiency. This, in turn, increases profits.
Attorneys need to reduce their number of vendors in order to maintain profits
There’s a funny thing about the point I just made above regarding the use of too many software applications. Attorneys do the exact same thing with their vendors. I’ve spoken with quite a few law firms who use Quickbooks, or another accounting program, to keep the financials. They use ADP to manage their payroll. Finally, they have their bank or Square managing their credit card processing. This means you’re dealing with three different companies/vendors to get these tasks completed. Personally, I believe life should be simple. You can streamline your office by using as few vendors as possible.
At SEO For Lawyers we use Quickbooks for our accounting, payroll, and credit card processing. Everything integrates together tightly and we only deal with one company. There are plenty of other examples of this; a law firm might have a runner company which provides large-scale copying and scanning services. The attorneys, however, use another company to perform those tasks. Asking yourself how much time you waste, dealing with an excessive number of vendors, might make you stop and realize just how much you’ve over-complicated your practice.
Law firms need to get better at financial management
Earlier this year I wrote about four methods which would improve a law firm’s finances. Let’s be blunt, few small businesses are as financially disorganized as the typical law firm. First, one is never going to get ahead if they’re donating excess money to the tax man. Second, one is never going to get ahead when there is excessive financial waste – this includes not getting the best deal on services, not getting rebates when possible, etc. To do better in this area you should read my previous article.
Don’t make the mistake of thinking that the only way to increase profits is to increase revenue. Focusing on the second half of the equation is the best way for lawyers to boost the bottom line.