Lawyers want the opportunity to practice law. Erik Mazzone, a law firm practice management expert, said that they don’t want to spend too much time looking at numbers.
Lawyers Mutual of North Carolina retained Mazzone as their practice management advisor.
“With legal technology changing at an alarming rate, and practitioners dealing with the challenges of the pandemic, it was obvious that our insureds would appreciate a complimentary practice management resource to help them operate more efficiently, with less risk,” Julie Beavers, Director of Client Services at Lawyers Mutual, said.
Mazzone writes informative articles and provides one-on-one consulting for company’s insureds. Three hours of consultation are included in the insurance policy at no extra cost. Consultations can be done online.
Mazzone has more than 20 years experience in practice management as the founder of the Center for Practice Management (NCBA) and as a managing member at a small law company. He has also lectured and written at law schools.
“I’m working too hard”
Lawyers often complain that Mazzone is working too hard but not making enough.
He explained that it required them to look at a company’s finances. “Is there enough staff?” We will look at a metric which allows us to compare apples with apples, so revenues for each employee. We will examine things such as the billing rate and realization rates, and the collection rate. We will look for revenue leakage in the firm. Sometimes, a person hasn’t changed their billing rates for 10 years.
“Firms will often establish a billable rate. There isn’t much analysis afterward to verify profitability. It’s usually just everyone taking their draw. Mazzone stated that if all the bills and employees have been paid and there is still some money in the account, then that’s enough.
“But after a year’s worth of high inflation, salaries have gone up for staff, but not for partners.” Because the firm hasn’t necessarily increased its top line revenue, there hasn’t been enough money left.
Mazzone expects that the bottom lines will be even thinner in case of a recession in 2023.
“Law firms have always solved their growth problems by hiring people to do the work. They have found that they are now facing the same problems over the past two years. And they can’t solve them in the traditional way by adding more people.
Technology is the Answer
According to Mazzone, technology is the answer for many companies.
“Start with practice management. Mazzone asked, “Is there a role for document automation? To try to increase efficiency and get rid what was once a person?” Mazzone explained that many firms have the same information entered five times by different people in Word documents, Excel spreadsheets, and paper files. This is done by centralizing the data in a database. Once your data is centralized and up-to-date, you can then use it in many different ways.
You can get a lot for your money by measuring the most commonly used documents, letters, and contracts and using automation. Instead of entering the same data five times and then cutting and pasting the same contract ten times, you can write the contract once and then enter the data once.
Referral Marketing
Firms will need to expand their marketing efforts if there is a recession. Mazzone stated that he advises clients to begin with referral marketing.
It doesn’t cost a lot. It doesn’t need a lot technology. Mazzone said that lawyers need to find a way to create a network of people who are familiar with them, like them and trust them. They also need to be willing to refer business to them repeatedly.
The post Lawyers Mutual Practice Management Advisory Programme to Target Firm Profitability was first published on Attorney At Law Magazine.