Starting 2022 with financial success for the coming year means planning ahead. Law firms need to assess the firm’s current financial situation to prepare a plan for success in 2022. We all know that adequate revenues are needed to grow and maintain a healthy law firm. When you focus on clients, marketing and billing, you can ensure your firm’s financial success starting with the 1st quarter of the new year:
1. Establish firm revenue goals
You need to determine what defining success looks like for your firm and then outline a specific plan to get you there. These goals need to include a timeline and the direction of firm processes and actions every step of the way. Once you have decided on your firm’s goals, you can outline the strategies to help get you there.
2. Client centered focus
Many firms spend large sums of money on marketing and other strategies to bring on new clients. They often forget the firm’s most valuable resource – the existing client. The existing client is not only contributing to the current bottom line, but also can bring future business – and revenue – to the firm.
3. Update your marketing plan
The new year is the opportunity for scrutinizing your marketing plan and making changes that will bring in better results. While reviewing your marketing plan, take a look at the law firm’s online presence and make sure that websites and search engines are bringing in the traffic you want – your target audience.
4. Re-evaluate your fees and consider other billing arrangements
An effective strategy for increasing the revenue stream is to raise firm’s billing fees. But, you need to really examine the pros and cons of raising your fees. Remember to look at the average hourly rate in your geographic area for the work you do. You have to remain competitive, although that does not mean having the lowest fees in the area. At the same time, you cannot price yourself out of the market.
You may also want to consider the benefits – and drawbacks – of alternative billing arrangements, such as flat fees or value-based billing. If the area of law that you practice is conducive to using flat fee arrangements or value-based billing, be sure that you consider all the possibilities when deciding on a flat fee. Sometimes, it may be wise to consider a flat fee with the caveat that if something becomes contested or outside the scope of the flat fee that you switch to hourly billing. Examine whether or not these fee changes could increase law firm revenue.
Value-based billing is a type of fixed-fee-based arrangement where the client agrees at the outset of the case to pay a flat fee for services received. It benefits clients by alleviating the potential for unexpected legal fees. It benefits the firm by promoting more timely and complete payments from clients, while also compensating for firm services based on their actual value instead of the just time spent.
5. Overdue invoice collections
In a perfect world your law firm will close out 2021 with no overdue invoices and zero AR. But this is not a perfect world and for most firm this will not be the case.
Focus on collecting these overdue payments could pay off in the form of increased first-quarter revenue. If traditional collection processes are not proving successful, your firm could offer clients discounts for payment in full by a stated time to encourage payment. A collection of overdue invoices at the start of the year could result in a substantial boost to revenue during the first quarter of 2022.
Billing is probably the most important thing that your firm does, aside from actually practicing law (doing the work). Yet, it is often overlooked because there is no time, or billing does not occur every thirty (30) days like clockwork, so you can get paid like clockwork. A mont or two down the road when there is a short fall of revenue, there is a mad scramble to begin billing and collections. Based on my firsthand experience, this always ends in disaster. Whether it is clients asking what happened to my money, or clients suddenly being billed for 2 or 3 months at a time and they cannot pay the bill, so instead they pay nothing. All of these problems are brought about because the firm does not have a 30 day billing protocol.
Billing is one of the services – among many other administrative functions – that we do to help you bring in the revenues. The cost of having your billing done every thirty (30) days will be far outweighed by the results of bringing in outstanding revenues owed to the firm on a regular, monthly basis.
I am Liz Miller, Law Practice Management Consultant. My firm will help you start bringing in the revenues on a monthly basis, handle trust account transfers and doing the reconciliations so you are in compliance with the Bar.
Call us today at 1-813-340-9569 to find out more about our all services, including billing and collections.
When you set clear goals for your firm and outlined a detailed plan – and stick with it!! – your law firm can expect greater revenues for the 1st quarter of the new year. Count on it!!
Happy New Year!!