One of the most interesting things I get to do is spend this part of the year reviewing law firm financials. One thing that made it especially interesting this year was that it was good to see that by and large… revenue in 2009 was NOT down compared to 2008 in almost every case! Often when it had declined there was a change in staff or a change in focus that could explain the change in revenue, in a very few number of cases the attorney I consulted with on their financials felt that the economy had caused the slight waver in revenue.
One of the many “benchmarks” we talk about is the revenue per person on the payroll. After years of looking at the financials from law firms focusing on estate planning and elder law—it’s clear that the magic number of staff can be identified by looking at how close your revenue is to $130,000 per person on the payroll (including owners and all attorneys).
When that number is less than $130,000 per person on the payroll, it points to a couple of possible issues to look at a little closer:
1) Are there systems for everything you do in your practice? Does everything run productively and efficiently? If you’re lacking systems for greeting clients, meeting with clients, producing the work for clients and delivering the work, staff may actually be swamped but in an unproductive way.
2) Is everyone as busy as they look? Is the work being done the work that makes sense to do? Is it busy work waiting for more pressing work to show up?
3) Have you hired staff for a revenue area that is not yet producing revenue? If you have an estate planning focus and you introduce elder law, it may take a while after you’ve hired a staff person or two to generate the revenue from that area.
4) Are you charging the fees you are worth for your services? If your fees are too low, you may be handling the right number of cases per person on the payroll and everyone feels and is busy being productive, however, you are not charging enough to justify the time and resources that are being spent on those cases.
If you would like the report the Academy produces about interpreting your financials, email jennifer@aaepa.com and I’ll be happy to provide it to you.
Jennifer Price
Director of Member Services
American Academy of Estate Planning Attorneys, Inc.
(800) 846-1555
www.aaepa.com
- When the Going Gets Tough, Get Back to Basics - November 17, 2022
- Do You Thank Those Behind the Scene? - April 28, 2022
- Give a Wow Experience - April 7, 2022
