It’s Mid-Year. Do You Know Where Your Business Is?

All right folks let’s talk about something as thrilling as watching paint dry – financials. Yeah, I know, it’s not the most exciting topic, but understanding your numbers could be the difference between having a thriving practice to having one that is simply surviving.

Here at the Academy, we’ve been dissecting law firms’ financials for what feels like a lifetime – over 30 years! And guess what? We’ve cracked the code. It’s not just about crunching numbers; it’s about the story behind them. Think of it as your own business novel, with an intriguing plot of twists and turns. And if you’re doing it right, a happily ever-after ending.

What’s the secret sauce we’ve uncovered? We have identified the red flags and benchmark metrics that give a comprehensive reading of your practice’s health at any given moment. Think of it like a car’s diagnostic scanner, but for your practice. One of the many benefits of Academy membership is our annual financial audits which compare your law firm’s financial data to our exclusive benchmark guides. It’s like peeking under the hood of your business to see if everything’s humming along nicely or if there are some adjustments needed to get the engine firing on all cylinders. And the best part? It’s easy to do!

Each year, we meet with firm owners privately to review their firm’s financials both at the beginning of the year and mid-year. Then, in preparation for our Spring Summit every year, we compile those financials, analyze the combined data searching for patterns and trends, and reveal our findings in our closed-door Financial Database session. Every owner who attends receives our confidential Financial Trends Insight Report, which includes the compiled results along with a Comparison Chart to see how other similarly sized firms are running their businesses.

This year, we revealed the average revenue among participating firms was over $1 million dollars! This highlights how focusing on your numbers truly does pay off. There really is no other organization that provides this type of personalized financial coaching and data.

Here are some of our favorite exploratory conversations to have if a firm is not quite hitting the target benchmarks or is unhappy with their revenue numbers:

Systems and Workflow

• Revenue and Expense Category Tracking – Pinpoints income sources to create targeted marketing, revenue growth opportunities, and/or eliminate excessive expenses
• Retention Rate by Attorney – Identifies lost revenue and training opportunities
• Case Volume – Looks at the marketing plan, workflow systems and training issues, especially if the firm isn’t hitting revenue goals but team is running a marathon every day and everything is urgent

Revenue and Fees 

• Average Fees – Identifies lower performing cases, fee waffling or retaining non-ideal client work 
• Revenue per Attorney – Tracks revenue goals, expectations, and results 
• Revenue per Person on Payroll – Examines marketing plan, workflow issues and staffing opportunities

Expenses 

• Owner’s Compensation – Highlights revenue or expense modifications
• Overhead per Attorney – Examines hard and soft costs for each attorney and the need to set goals and expectations
• Salaries to Income – Highlights marketing and workflow issues

Marketing and Promotion

• Marketing Costs to Income – Identifies ROI and opportunity costs of marketing efforts
• Marketing Planning and Execution – Highlights areas of need and attention
• Volume of Leads – Examines the five marketing channels, target audience and execution of the plan

Because we all know you can’t fix what you don’t know is broken, we encourage you to take a quick peek under your hood with us. We have the experience and know-how to help you decipher your numbers and adjust your story’s ending.

If you’re interested in a financial check-up for your firm or want to chat about metrics, be sure to contact your talented Practice Building Coach. And if you’re not part of the Academy membership yet, contact one of our Membership Consultants at information@aaepa.com, and let’s get your financial review started!

Susan Russel
Practice Building Coach
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128
www.aaepa.com