Profitability Improvement Services

The decision to bring in outside support to help improve profitability typically in response to a need for objective advice and new ideas. These new ideas and approaches can involve better cost allocation systems, better financial reporting, process innovations, cost control, new software, changes to compensation and incentives, marketing, pricing, staffing, facilities, and organizational development.

Whether you firm is struggling with one or more of these areas or just wants to do better, we can help diagnose the high impact issues quickly and help you to apply more of your resources to fixing the issues.

Clients use our services on a project basis or on a longer-term agreement to help implement our recommended actions. Our role can include financial analysis, strategic and technical advice in several areas, and as a resource to support the change management process.

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Benefits

What can you do to improve the chances of a successful new firm start up and what can PerformLaw do for you?

The Process

How does a profitability improvement services agreement work?

Resources

Where can I learn more about the topics I might want advice about?

Benefits

The confidence of knowing you will receive objective feedback. Clients who engage PerformLaw for profitability improvement services get objective, experienced, and practical advice about how to best make more money.

The ability to quickly determine the high impact opportunities and begin working on improvements. Use of our tools, templates, proven processes, market awareness, and management expertise are included in the engagement.

A solution for the long term. All our engagements are designed to raise the level of in-house competence and promote self-sufficiency.

The ability to continue to focus on your daily responsibilities while we focus on profitability issues. Successful lawyers are busy and must focus on client priorities. We can help you and your management team minimize the distractions that special projects can cause.

What PerformLaw can do for you:

  • We help clarify and communicate goals and expectations.
  • We provide easy to understand analysis and processes.
  • We help identify and address the high impact issues and opportunities.
  • We help with the change management issues.
  • We are available when clients need us; before, during and after an engagement.

THE PROCESS

INITIAL DISCOVERY & INFORMATION REVIEW

Initial Information Request

Financial Statements

Income Statements, Balance Sheets, General Ledger Asset and Expense Accounts(Income Statement Ratio Analysis, IS Breakout, Cost Per Hour) Current AR and Work In Progress (WIP) Aging - For concentration of risk analysis

Employee Detail

Employee List(TKPR Profitability, Compensation Analysis, Overhead Analysis, Staffing Ratios, Historical Payroll) - Salary, Bonus History, Raise History, Position, Hire & Termination Date, Benefits Data, Secretarial/Staff Allocation

Contract Labor

Working Attorney Productivity Reports

Working Timekeeper Productivity(TKPR Graphs, TKPR Profit, TKPR Comp Models) - Billable Hours, Billable Value, Amount Billed, Amount Collected & Average Rate

Write-off Reports

Any Expectations - Hours, Billings, Collections

Client Productivity Reports

Top Client Fees Billed/Collected(Concentration of Risk) - Sorted on Working Timekeeper & Originating Attorney - Amount Billed & Amount Collected

Top Client Fees Billed/Collected(Concentration of Risk) - Sorted on Practice Area - Amount Billed & Amount Collected

Working Timekeeper by Client(Workload Distribution) - Billable Hours, Amount Billed & Amount Collected

Originating Attorney by Client(Competitive Comp & Workload Distribution) - Billable Hours, Amount Billed & Amount Collected

Extended Services(Marketing plan, Client Profitability, Partner Compensation Analysis, Associate Performance)

FINANCIAL HEALTH OF THE FIRM OR STRATEGIC UNIT

Cash Flow Analysis, Debt Analysis & Equity Analysis, Operating Performance, and Concentration of Risk

Cash Flow, Debt, & Equity Analysis

Assessment of Net Cash Flow, Debt Levels, & Equity Levels(Draw & Distribution Policy) - Benchmarked 1 Page Summary - TBD

The idea to determine if the firm's partners are taking out too much money too quickly. KPI's Number of months expenses in cash Cash/Average Monthly Expenses/ Concentration of Capital (Capital by Owner compare to ownership %, Short Term Debt (LOC)/AR WIP, Total Debt/AR+WIP + Net Book Value of Hard Assets Capital mix % Debt, Undistributed Earnings, Paid-In Capital Prior Year Capital Accounts)

Operating Performance of the Firm

Revenue & Expense Benchmark Analysis - Revenue Per Lawyer, Revenues Per TKPR, Expenses Per Lawyer, Expenses Per TKPR, Percent of Fee Analysis in Key Areas - All Compared Against Best Practice Range 1 Page Summary - TBD

Income and expense analysis

Per hour/ unit cost analysis

Income and expense benchmarking

Concentration of Risk

Analysis by Client, Lawyers, Originators, Practice Area, Referral Source In Terms of People, Hours, Income & Attorney Profit, AR and WIP Analysis assess the viability of collections based on aging. The metric is % available for collateralizing a bank loan- use the standard indicated in a bank borrowing base.

1 Page Summary - TBD

Financial Reporting Review and KPI's

Assess the adequacy of the financial report package available to the partners: Is there an identifiable economic model?

At a minimum, the financial reporting package should include Income Statement, Balance Sheet, Timekeeper Profit, Production (hours, billings, collections) by timekeeper, Client stats, files opened and closed, AR and WIP analysis, historical comparatives, and realization and write off accounting.

Average Worked, Billed and Collected

List of KPI's Key Performance Indicators http://www.lawjournalnewsletters.com/2018/01/01/examine-kpis-on-a-micro-level-to-boost-law-firm-profitability/?slreturn=20190222182116

http://www.appliedstrategies.ca/documents/kpi_primer.php http://solopracticeuniversity.com/2018/02/06/20-kpis-of-a-successful-law-firm-how-to-diagnose-why-your-law-firm-isnt-doing-as-well-as-youd-like/

This information can come in report form or through on-demand dashboards. Graphical representations are helpful but not absolutely essential.

ATTORNEY AND OTHER REVENUE GENERATOR ECONOMIC PERFORMANCE ANALYSIS

Historical Performance of Revenue Generators Productivity Against Benchmarks

Extended Service - Realization by Originator & Client, Associate Performance

Capacity Analysis

Capacity Analysis by Position

Revenue Generator Productivity Benchmark Analysis

Historical Performance of Timekeeper Productivity

Recommended Performance Ranges Based on Experience and Practice Area

Revenue Generator Profitability

Profit by Timekeeper - Time Period Dictated by Data

Payroll

Payroll by Position

Overhead Analysis

Analysis of Overhead by Position

Secretarial/Staff Allocations

Allocate Secretary & Staff to Respective Attorneys

RECOMMENDATIONS FOR IMPROVEMENT

Resources

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