End of Year Checklist for Law Firms
Yes, it’s that time of year again. But this year, let’s be a little more proactive. Intentions are great, but they are nothing without action.
First things first, get your financial house in order…
Reconcile ALL accounts
When I say all, I mean all. So often I will have a new client that tells me there are 3 bank accounts and that’s it. However, when the books are brought up to date, what I actually find is way different. Instead of 3 simple bank accounts there are actually 5 (the other two are just not used as much). On top of that, there were 3 credit cards and a line of credit. ALL of these must be accounted for correctly in your books.
So, Reconcile all accounts.
The key is to verify that your books reflect what your bank says your ending balances should be for each account. Not doing so could result in missed expenses which means less deductions and more tax dollars paid to the government unnecessarily. Be sure you are handling client expenses properly as well. We’ve got a helpful article you can find here.
Take time to evaluate (thoroughly) your 2018 financial reports
At a very minimum, pull a profit and loss report for the entire year and pay attention to where your money is coming from and where it is going. Which revenue sources might be easier to increase than others? Are there any expenses you can aim to cut in the coming year? Don’t fall in to the trap of thinking that you must spend money to make money, that is false. Get creative and make sure your firm runs efficiently.
Speaking on efficiency…
Time = Money, so don’t ignore the time your team spends
Generally speaking, a firm can support $1M in annual revenue with less than 10 people. Are you using your team wisely? Take a look at what each position in your firm is responsible for and estimate the time that position should take. Now look at the people in those positions, are they working efficiently or working for works sake?
Adjust your financial reporting for 2019
One adjustment that has the most impact comes from evaluating how your Income Statement is presented. Your income statement tells the story of where your money came from and where it went. 95% of law firms work in more than one practice area. However, when I look at their financials, I’d never know it. $500,000 in revenue is great but doesn’t it matter WHERE that came from?
Let me ask you, which report layout tells you more about where your money came from?
REPORT OPTION #1
Service Revenue $500,000
REPORT OPTION #2
Estate Planning Revenue $125,000
Family Law Revenue $200,000
Business Law Revenue $175,000
You should know where you generate the most revenue in your firm. And if you have a dying revenue stream, perhaps looking at dropping that service and focusing that time and energy on an area you’re already flourishing in.
For the love of law, set goals!
This is one of those things that EVERYONE knows they should be doing, but less than 5% of law firms actually do. Your goals should cover at least 4 areas in your firm. Financial management, team management, client management, and growth management.
Revenue goals are almost always parallel with marketing efforts. You should always nurture a referral program, but do not neglect marketing. You should have a marketing budget in place and know approximately how much new business is generated from each marketing effort. This helps you to set revenue goals. Other financial management goals include having monthly budget review, quarterly in-depth evaluation of progression towards financial goals, and prioritizing and cutting expenses.
The best way to motivate your team is to make them part of the bigger purpose or goal within your firm. People are driven by something greater than themselves. Share your firms’ goals with your team and make sure they are clear on the role they play in reaching each goal. Regular weekly meetings to check in with each other nurture and renew your team’s motivation.
It may not seem related to money and finances, but it directly affects your firm’s revenue in a huge way. Your clients experience with your firm starts when they see or hear about you (before they even call in). What are you putting out there to your prospects? What are their pain points? Are you addressing them in a compassionate way? When they make that first call to your office, are they greeted by a positive upbeat caring receptionist? When they engage into a service is the on-boarding process easy for them? As the services progress, do they feel updated on the status or are they calling your office asking what the heck is going on? Once services are complete, do they never hear from your or do you put them on an email list where you provide them with relevant information on a regular basis so that next time, they come to you again? Can you duplicate all of that so that every prospect experiences the same process, creating raving fans who will refer you to the ends of the earth?
Nothing saddens me more than the law practice that drags its owner carelessly behind it because they can’t keep up with growth let alone control it in a direction of their choosing. A required component of growth and scalability is process creation. This goes for every area of your practice. Your law practice should depend on processes, not people. If you have the right processes in place, almost any qualified person should be able to come in and maintain the workload for their position.
In addition to creating processes for work you’re doing now, consider how those might change in the future. The legal industry is no different when it comes to technology playing a huge role in how firms operate and will operate in the future. Always be looking towards the future of law and how you can serve your clients better than any other firm by utilizing technology that will aid you on your mission.
For a GREAT book on running a successful law firm and to get some specific ideas on changes your firm would benefit from, check out our blog post “The #1 Book Every Law Firm Owner Needs to Read”.
“Success is no accident. It is hard work, perseverance, learning, studying, sacrifice, and most of all, love of what you are doing” – Pele
So, here’s to 2019, make it the BEST year so far!
If you’re ready to take your law firm to the next level, contact us here to book your no-obligation 45 minute efficiency call. We’d love to see if we’re a good fit for your firm.
Check out more related quick fixes and tips for lawyers to help grow your law business here!