In the past four years many attorneys have found it difficult to survive financially. Sadly, many practices have closed their doors or have downsized substantially. On the other hand,
there are many who have opened their doors for the first time since 2008 and prospered. Many old firms dating form the 80's and 90's have also survived and done well.
Why do some survive and prosper and others not? How do they do it? We investigated some of the 2500 plus practices presently running on our systems and found in successful firms that:-
- Great emphasis is placed on the improvement of legal knowledge and technology skills. Everyone uses the right technological tools such as laptops, email and Internet.
- Productivity is the name of the game. The employees of these practices always aspire to do more in a day and deliver work of higher quality. The technology of working anywhere and at any time has been a big boost to productivity.
- Lawyers and employees practice in specialist branches of the law. Specialists are more successful than general practitioners.They choose the type of work which is still relatively plentiful and profitable.
- Money is spent wisely. The question is always: what is the return on the cost/investment? More specifically, successful firms spend money on marketing, computer systems and software, productive employees, knowledge improvement and motivation of employees.
- Accounting, fees, creditors and debtors. A great deal of attention is given to accounting matters. Attorneys who regularly (daily) look at cash flows, outstanding debtors, fees debited, work in progress, new matters opened, transfers from trust to business, bank reconciliations and other reports, almost always do well financially.
- Reporting to clients. In some matters one must report once a week to clients, in others once a month. But regular reporting to clients is an essential element of success. With today's technology, reporting by email is quick and effective.
- Remuneration based upon performance. At most, a salary should only be part of remuneration. A major part of remuneration of any employee should be based upon fees which that person has generated. But more, the remuneration should be based on fees actually collected, in other words, the cash flow contribution of an employee.
- Appoint the right employees. The right person for a particular position is vital. Spend more time in interviews and ask many questions. Ask other staff members to conduct interviews with the prospective employee and require their opinions on personality, attitude, skills, including people skills, employment history and remuneration.
- Manage, treat and motivate employees to be friendly, helpful, hardworking, efficient and skilled. There are many books available on this subject.
So what is a successful practice? One that has a growing base of clients, has a positive cash flow, makes profits and is highly skilled. It is able to meet all its commitments including obligations to employees, partners or directors. May all attorneys experience a better and more prosperous 2013.
Chris du Plessis