Lawyers...here's how to better understand your new file imperatives...

#Robservation

I recently posted my Robservations on the cause of most lawyer under-performance…essentially that they don’t have enough work because the firm they work in is not well enough organised to get it.

Previous posts here  https://www.dhirubhai.net/posts/activity-6774422481538310145-9v-G

…and here   https://www.dhirubhai.net/pulse/lawyers-without-healthy-backlog-dont-have-nearly-enough-rob-knowsley

I raised the question of how you calculate if you have enough work to hit reasonable targets…

The post at the second link above discussed relying on gut feel, as most do, and I said it isn’t good enough.

So here’s a much better, tried and true, approach...guaranteed to improve focus on where the required work will come from and how to get it.

Start with this fundamental awareness, that no matter how busy you are today, the day will arrive soon enough that you don’t have enough to do unless you are driving in sufficient new work, being delegated enough work, or a combination of these.

Few lawyers do a single type of work only, with the same fee, but to make this example simple to demonstrate my point, we’ll suspend disbelief for a moment.

You assist people with contract disputes and your average fee in that work has historically been $4885. Sadly, most firms don’t have these sorts of statistics…choosing to rely on guesses.

Your WorkPlan? allocates the time the firm requires you to invest in return for your remuneration and benefits in such a way that your collectable output of direct value to clients produces a fee target averaging $40,000/month.

To maintain a healthy backlog of work you need $40,000/$4885 of new work each month in files, that’s about 8.2 new files or equivalent work delegated to you. 

Are you or the firm opening those monthly on average?

If not, at some point you’re going to have too little work to hit your targets, irrespective of your firm’s approach to capturing activity, pricing, credit management and cash flow.

With this type of work many firms will have money held on account of fees, will be invoicing regularly so Work In Progress will have a healthy low average age, and will have very small levels of debtors. Insufficient new files is pretty easy to spot very early.

However, the same potential problem of not enough new work coming in exists in every type of legal service, and in some it can be partially obscured by reduced file velocity creating large numbers of current files, high levels of Work In Progress, and even situations where when matters are finally completed many of the lawyers who worked on the file are no longer with the firm! 

Medical Negligence is just one area that is a good example, with the potential for very substantial fees but an average file life in many firms of 5-plus years.

It is not easy for firms to stay focussed on the need to be opening enough files this month to keep all lawyers productively busy when there are dozens, even hundreds, of very large active files, and often many millions of dollars of Work In Progress, not to mention extensive disbursements the firm has often actually paid for.

Conveyancing, particularly with residential sales and purchases of single dwellings, is at the opposite end of the spectrum, with file velocity driven largely by things like competition between buyers to exchange contracts and time of the essence settlement dates. Any failure to open enough new files will reveal itself in some shortage of work in just a few weeks.

Next post…Is your fee target reasonable? 

I regularly have discussions with lawyers who consider their fee target too high, indeed believe it impossible to ever achieve. 

I’ll look at why that perception is often correct, but very often not for the reasons you might imagine.