What Makes a Private Client Department Profitable? Peter Scott Peter Scott Consulting

PETER SCOTT CONSULTING Flabby law firms are failing To drive up revenue To drive down costs

PETER SCOTT CONSULTING Margins are being squeezed

PETER SCOTT CONSULTING Who feels like this?

PETER SCOTT CONSULTING Make the most of what you have Work smarter, not harder

PETER SCOTT CONSULTING Your partners Their performance Their behaviour

PETER SCOTT CONSULTING “Heavyweight gorilla” “You can’t manage me. I’m a big biller!”

PETER SCOTT CONSULTING “Do own thing” “That’s a great idea… …for the rest of you”

PETER SCOTT CONSULTING “Winding down” “Ahh….only 5 more years to go”

PETER SCOTT CONSULTING Accountability “We have no room for those who put their own personal agenda ahead of the interests of the clients or the office” David Maister’s “Predictive package”

PETER SCOTT CONSULTING Put the squeeze on your business

Achieving maximum profitability – practical steps to make a real difference

PETER SCOTT CONSULTING Analyse your business

PETER SCOTT CONSULTING Work types Leverage Clients Pricing Chargeable hours Recovery rate Major overheads Profitability factors

PETER SCOTT CONSULTING Overheads Cost of: - people - premises - P I - I T ZBB

PETER SCOTT CONSULTING Profitability – finding solutions Focus on : building the top line

PETER SCOTT CONSULTING Work types Tax planning / Wills / Trusts Probate Charities Family Financial services Others ?

PETER SCOTT CONSULTING Work your ‘Wills Bank’ How many wills are you holding?

PETER SCOTT CONSULTING Work types Each work type as a % of overall turnover? Net profit per equity partner for each work type/group?

PETER SCOTT CONSULTING Leverage For each work type /group Net profit per equity partner? Number of fee earners (including partners)? Age/qualification of each fee earner (including partners)? Delegation?

PETER SCOTT CONSULTING Clients % of turnover represented by top 10% / 20% of clients (by billing value)? Ditto for bottom 10% / 20%? Net profit derived from each of above categories as a % of total?

PETER SCOTT CONSULTING ‘Triple Whammies’? Who is never guilty of the ‘Triple Whammies’? The TRIPLE WHAMMIES - Under pricing Under recording Under recovering

PETER SCOTT CONSULTING PRICING

PETER SCOTT CONSULTING Pricing For each person/work type/group/client Headline rates Local comparables/competitiveness Recovered rates Latest rate changes Value billing arrangements Fixed fee work

PETER SCOTT CONSULTING RECORDING CHARGEABLE TIME

PETER SCOTT CONSULTING ‘Why should I fully record all my chargeable time?’

PETER SCOTT CONSULTING Time is a MANAGEMENT TOOL

PETER SCOTT CONSULTING 1. Meeting your targets ‘I can meet my billing target but without having to work any harder’ How?

PETER SCOTT CONSULTING 2. Budgeting for revenue Fee earners X Hours X Hourly rate

PETER SCOTT CONSULTING 3. Are we ‘on budget’? Recording chargeable time enables us to compare performance with budget

PETER SCOTT CONSULTING 4. How to estimate a fee? ‘How much will this cost me?’

PETER SCOTT CONSULTING 5. Are we working profitably? How do we know we are profitable if we do not know how much our work is costing the firm to do?

PETER SCOTT CONSULTING How easy is it for you to record time? Do you need training?

PETER SCOTT CONSULTING Recorded chargeable hours Methods of recording time Units of recorded time Frequency of reporting Available time Recorded chargeable hours by person/group/firm Set Targets

PETER SCOTT CONSULTING Non - chargeable time Set maximum allowances depending on roles / responsibilities Stop use of “unspecified” and “other” codes Review excessive non – chargeable time

PETER SCOTT CONSULTING Recovery rate

PETER SCOTT CONSULTING Every 1% on your recovery rate = ? Recovery rate

PETER SCOTT CONSULTING Write off policy How much do you write off each year? Introduce a write off policy eg: - all time to be w/o more than £500 or 5% of recorded time whichever is the higher has to be approved by managing partner

PETER SCOTT CONSULTING you halve the amount you write off, by how much will your annual profits increase? If…

PETER SCOTT CONSULTING By reducing … Under-pricing Under-recording Under- recovering how much more profit would you make?

PETER SCOTT CONSULTING Put the squeeze on your business

What are you going to take away from today and do something about? An action plan?