1. Profitability – How to drive Shareholder Focus
Presented by:
Nancy Griffing
35★45 Consulting
Lexis Practice Management Account Executive

2. Nancy Griffing
35★45 Consulting
Managing Member

3. Profit - What’s in it for the firm?
Gain insight into the key metrics that impact profitability at your firm
Know and understand the “carrying costs” for your timekeepers
Determine profitability by Timekeeper, Client/Matter or Practice Class
Drill down to determine which clients (and timekeepers) are making the most money for your firm
Learn to understand the ‘why’ behind your financial numbers
Determine where to focus your resources to drive more profitable lines of work
Identify areas you can leverage to increase profitability
Compare results year-to-year to determine trends and areas of improvement

4. What are Timekeeper
Key Metrics?

5. What motivates timekeepers?
Consistent Measurements
Timely Reports
Clearly Defined Incentive Programs
Feedback on Billable, Billed and Collected $
Understanding “Partner Motivation”

6. Utilization – Bill what you work!
Utilization: How timekeepers use time on billable vs. non-billable activities.
Establish time and expense tracking rules by client and practice areas and enforce them.
Validate compliance when entering data to simplify bill creation and reduce rejected bills
Provide attorneys and staff with real- time views of actual billings vs. goals
Record billable time as it is earned – contemporaneously.

7. 55-70% Correct Under-Earning Habits
The Problem
55-70%
Lost billable time per month when trying to reconstruct their time weekly.
(Attorney at Work blog, June 14, 2013)
The Problem: “Lawyers who reconstruct their time weekly tend to lose 25 to 30 percent of their time, and those who enter on a monthly basis can lose as much as 55 to 70 percent.” (Attorney at Work blog, June 14, 2013)
Signs of Under-Earning:
Entering time and expenses weekly or monthly
Frequent discounting of rates to clients
Heavy reliance on write-downs
“Attorneys don’t always understand how the adjustments they make on WIPs determine their Effective Hourly Rate, and the impact they can have on the firm’s bottom lin. With Juris, I can drill down, show him his history and show how the adjustments affected his hourly rate.” Joseph Revell, Administrator, Campbell Kyle Proffitt LLP
Provide tools that make time easy to enter and contemporaneously when work is being performed!

8. Timekeeper Goals should be easy to see

9. Utilization – Collect what you work and bill!
Utilization:  How much is ultimately collected versus the effort expended.
How accurately can you track write- offs from your original worked amount?
Are your billings going to the clients in a quick and efficient manner?
What are your policies on tracking AR and how quickly are you paid?
Do you have collections policies & practices in place?

10. What do Financial Statements Tell You ?

11. Balance Sheet vs Income Statement
Debit
Credit
Assets
Liabilities
Income
Capital
Expenses
Debit
Credit A L I C E
ALICE
Read the Balance Sheet to Understand Profit & Loss (Income Statement)
Determine what shows on the Financial Statements and what is Productivity
Are you “Shooting the Dead” or “Changing your Destiny”?

12. Does your Income Statement answer the right questions?
What is your fixed overhead?
What are your YTD comparatives?
Can you predict year end profit?
Can you predict cash flow?
What is your monthly thermostat for measuring success?

13. Year to Date through August, 2015
Can you produce P&L by title?
Year to Date through August, 2015

14. Can you produce P&L by Person?
Period Ending August, 2015

15. 2015 Profit & Loss Statement
Can your produce P&L highlights?
Grouped
Detail
2015 Profit & Loss Statement

16. Taking it to the “Client Level…”

17. 75 Days Collect What’s Yours!
The Problem
75 Days
On average firms with attorneys have 75 days of collections in fees receivable
The Solution:
Track and centralize the account history for all overdue accounts to manage the collection action plan
Promptly notify clients who are delinquent in paying their past due accounts
Schedule reminder alerts to ensure client follow up
Systematically analyze aged accounts receivable reports to spot overdue accounts
Don’t be part of this statistic – put policies in place now to proactively manage your outstanding AR and collections.

18. Which clients generate profit?
Are all of your clients worth keeping?
Is your largest client or practice area really the one bringing in the most money?
Which types of clients & practice areas deserve your marketing dollars?
Which Timekeepers should I assign to which Clients to increase profitability?
Questions you should be asking about your clients:
Running a profitable business is not about luck or chance, it’s about managed thought, focused attention to detail and deliberate action based on comparable consistent data.

19. Management reports should be quick & easy to digest!
Client Net Profit
Attorney Cost/Hr rate
Multiplied by: Billable Hours Worked = Total Expenses
Less: Cash Received on posted bills
Equals: Net Profit (Loss)

20. Taking it to the “Next Level…”
Getting your information should be easy from a good financial management tool but you need to take it further….
Discuss what do these numbers really mean?
How can this be true?
Where can we Improve?
Knowing the underlying costs enables the firm to price aggressively in the market…..!!!
Charting your course for the future by looking at year over year trends.

21. Thank you! Nancy Griffing 35★45 Consulting Managing Member
Thank you!