Welcome to Issue
38 of ProfitPower™ Tips For Lawyers, December 2009. As usual, I
trust that you find at least some thoughts herein of interest and value to
you in practice. At various times
during the twenty-one years plus KMS has been operating I’ve become even
more acutely aware than normal of how many fundamental management mistakes
the majority of law firms are still making. Usually this
state is brought on by what I’ve been finding in new client firms, but
sometimes the frustration is exacerbated by finding that firms I’ve set up
ideal systems in have not been following one or more of them, with not
unexpected results for cashflow and profits or both. In the last few
months KMS has commenced working with quite a few new firms across a wide
spectrum of sizes and shapes, and not surprisingly I find myself in that
“dark place” once more! My response is
to include in the next few issues of KMS ProfitPower Tips an item on a key
issue I see poorly handled in firm after firm…a serialised “heads-up” if
you like. In this issue I
will deal with the need for firms to have good capabilities in really
managing people…looking at some of the serious downsides of not getting it
right. Everyone knows
that wages are a huge annual investment, the biggest a firm makes usually,
so it’s self-evident that it’s critical to what you can achieve in both
short and long term that the labour purchased by your wages is not wasted,
in terms of effective productivity.
Robservations
revenues,
hopefully well after break even where all your overheads (including proper
partner salaries) are covered, because the revenue then generated is almost
100% profit. Take a very
simple example…two partners truly generating profit of $100,000 each per
annum after salary (Salary will usually be in range of $250,000-$400,000). If there is
productivity wastage of only $200,000pa in the firm( and remember the KMS
experience is that’s it’s generally around $150,000 per lawyer) fixing the
leakage will add about $100,000 extra profit per partner per annum…an
increase in profit of 100%. These sorts of
improvements are common…and make it clear why getting this area of
management right can be so worth doing and so rewarding…year after year. Importantly,
better profits make the partners’ interests more valuable, and also improve
options for succession, because more good people can be attracted to, and
kept in, the firm and more of the suitable equity candidates will take the
view that the profit levels make buying in very attractive. Sensible systems
that fit with your firm culture that get labour firing on all cylinders
must be sound in design and sound in operation...and be a genuine “Win-Win”
so all suitable team members can fully benefit in terms of remuneration and
career progress, by following the systems. The Editor,
Rob Knowsley, is a lawyer, admitted 35 years, who practiced successfully
with firms of all sizes – city, suburbs and country... in Australia and New
Zealand. As KMS Senior Consultant,
his insights are further based on the experience of twenty-one years of
consultancy assignments, and telephone/e-mail support, for lawyers…in all
areas of practice management and profit building. Many practices have quickly reaped the
monetary benefits and enjoyed the feeling of being in more control of their
business through his practical help…as multiple referees attest.
The Editor, Rob
Knowsley, is a lawyer, admitted 35 years, who practiced successfully with firms
of all sizes – city, suburbs and country... in Australia and New Zealand. As KMS Senior Consultant, his insights are
further based on the experience of twenty-one years of consultancy assignments,
and telephone/e-mail support, for lawyers…in all areas of practice management
and profit building. Many practices have
quickly reaped the monetary benefits and enjoyed the feeling of being in more
control of their business through his practical help…as multiple referees
attest.
To chat with our Editor about issues
raised within this newsletter call the KMS Management Support Helpline™
Free
Call 1800-621-270 in Australia – Outside Australia E-mail robk@lawfirmprofit.com to arrange a telephone discussion.
Keen to see a pet
practice management topic of yours addressed in a future issue of
ProfitPower Tips?
Feel free to
click this link and email me your
suggestion
To chat with our Editor about issues
raised within this newsletter call the KMS Management Support Helpline™
Free Call 1800-621-270 in Australia – Outside
Australia E-mail robk@lawfirmprofit.com to arrange a telephone discussion
Partners
need to take proper advantage of their experience. Do less Client work and
leverage your knowledge and contacts by building a strong team around you. For the limited Client work
you do, be selective and ensure it’s upper-end work at a much higher charge
rate, and ensure you do charge and collect at that rate or better. Enjoy the benefits of
structuring correctly and take more holidays!!
KMSManagementSupport™... Guaranteed to deliver you tens of thousands of
dollars worth of practical value, and
huge additional income potential every year of your practicing life!
