By Jared Correia, Red Cave Consulting
Lawyers make ad hoc decisions about business management all the time. But those decisions are often wrong — because they’re built on false assumptions about how the business works. Attorneys often overestimate how much money they make and underestimate how much money they pay out in terms of case expenses and overhead. That leads to a lot of disappointment, as you might imagine.
There is a pathway to make better decisions about how to run a law firm — and, as it turns out, the data’s right there in front of you. Most law firms are using case management software or accounting software, which is where law firm financial data is arrayed. The majority of attorneys capture that information for tax and billing purposes only and don’t use it for anything else. However, each of those systems includes custom reports and useful dashboards that can provide you insight into the financial health of your law firm. Want to know how much you have racked up in accounts receivable? You can get that number down to the second decimal point. How fast are you working? Check your utilization rate. What’s your collection rate? If that is low, you can then look at ways to collect more money, faster.
If you want to get a head start on accessing data and making better decisions about managing your practice based on that data, it’s at your fingertips. Start by checking in on the template reports that your software tools offer and stop making choices like your hair is on fire. Get more circumspect about your business management.
Want to discover more about your own practice, using data? We can help.
The IndyBar offers FREE law practice management consulting services through Red Cave Law Firm Consulting.
To request a consult, visit the IndyBar law practice management consulting landing page, and start running your law firm like a business.
Clio, a partner of IndyBar offering discounts to members, makes available data aggregated from thousands of attorneys using their service. Their tool breaks down the average rates by state as well as practice area. To learn more about Clio, visit the partner links at the bottom of www.indybar.org homepage.•