RJon Robins

Improving Law Firm Profitability & Cash Flow

December 2, 2014 by RJon Robins

There are six key numbers that every self-respecting equity owner of a law firm should be looking at every month. Every month you should be looking at a budget, a budget variance report, a cash flow projection, an aged accounts receivables report and a cash position operating and trust. Remember these six key numbers.

Once your revenues are over a million dollars then we can start talking about a balance sheet. Until your revenues are over a million dollars a balance sheet is really just a distraction. Until you get to that million dollar mark, you just need to manage the business and propel it to this point through a cash flow projection management.

A decent bookkeeper, a good bookkeeper, should be able to give you these reports very easily. If your bookkeeper can’t or won’t give you a written budget variance report every month, a cash flow projection and six week cash flow projection you should consider getting a new bookkeeper. You need to know where you stand every month as far as revenues projected to come in, expenses projected to go out go. These are key numbers you need to be aware of, and you need a bookkeeper that will give you these numbers.

I’m not saying this to be funny, I’m saying this seriously. You need a new bookkeeper! I’ve had this conversation with thousands of lawyers over the last 10 or 12 years and usually the problem is that the bookkeeper went to law school, in other words, usually the lawyer is being pennywise and pound foolish and trying to be their own bookkeeper. Here are a couple of tips on how to decide if you need to hire a new bookkeeper.

First off, your bookkeeper is probably not very good unless they went to accounting school, have a finance degree or formally studied bookkeeping. For bookkeepers there is a very good chance that you may be a brilliant lawyer but a very bad bookkeeper.

Number two, it is extremely difficult to be objective with ourselves and to hold ourselves accountable for our budget, budget variance report and our cash flow projections. That’s why the owners of the most successful solo and small law firms have an outside chief financial officer. This officer is appointed to sit there and go over the budget, variance report, cash flow projections,and make a plan based on the accounts receivables report. Once you have someone appointed to this job, you won’t go deeper and deeper with the client month after month and they owe you tons of money. You won’t have to go over the cash position in your operating account and your trust account.

The way you get control over the finances of your law firm is by making the decision to plan and get help. You decide how you’re going to live your life, how you’re going to run your business and who can help you reach these goals. Don’t try to be your own bookkeeper. You can hire a bookkeeper in most markets today for $35, $45 an hour. As an attorney you may bill by the hour, which I don’t recommend, have a flat fee, value-based or other creative billing, either way, your time is worth much more then it would cost you to hire a bookkeeper.

Being efficient, is one of the main goals every law firm should be focused on. What would take a good bookkeeper three hours takes you six. Not only does it take you a long time but you hate it. It makes you miserable, it doesn’t inspire you, it doesn’t make you excited and where do you think all of that energy goes to? It trickles over to the next time that you meet with a prospective client or a potential referral source.

Get a good bookkeeper, ask the bookkeeper to watch this video. They can watch a bonus video at smalllawfirmCFOservices.com, and you should watch it as well. It’s a 45-minute complimentary lesson on each of these six key numbers so you understand what you need out of your bookkeeper. If there is one thing to take from this video, it’s this.. if your bookkeeper can’t or won’t give you these six key financial reports every month, you need to move on. You are wasting time and energy.

Get a better bookkeeper. If the bookkeeper is you, you definitely need a better bookkeeper.

Your People Are (Should Be) Your Most Valuable Resource, So Invest in Their Success

November 20, 2014 by RJon Robins

You can’t build a million-dollar law firm by yourself. You need your team to get you where you want to go. From your secretary to your paralegal to your associates, at the end of the day your law firm is only as good as the people that work in it. That can be a scary thought, right?

The good news is that you have the opportunity – and the responsibility – to find the right people to fill each job in your firm, and to engineer each job in your firm for maximum profitability. Hiring, training, developing, and equipping your people are among the most important tasks you’ll ever deal with as the leader of a small law firm. Yet many solo lawyers don’t give these tasks the attention they deserve – usually because they are “too busy” and think they just need to put a warm body in a chair and then hope they figure out what they’re doing each day.

A much better (more profitable) approach is to view your people as assets to invest in. When you make smart investments of time, money, and resources, you’re laying the foundation for the success of your firm. Here are three of these investments that you, as the leader of your firm, need to make into your people.

1) Invest in hiring the right people. It’s tempting to hire quickly in order to fill a need. But hiring the wrong person will leave you back in the same situation, likely in just a few short months. Take the time to conduct an extensive search and truly identify top talent for each position you need to fill. Rushing this process is penny wise, pound foolish. Take as much time as you need to find the right person for the job.

2) Invest in training your people. Once you’ve hired the right person for the job, invest the time and resources to thoroughly train the new employee. Teach them the key policies and procedures that are relevant to their job. Introduce them to your firm culture and make sure they understand exactly what you do and who you help. (Even if they aren’t in a “sales” position.)

3) Invest in tools for your people. Put your people in position to succeed. Whether it’s computers, software programs, periodical subscriptions, comfortable office furniture… give your team the tools they need to be successful. If a top-of-the-line office chair for your secretary is going to cost you $500 but is going to make him or her 10% more productive and significantly more excited to come to work each morning… it’s not going to take long for that investment to become profitable.

Your people will make or break your law firm. Make smart investments into their development and position your firm for success.

Who’s Going to Stop You From Building a Million-Dollar Law Firm?

November 6, 2014 by RJon Robins

“The question isn’t who is going to let me; it’s who is going to stop me.” -Ayn Rand

Ask most solo lawyers if they’d like to build a million-dollar law firm and they’ll respond “Yes BUT…” and proceed to rattle off a list of reasons why this is impossible. They’ll say things like:

“Building a seven-figure law firm requires too much work.”

“This market is too small to support a seven-figure law firm.”

“This market is too large (too competitive) for me to build a seven-figure law firm.”

“Building a seven-figure law firm is impossible because of the area of law I practice.”

Notice that most lawyers will rattle off these excuses before you’ve even asked for them. They’ll do this because they’ve adopted a defeated mindset. They look for reasons that good ideas will fail. They’re cynical and many of them are probably secretly miserable as well.

As a result, they’re asking the WRONG question as highlighted by the Rand quote above. They’re asking “Who is going to let me build a million-dollar firm?” and the answer is that nobody is going to LET them. Nobody is going to roll out a red carpet for them. That’s not how the market works. That’s not how life works.

Lawyers who get it (like our members) know that Ayn Rand was right. They don’t ask who’s going to LET them… they ask who is going to STOP them. And then, they build a plan and a strategy and a process to overcome the obstacles that sit in their way.

It’s not rocket science. Building a massively profitable law firm that supports your lifestyle and allows you to enjoy life, whatever that means for you, isn’t about complicated business theories and strategic concepts. It’s about your MINDSET. It’s about your determination to find a path (or blaze a trail if needed) towards ultimate success, whatever that looks like for you.

So be honest.

What’s your mindset?

Are you asking who’s going to let you?

Or are you asking who’s going to STOP you?

How To Keep All Your Law Firm Employees Moving In The Same Direction

November 4, 2014 by RJon Robins

“How can I keep all of my law firm employees moving in the same direction?” Even if you’re a solo lawyer completely by yourself in your office without anyone helping you at all, you have to know that every law firm has the following positions on staff. Every law firm has a receptionist, a secretary, a paralegal, a associate, (a rainmaker), a manager, and a chief operating office. A chief operating officer is the person who creates the policies and the systems and the procedures and makes the factory work. A chief financial officer and an owner so you’ve got to inventory all of these people to make sure that you’ve got someone covering each of these positions. It may be one person wearing all of the hats if it’s all you by yourself still but if you ever want it to not be always you by yourself you’ve got to document what these jobs are, what these positions are.

Next step, you get someone in one of these jobs and now you’ve got to lead them. Leadership and management; two very different things. Don’t confuse management with leadership. Getting everyone to go in the same direction is a function of leadership. It’s very simple, it’s a very simple conversation. This is the job of the managing partner. You go and talk to the managing partner of a million dollar solo law firm, you go and talk to the managing partner of a 100-lawyer firm, the job of the managing partner is very simple, there’s four parts to it.

One part is to have a very simple conversation with all of the key players and the conversation goes like this. Ready? Where are you now in terms of your career, in terms of your income, in terms of your professional development? Let’s say for example that you talked to someone and where they are now is they’re 30 years old and they’re single and they have no kids and they’re making $75,000 a year.

Where do you want to be in 12 months, 24 months, 36 months? Well, in 24 months I think it want to be, well, obviously I want to be 32 years old and I want to be making $150,000 and I want to have these professional experiences and credentials and responsibilities and then you help the person make a plan to get them from where they are now to where they want to be. You help them make that plan, you coach them, you guide them, you mentor them, you advise them, you cajole them, you encourage them, you hold them accountable and you schedule regular interval meetings to sit down and say where are you against the plan that we laid out? Where are you against the things that we agreed that you were going to accomplish between then and now to help you accomplish your goals in your life and your career?

Now, to the extent that they’re achieving their goals in their life and their career are consistent with the overall business plan you have for your law firm, you’ll get everyone working in the same direction.

It’s okay, by the way, if someone’s plan is to achieve X, Y or Z and they plan to stop working with you once they’ve achieved those things. At least you know you’ve got them for that long at least you know you can motivate them to that point. At least you know when you need to start replacing them. This is the job of the managing partner, it doesn’t matter if you’re the managing partner of a solo law firm that’s $250,000, $500,000, a million dollars, multiple million dollars or if you have aspirations or maybe you’re already the managing partner of a 10, 20, 50-lawyer firm. This is one of the key functions of a managing partner and this is what leadership looks like.

How to Network Strategically and Get More Referrals

October 20, 2014 by RJon Robins

How to network strategically and get more referrals. Networking is very simple. Networking is all about talking to the right people about their favorite subject and then following up with them. Write that down!

Networking is part of marketing, it’s not part of sales. If you’re networking to try to get business from the people you’re networking with, and it’s not working, that’s why. Networking is marketing. Marketing is designed to cultivate a referral network. That’s why it’s called networking, right? So the idea is you go and you identify who the influencers are either by their job, by their position in society, or by their temperament. It doesn’t have to necessarily be someone with great credentials but there are influencers in every community. You identify who those influencers are. You see where they’re going. They may be going to formal networking events like a BNI group or something like that, or they may be standing behind the counter at their store just meeting and greeting all of the people who come and go and being a resource to their staff. Identify who is in a position to refer business to you; that’s number one.

Next, talk to them about their favorite subject. Their favorite subject is always very predictable. It’s going to be their business, their occupation, their profession, their family, their kids, their hobbies; it’s their interests. Ask them about these things. Put them on a pedestal and ask them all about what they like best about their business, their industry, and where they see their future going in whatever they are doing. Make sure you only ask positive questions. This way they will connect you with positivity, stay positive!

Make sure to tell them what you do very briefly. Put it in terms of why they should care. For example, I would say I’m the CEO of How to Manage a Small Law Firm. That would be very boring, no one cares about that. If I was speaking to someone and I wanted them to care I’d say, I help lawyers make more money in record time.

Even if they’re not a lawyer they might know a lawyer and what I just said will then resonate with them and if they’re interested, they’ll ask for follow-up. If they’re not, you add them to your (rainmaking) rolodex and come back to them.

You have to but constantly be on the lookout for how to connect A and B in your network and be that connector, that person who recognizes when people should be doing business together and they’ll love you for it. In return, they’ll refer business back to you because you care enough to refer business to them.

This last point will be on networking; it’s called networking it’s not called net socializing. Do not go and pretend like you’re networking by going and hanging around with a bunch of other lawyers who do the same thing you do. Hanging around with people who do the same as you won’t get you far.Hang around with realtors, hang around with family therapists, anyone who doesn’t do the same thing that you do because the odds are those who do the same as you are not going to refer you business. That’s why so many lawyers go around and they spend years and years networking and they think it doesn’t work. In reality, it isn’t working for them because they are hanging around and networking with people who do the exact same thing that you do, they are not likely to send business your way.

Remember: networking, not net socializing!

Why the WRONG Clients Are Worse Than No Clients At All

October 19, 2014 by RJon Robins

As the owner of a law firm, you might think that waking up one morning and realizing that you don’t have a single client would be the absolute worst-case nightmare scenario. But you’d be wrong. The true nightmare scenario is having the WRONG clients. The wrong clients force you to do work that you don’t like doing for people you don’t like working with. Do this long enough and you’ll wake up one morning and realize that you’re miserable, that you hate your job, and that you’d rather do just about ANYTHING than go into the office for yet another day of miserable, mind-numbing, unfulfilling work. This is a trap that many law firms still in the first stage of firm growth fall into. And it’s easy to understand why. When you’re barely making enough money to make your mortgage payment, let alone actually taking your spouse out to a nice restaurant, you are inclined to take any work that you can get. If representing the Devil himself would cover your student loan payments… you’re probably going to do it. But then you’re trapped. Your devil cient may give you the income you need to just barely scrape by. But in the process, he will demand so much of your time and your energy that you’ve got nothing left. No energy to invest into growing your business. No desire to get up in the morning. And no time to think about anything other than meeting his demands. What should you do instead? Figure out what kind of work you want to do. Your work should energize you. It should leave you feeling good about yourself and what you’re doing with your time. And then figure out what type of clients you want to work for. This refers to their occupation and position in life (i.e. small business owners or wealthy retirees)… but their personality is just as important. At How to MANAGE a Small Law Firm, we have a strict NO ASSHOLES policy. And your law firm should probably have a similar policy. Once you know what type of work you want to do, and who you want to do it for… force yourself to say no to the wrong clients. This can be very difficult at first, especially when you need the money. But it’s one of the most valuable habits you will ever learn. Having the WRONG clients is worse than having no clients at all. Be honest with yourself. Are you working for the wrong clients?

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