Firm of the past or firm of the future. Ask yourself, says John Chisholm, what did you do in June?
As another financial year comes to an end did you, like many firms, spend much time and energy in the month of June on things such as staff performance reviews, negotiating your staff salary reviews; agonising over how much (if any) the market can stand for hourly rack rate increases from 1 July; finalising the new financial year's budget;scraping around trying to find cash; and writing off unbilled and unrecoverable WIP?
And during June did you find time to service your clients as well? Does any of this sound even vaguely familiar?
It should because nothing much has really changed in the last 20 or 30 years in this regard for many firms irrespective of their size and location.
It is also familiar because most firms stick to the same old business model and paradigm, focussing on revenue as their prime goal.
We call these firms Firms Of the Past.
Thank goodness there is a small but increasing number of firms that, whilst experiencing other challenges during June, do not experience all those that Firms Of The Past do- or at least not to the same extent.
They are firms made up of people who are innovative, have become tired and disillusioned with the old firm business model and have realised there are much better ways of practicing law which benefit themselves, their staff and their clients all at the same time.
Their primary is focus on profitability, not revenue.
And they spent the month of June not undertaking staff reviews. Their staff appraisals-if they have them at all- happen regularly during the year and are based on Key Predictive Indicators- not Key Performance Indicators.Their team members remuneration is based on Key Predicative Indicators and other accountabilities such as turnaround time, what their clients think of their performance,teamwork, coming up with innovative solutions, encouraging creativity, and people's contribution to providing value to their clients and profit to their firms-not on hours worked and billed.
They did not spend June on working out rate increases as these firms have prices for individual clients on individual matters or long term retainers, not hourly rates. And rates are not prices.
They worked on team budgets built around a range of targets including profitability -not personal exertion revenue targets.
They did not have to waste their time undertaking debtor purges as they do not experience the same lock up and cash issues Firms Of The Past do because they agree their prices and terms of trade up front with their clients and are paid all or something in advance of doing the work -not waiting until after the work is done. And clients who agree prices up front pay more quickly and do not dispute bills.
What did you do in June?
These firms either do not record time so do not have WIP lock up or if they record time the WIP is largely irrelevant as it is the scope of the work, project managing that work and the fee agreed up front that counts.
These Firms spent most of their June working hard at continually providing increasing value to their clients.
We call these firms Firms Of The Future.
John Chisholm is a law firm consultant.
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