Resources

Red Cave Law Firm Consulting's Technology Blog Series (from CEO Jared D. Correia, Esq.)

2022 Quarter 3

September 21, 2022: Raise Up: Law Firms Should Increase Rates Annually

The chief method for law firm business management is inertia, largely.  That means you can pretty much default to lawyers doing nothing, rather than something, anything.

That, of course, extends to financial management.  Lawyers tend to run up accounts receivable, because they don’t bill regularly.  They never run revenue projections, either; so, they can’t build to specific financial goals.  They don’t run financial reports regularly; so, they don’t have a consistent understanding of the financial health of their law firms.

Neither do attorneys raise rates regularly.  Across the country, law firm rates struggle to keep up with inflation. That’s not enough.

And, while most attorneys think that raising rates is a dangerous step, there are ways to manage it, without alienating new or existing clients.  In the first instance -- don’t go crazy: it’s okay to raise your rates by $25/hour, let’s say.  You don’t necessarily have to make up for lost time by doubling your rates, or adding a tripe digit rate increase.  Just start small, and then setup a process.  To that end, you’ll want to raise your rates at least annually, by letter, to your existing clients; and, update your rate sheet to reflect those changes.  Let your clients know that this is something you will do on a recurring basis, each year.  It’s easier for new clients: just apply the new rates.  Make sure your original fee agreement includes language reflecting rate increases, too.  Like many things related to more effective business management for law firms, this is mostly about creating a system, and sticking to it.

If you can send out holiday cards every year, you can raise your rates every year.

September 08, 2022: Bill’s Excellent Adventure: Invoice More Regularly

Lots of attorneys are short on cash.  But, lots of attorneys are sitting on unsent or incomplete invoices.  So, if you’re feeling a cash crunch in your law firm, look to a likely culprit: invoices that need to go out.

Lots of attorneys are sitting on lots of cash; those attorneys just need to send out their billing.  And, sending out that billing quickly is essential, because the more it piles up, the harder it is to collect on later: the more aged your accounts receivable, the less likely you are to see the money they represent.

So, here are some tips for getting your billing out quicker:

-Simply set a recurring task for doing so.  Add a task in your calendar at the end of every month for sending out your invoices.  And, put a tickler on it, so you know it’s coming up.

-Adopt a single-entry system.  If you’re still writing down your time on a piece of paper, and handing it to your secretary: stop.  Instead, use a time and billing or case management system to record your time entries directly.  Some of these systems feature, or can be integrated with, automated time trackers, which keep track of your time on your devices.  Not only will you get your billing out faster, there is also a decreased likelihood of errors because no second person is adding your data to a new system.

-Don’t send invoices out one-by-one, via your productivity software.  Instead, adopt a time and billing or case management system that allows you to use ‘batch invoicing’, or the running and sending (via various mechanisms) of invoices to all of your clients, all at once.

Speed is the name of the game.  And, if you’re not fast, you get paid less.

August 29, 2022: What Have You Done for Me Lately: Client Homework is the Great (Effort) Equalizer

Most lawyers would tell you that the attorney-client relationship can be a pretty one-sided equation.  Lawyers do a lot for the benefit of clients.  Clients, on the other hand -- well . . . they’re relying on lawyers to do the things for them.

Part of this, of course, is that attorneys have duties to clients; but, it’s also that lawyers set up these relationships like this.  Attorneys, when trying to get the work in the first place, work very hard to tell clients all about what they’ll do for them.  As the relationship continues forward, that how it gets structured: lawyer performs work, client pays for work.

​​​​​​​Of course, the attorney-client relationship is better when the lawyer and the client work together.  Like when the client keeps the lawyer informed of what is happening in their life, that is relevant to the case.  Or, when the attorney doesn’t have to ask multiple times for items she needs.  Or even when semi-regular check-in calls become fruitful.

To craft that sort of relationship, it helps to discuss with clients early on about the two-way nature of the street, with respect to the attorney-client engagement.  So, talk to your clients about how you can work together.  And, don’t be afraid to give them things to do: Ask them to collect a set of documents.  Provide you some other information.  Assist in their own cause.

Teachers have been keeping students honest with homework for centuries.  Lawyers can use the same trick.

August 22, 2022: Run of the Mill: More Ways to Differentiate Yourself from Other Lawyers

It’s a whole new world for lawyers; but, one thing hasn’t changed: there are still a lot of them.

Yes, there are a staggering number of attorneys in the United States, both in terms of raw numbers, and when you look at per capita figures.  Yet, most of the law firms are very poor at differentiating, one from another.  Law firm websites spout platitudes about customer service and competency, and offer, what amount to very weak, reasons for a consumer to pick one law firm apart from another.

Attorneys should consider new and interesting ways to create unique sales propositions, especially relevant to their customers, like these:

-If you’re one of a growing number of Americans fleeing major cities, you’ll find new opportunity being a community lawyer, without a specific practice focus, in smaller communities -- just as local referrals are on the rise.

-What practice areas are on the rise during the pandemic?  What trends in your own practice are accelerating?  Now is not the time to be timid.  If you see a new marketing opportunity, jump on it.

-Now is the time to convert all of the analog, in-person aspects of your practice to digital models.  Or, at the least, offer digital versions of analog processes.  You can’t wait any longer to get virtual, it’s what clients expect, and require.

-Since more and more information sits online than ever before, you can double-down on your ability to safeguard data, as a steward of client information.  Convince your leads and clients of your law firm’s worth as a secure repository of their most sensitive information, and you’ll garner both more leads and conversions.

-Engage in alternative content options (like podcasts and video), and show a little personality.  Without the benefit of offline meetings to get leads and referral sources to like you, you need to be able to resonate with those same folks online now.

August 19, 2022: Getting Closer: Can You Quote Clients a Total Price?

Although lawyers often guess about what legal consumers want, there are very specific and discoverable things that legal consumers want from lawyers.  And, knowing these things can allow you to convert more clients.

​​​​​​​One of the things that legal consumers want from law firms is to know the total cost of legal services.  This doesn’t mean your hourly rate, because that’s uncapped.  And, consumer and corporate legal consumers are getting wise to the fact that hourly rates actually promote inefficiency.  I mean, think about it: the more hours you bill, the more money you make: So what’s the incentive for working fast?  There isn’t one; in fact, there’ a disincentive for doing so.

The job for modern lawyers is to meet and exceed client expectations.  So, if you know (now you do) that clients want to know the total cost of representation before engaging a law firm, how do you provide for that?

It’s difficult to do with hourly billing, for sure.  But, it becomes easier if you offer alternative pricing models, like flat fees, risk collars (client pays a discounted rate if you go over an hours estimate, you come under that hours estimate and you get a bonus), limited scope representation (you break the representation into components, and only represent clients for single parts of the representation at any one time) and subscription services (like technology vendors use).

Reformatting your billing system is not an easy thing to do; but, it may make your client conversion a whole lot easier.  And, if you can find the right value proposition, the new system will work out for both you, and your new clients.

August 08, 2022: Play in the Sandbox: Test Your Software Before You Use It

Adding new software to a law firm is often a challenge.  But, the reward is great.

The issue is that most law firms stumble out of the starting blocks, and then squander any gains that they may have had.  One way law firms screw this up is to spend too little time vetting software, so that they’re surprised by what they view as limitations during the implementation process -- which may be actual limitations, or just undiscovered existing features, of which the law firm is not aware, because they did not utilize a thorough vetting procedure.  Another way that law firms screw this up is by focusing too much on the implementation procedure, with skewed expectations with respect to speed of adoption -- many lawyer-owners feel that a software should work perfectly within their environment right away; but, that’s the wrong expectation.  It takes time to adapt software for your office.  Don’t even get me started on staff training for software: law firms just don’t do that.

But, there is one thing law firms can do to better utilize the software implementation period, reduce exasperation over features and better align expectations to the launch process.  Most law firms will just add software and push it out to users and clients right away; and, if there’s an old software that’s being replaced, they unplug it at the same time.  The operating principle here is that the new software will be a perfect replacement for the old software, and that there will be nary an issue in moving ahead.  Yet, according to Murphy’s Law -- there are always issues.

The best way forward, in implementing new software, is to first test it out in a sandbox environment, before launching it, in full.  And, that’s true whether you’re a solo, small firm attorney or large law firm owner.  So, create a ‘sandbox’ with certain restrictions: Use dummy data, or data from a small number of clients or matters, to start with.  Limit the number of users within the law firm.  Then, see what happens.  That will surface the errors and issues you can fix before you start using the product across your entire staff, and with your full clientbase.

August 04, 2022: VoIP is the MVP: This is the Cloud Software You Need for Your Distributed Workforce

With in-office work still now a very disjointed proposition for law firms, attorneys continue to struggle with managing a distributed workforce -- often for the first time.  One particular problem with the new system is managing phone calls.  With administrative personnel, who normally answer the phones, out of the office, and separated from the physical phone systems many law firms still maintain, solo lawyers and small firm attorneys themselves are burdened with tasks generally revolving to receptionists, on days when the usual receptionist is out of the office. That’s a problem for staff (who are blocked from their normal duties), and for attorneys (who are better served delegating the task).

The answer is adopting a VoIP phone system.  VoIP stands for ‘voice over internet protocol’; it is, essentially, a cloud-based phone system.  Hardline phones are connected via PBX (‘public branch exchange’), which makes those systems cost more than VoIP, and forces business phone systems to be anchored to a particular place.  VoIP phones systems, on the other hand, are accessible anywhere, because they’re not tied to particular phones (though they can be), and can utilize ‘soft phones’ instead -- which turn any internet-ready device into a dialpad.  This means that your staff can answer your phones from their homes, whether or not they have a firm-issued phone.  VoIP phone systems also offer ‘hunt groups’, which allow you to automate call transfer protocols, based on availability.  And, since VoIP systems are essentially cloud-based tools, they feature interoperability with your other cloud-based tools, like case management software, productivity software and accounting software.

To get started, check out Ooma, Nextiva and RingCentral.

July 28, 2022: One Entry to Rule Them All: It’s Time to Ditch Your Old School Time and Billing System

Many law firms still operate with pen-and-paper time and billing systems; but, that’s like a recipe for losing money.  Of course, there’s no time like the present to change your ways, and recapture more of the money you make.

There are two moves you can apply, in short order, to revise your time and billing practices, that will combine to change your (work) life: (1) Move to a single-entry system for billing; (2) Get a law practice management software system in place.  The first maneuver is something that lawyers are traditionally reticent to do, because it seems to place more work in their laps: rather than handwriting time capture notes and submitting them to a secretary, attorneys are instead inputting their own time capture data into a time capture software directly.  That process only happens once (not twice, like when you write down your time, and then have your secretary convert it to another system), and thereby reduces the likelihood for error and lost time.  Delegation is usually great, just not in this case -- because it’s actually inefficienct and redundant; and you’re definitely losing money, as captured time becomes lost time as it pushes down an unnecessarily long funnel.

Utilizing a modern cloud-based time and billing program is the next big step you can take.  That’s where you input your time, the one time you do it.  Time and billing systems have largely morphed from single-feature structures into case management systems, which include time and billing programs -- but also much more: as relational databases that can track all of your case records and can effectively integrate with other relevant programs, like accounting softwares.  Choosing a modern case management system not only solves for the single entry time capture requirement, it also allows you to create billing workflows, review pre-bills and utilize batch billing -- to send out all outstanding invoices at once.  It’s at once a time-saver and a moneymaker.

July 22, 2022: System Update: Law Firms Must Move from Analog to Digital Processes

Over the course of the last three years, law firms have become more comfortable with online solutions.  And, lawyers have started to move as many analog processes as they can to digital processes.

Law firms that are used to, or only willing to, manage in-person events have been required to reconsider that stance.  It’s time to rethink every process in your law firm to create online options for what have traditionally been offline events.  Every offline transaction you utilize in your law practice, can be shifted to an online transaction.  And, if you’re not making those moves now, the question is when will you?  If you didn’t make the transition to a modern law practice during a global pandemic, then when will you?

It was important even before the coronavirus changed everyone’s life to offer law firm clients digital alternatives -- now, it’s essential.

July 13, 2022: Line ‘Em Up: The Secret to Hiring Is Gaining Massive Business Efficiency First

Imagine if Henry Ford had tried to create massive efficiency within the automotive industry, and just hired people, before he started building assembly lines.  It would have been a disaster.  At that point, one of the greatest innovations of the 20th Century becomes just another Hindenburg disaster.

Yet, law firms try to do this all the time!  They onboard staff and associates without any sort of processes or workflows in place.  That’s part of the reason why law firms, especially small law firms, tend to shy away from the hiring process: they’ve had bad experiences -- because they can’t effectively onboard new employees, because those new employees are dropped into the middle of a hurricane.

Imagine now a world in which you built the assembly line first.  As a solo or small firm business owner, you too should add the processes before you hire.  And, in the process of doing so, you will also ramp up your own personal efficiency.  What will then happen is that, when you hire, your new employees will enter an extremely efficient environment, and can learn via the processes you’ve established.  That helps your clients by offering a more consistent service; but, it also helps you to keep your employees in line, and reduces the potential for malpractice.  Keep the assembly line moving.

So, to review: Step 1 – Generate maximum efficiency; Step 2 - Hire.  If you do it in that order, you’ll also have a much better handle on what you can expect from your staff, in terms of revenue generation.  That way, each of your staff members will become reliable profit centers for you moving forward.

July 6, 2022: No Direction Home: What To Do With Clients Who Don’t Want a Lawyer

There are legal consumers out there who don’t want you, you know.

There is a subset of DIY legal consumers that want legal information, advice and services -- but, they don’t want to pay a lawyer for those items, because they think that lawyers are too expensive, and because they think that they can do a passable job on their own.  In certain instances, they’re probably right -- on both counts.

At the point at which most lawyers understand that, the common reaction is to throw up one’s hands, and assert that such clients aren’t wanted by law firms, either.  For other attorneys, it’s a reason to gripe about services like LegalZoom and RocketLawyer, that provide documents to legal consumers, as well as links to lawyerly advice.

Very few attorneys take the middle way, and decide to sell products and alternative services to DIY clients.  Most attorneys will complain about a service like LegalZoom; but, those same attorneys won’t consider the potential for emulating such a service.  Though, there’s nothing to prevent attorneys from doing the same thing.  If your clients want documents because they cost less than legal services . . . then, sell them documents.  There are lots of technology products that can produce intake tools for populating template documents.  And, if your clients want limited legal advice on documents, you can offer it, too.  You see, lawyers can service DIY clients; they just have to do it in a different way.

Or, they can continue to bury their heads in the sand.

Either way, it looks those law firms that adopt subscription services and products will win the long game.

. . .

Need help revising your pricing structure, so that you can focus on real value?  We can help.

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To access consulting services, visit this website, and start running your law firm like a business.