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Easy Law Practice Management Tips for Boosting Your Firm’s Profits

There are two ways to raise profits: increase revenues or cut expenses. Raising fees may not be possible in this economy, but you can use legal billing software to use your current resources more efficiently thereby cutting expenses. Three of the most important law practice management metrics are realization, leverage and margin.

Realization: Measuring Receivables

Although your clients might not be willing to pay higher fees right now, you can use legal billing software to better manage your receivables, effectively increasing revenue without actually raising rates.

Cash flow is different from revenue. Billing a client may show as revenue on the books, but until the client actually makes a payment it isn't cash in your company's pocket. Law firms have seen the time between sending invoices and receiving payment increase over the last few years as clients struggle to make ends meet, and these delays effectively reduce practice income. Rather than passively accepting this trend, law practice management experts recommend identifying which accounts are the most behind and pursuing payment. Improving collection rates increases cash flow and the practice's financial health.

Legal billing software can help improve receivables by alerting you to past due accounts and automatically generating reminder statements each billing cycle.

Leverage: Using the Right Person for the Job

Do you have senior attorneys doing work that is better suited to junior attorneys or law clerks? This is a waste of company resources. Delegation is smart law firm management. When senior staff offloads routine tasks onto lower-paid members of the firm, it lowers the cost of handling a case. It frees up more experienced attorneys to handle more important matters. Legal billing software allows senior attorneys to monitor the workflow and ensure delegated tasks are getting done as needed.

Another benefit of delegation is that it improves the morale of junior staff. When the firm entrusts them with more important tasks, it increase their job satisfaction and makes the work more interesting. Junior attorneys will pick up valuable skills, grooming them for higher positions in the firm during future years.

Margin: Cutting Costs to Improve Profits

All law firms have costs, and a key element of law practice management is reducing costs without jeopardizing the quality of service. Wasted time is wasted money, and when you find ways to complete tasks more quickly you create new profit streams for the company.

Technology is a great boon to efficiency. Legal billing software and other specialized legal applications have taken labor-intensive tasks such as case management or filing and made them more efficient. If your firm still maintains large files of paper contracts and other documents, you are wasting time and money filing, retrieving and searching for documents. Although the truly paperless office may never be realized, the modern law practice should have more electronic data than inefficient paper files.

If your firm is not using legal billing software and law practice management applications, it is time to start. Make a full commitment to embracing the new technology and you will be surprised at how much more efficiently your practice runs, and how quickly profits rise.

Loretta Ruppert

Loretta Ruppert works for LexisNexis, a developer of legal software tools which enhance client intake and other law firm management tasks.

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Filed Under: Practice Management


About the Author: Loretta Ruppert works for LexisNexis, a developer of legal software tools which enhance client intake and other law firm management tasks.

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