Law Firm FInancial Management – Metrics for a Small Firm

Question:

I am a partner in a three attorney litigation firm in Boston. Two of us are partners. We are in our fourth year in practice after leaving a very large firm. We are concerned that we could be doing better financially. We are haphazard in our record keeping, have no goals, and are even sure what number matter. What are your thoughts are to the key number (metrics) for a small firm like ours?

Response:

Goals should be established for each attorney with monthly reporting showing performance against goals. Key metrics should include:

Fees collected – working attorney
Fees collected – originating attorney
Fees collected – responsible attorney
Billable hours – working attorney
Non-billable hours – working attorney
Billing, collection, and overall realization – working attorney
Other goals – financial and non-financial
Summary dashboard report should be developed.
Attorneys should consider keeping timesheets for all worked time – billable and non-billable with specific goals for non-billable activities.

Firm management contribution is important. If both partners do not share in the firm management responsibilities then the partner committing non-billable time to firm management should be compensated in the form of an agreement to amount or a fee credit that is run through the compensation system. If both partners participate in firm management, implement and document a management structure that clarifies management roles, responsibilities, and accountabilities for the partners, the office manager, etc. Respect the boundaries and avoid stepping over each other.

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John W. Olmstead, MBA, Ph.D, CMC

Posted at 09:03 PM in Financial Management
Tags: a, Financial, Firm, for, Law, Management, Metrics, Small

Jun 16, 2015

Law Firm FInancial Management – Metrics for a Small Firm

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