What Makes a Private Client Department Profitable?

Peter ScottPeter Scott Consulting

PETER SCOTT CONSULTING

Flabby law firms are failing

To drive up revenue

To drive down costs

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Margins are being squeezed

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Who feels like this?

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Make the most of what you have

Work smarter, not harder

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Your partners

Their performance

Their behaviour

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“Heavyweight gorilla”

“You can’t manage me.

I’m a big biller!”

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“Do own thing”“That’s a great idea… …for the rest of you”

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“Winding down”“Ahh….only 5 more years to go”

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Accountability

“We have no room for those who put their own personal agenda ahead of the interests of the clients or the office”

David Maister’s “Predictive package”

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Put the squeeze on your business

Achieving maximum profitability – practical steps to make a real

difference

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Analyse your business

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Work types LeverageClientsPricingChargeable hoursRecovery rate Major overheads

Profitability factors

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Overheads

Cost of: - people - premises - P I - I T

ZBB

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Profitability – finding solutions

Focus on :

building the top line

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Work types

Tax planning / Wills / TrustsProbate CharitiesFamilyFinancial servicesOthers ?

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Work your ‘Wills Bank’

How many wills are you holding?

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Work types

Each work type as a % of overall turnover?Net profit per equity partner for each work type/group?

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Leverage

For each work type /group

Net profit per equity partner?Number of fee earners (including partners)?Age/qualification of each fee earner

(including partners)?Delegation?

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Clients

% of turnover represented by top 10% / 20% of clients (by billing value)? Ditto for bottom 10% / 20%? Net profit derived from each of above categories as a % of total?

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Who is never guilty of the ‘Triple Whammies’?‘Triple Whammies’?

The TRIPLE WHAMMIES -Under pricingUnder recordingUnder recovering

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PRICING

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Pricing

For each person/work type/group/client

Headline ratesLocal comparables/competitivenessRecovered rates Latest rate changesValue billing arrangementsFixed fee work

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RECORDING CHARGEABLE TIME

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‘Why should I fully record all my chargeable time?’

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Time is a MANAGEMENT TOOL

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1. Meeting your targets

‘I can meet my billing target but without having to work any harder’

How?

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2. Budgeting for revenue

Fee earnersXHoursXHourly rate

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3. Are we ‘on budget’?

Recording chargeable time enables us to compare performance with budget

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4. How to estimate a fee?

‘How much will this cost me?’

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5. Are we working profitably?

How do we know we are profitable if we do not know how much our work is costing the firm to do?

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How easy is it for you to record time?

Do you need training?

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Recorded chargeable hours

Methods of recording timeUnits of recorded timeFrequency of reportingAvailable timeRecorded chargeable hours by person/group/firmSet Targets

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Non - chargeable time

Set maximum allowances depending on roles / responsibilitiesStop use of “unspecified” and “other” codesReview excessive non – chargeable time

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Recovery rate

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Every 1% on your recovery rate = ?

Recovery rate

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Write off policy

How much do you write off each year?Introduce a write off policy eg:

- all time to be w/o more than £500 or 5% of recorded time whichever is the higher has to be approved by managing partner

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you halve the amount you write off, by how much will your annual profits increase?

If…

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By reducing …

Under-pricing Under-recordingUnder- recovering

how much more profit would

you make?

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Put the squeeze on your business

What are you going to take away from today and do something

about?

An action plan?