What Makes a Private Client Department Profitable? Peter Scott Peter Scott Consulting.
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Transcript of What Makes a Private Client Department Profitable? Peter Scott Peter Scott Consulting.
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
PETER SCOTT CONSULTING
Margins are being squeezed
PETER SCOTT CONSULTING
Who feels like this?
PETER SCOTT CONSULTING
Make the most of what you have
Work smarter, not harder
PETER SCOTT CONSULTING
Your partners
Their performance
Their behaviour
PETER SCOTT CONSULTING
“Heavyweight gorilla”
“You can’t manage me.
I’m a big biller!”
PETER SCOTT CONSULTING
“Do own thing”“That’s a great idea… …for the rest of you”
PETER SCOTT CONSULTING
“Winding down”“Ahh….only 5 more years to go”
PETER SCOTT CONSULTING
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”
PETER SCOTT CONSULTING
Put the squeeze on your business
Achieving maximum profitability – practical steps to make a real
difference
PETER SCOTT CONSULTING
Analyse your business
PETER SCOTT CONSULTING
Work types LeverageClientsPricingChargeable hoursRecovery rate Major overheads
Profitability factors
PETER SCOTT CONSULTING
Overheads
Cost of: - people - premises - P I - I T
ZBB
PETER SCOTT CONSULTING
Profitability – finding solutions
Focus on :
building the top line
PETER SCOTT CONSULTING
Work types
Tax planning / Wills / TrustsProbate CharitiesFamilyFinancial servicesOthers ?
PETER SCOTT CONSULTING
Work your ‘Wills Bank’
How many wills are you holding?
PETER SCOTT CONSULTING
Work types
Each work type as a % of overall turnover?Net profit per equity partner for each work type/group?
PETER SCOTT CONSULTING
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?
PETER SCOTT CONSULTING
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?
PETER SCOTT CONSULTING
Who is never guilty of the ‘Triple Whammies’?‘Triple Whammies’?
The TRIPLE WHAMMIES -Under pricingUnder recordingUnder recovering
PETER SCOTT CONSULTING
PRICING
PETER SCOTT CONSULTING
Pricing
For each person/work type/group/client
Headline ratesLocal comparables/competitivenessRecovered rates Latest rate changesValue billing arrangementsFixed fee work
PETER SCOTT CONSULTING
RECORDING CHARGEABLE TIME
PETER SCOTT CONSULTING
‘Why should I fully record all my chargeable time?’
PETER SCOTT CONSULTING
Time is a MANAGEMENT TOOL
PETER SCOTT CONSULTING
1. Meeting your targets
‘I can meet my billing target but without having to work any harder’
How?
PETER SCOTT CONSULTING
2. Budgeting for revenue
Fee earnersXHoursXHourly rate
PETER SCOTT CONSULTING
3. Are we ‘on budget’?
Recording chargeable time enables us to compare performance with budget
PETER SCOTT CONSULTING
4. How to estimate a fee?
‘How much will this cost me?’
PETER SCOTT CONSULTING
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?
PETER SCOTT CONSULTING
How easy is it for you to record time?
Do you need training?
PETER SCOTT CONSULTING
Recorded chargeable hours
Methods of recording timeUnits of recorded timeFrequency of reportingAvailable timeRecorded chargeable hours by person/group/firmSet Targets
PETER SCOTT CONSULTING
Non - chargeable time
Set maximum allowances depending on roles / responsibilitiesStop use of “unspecified” and “other” codesReview excessive non – chargeable time
PETER SCOTT CONSULTING
Recovery rate
PETER SCOTT CONSULTING
Every 1% on your recovery rate = ?
Recovery rate
PETER SCOTT CONSULTING
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
PETER SCOTT CONSULTING
you halve the amount you write off, by how much will your annual profits increase?
If…
PETER SCOTT CONSULTING
By reducing …
Under-pricing Under-recordingUnder- recovering
how much more profit would
you make?
PETER SCOTT CONSULTING
Put the squeeze on your business
What are you going to take away from today and do something
about?
An action plan?