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Financial tips and tuneups: Healthy firms focus on details, embrace creativity

By: DOLAN MEDIA NEWSWIRES//January 25, 2013//

Financial tips and tuneups: Healthy firms focus on details, embrace creativity

By: DOLAN MEDIA NEWSWIRES//January 25, 2013//

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By Tony Ogden
Dolan Media Newswires

Succeeding as a solo or small-firm attorney requires being more than just a good lawyer.

It means being a savvy businessperson.

But “law schools haven’t done a very good job … of helping law students know how to do budgeting and finance, and how to treat the firm as a business,” said Janis Alexander, chief operations officer at Ambrose Law Group LLC, Portland, Ore., and a frequent speaker and writer on law firm finance, technology and operations.

Laura Calloway, director of service programs at the Alabama State Bar in Montgomery, Ala., agreed. She advises small-firm lawyers “to really focus their practice on creating an environment that’s very technology-oriented in order to reduce costs, save money and get clients that normally would only go to big firms.”

Here are some other suggestions for improving a firm’s financial health.

Bill early

Infrequent billing is an easy way for attorneys to get into trouble, Calloway said.

When lawyers get “really busy doing legal work, they won’t send bills out,” she said. “Have a time and billing program.”

She also suggested timing the sending of bills to accommodate clients.

“Ask them when is best,” Calloway said. “If you send the bill when the client has the money to pay … they will pay you.”

Watch the books

Have a financial management system that tracks finances, Calloway said, and learn to make use of the features.

“Most billing programs will provide you with aged accounts receivable, but a lot of lawyers never bother to look at that report,” she said.

But looking at those reports can keep attorneys updated on how much money is owed and for how long the debt has been outstanding, Calloway said.

“If it’s over 90 days old,” she said, “there’s about a 2 percent chance of collecting it.”

It’s also important to keep an eye on write-offs.

“If you’re writing off a lot of work before you even bill it out,” Calloway said, “that’s an indication that you need to tighten up the work processes in the office.”

Minimize paperwork

Whenever attorneys close files, they should scan all of the documents, send the originals back to the clients and then shred the rest, Alexander said.

“This saves tons of money by not having to use off-site storage,” she said, “and then take the time years later to retrieve and dispose of files.”

Attorneys also can go paperless to cut down on time spent looking for documents, Calloway said. An easy way to do that, she said, is to “use your computer filing structure to mirror the paper filing structure that you used to use. If you name your documents starting with the date … all of your documents within a folder will order themselves chronologically.”

Leverage existing talent

Small firms can have the most tech-savvy person handle minor troubleshooting and software upgrades without calling third-party vendors, Alexander said.

She also suggested offering a regular “tips” presentation, during which each employee of the firm presents a discreet tip on how to improve the firm, such as a new use of existing office equipment or software, or a marketing idea.

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