Are law firm inefficiencies good for business?

By on March 27, 2011

The attorneys are always busy, hopefully, working on that they do best, practicing law and rack-up billable hours. The attorneys rely on their administrative staff to run the operations.

There is no similar situation in corporate America, the people doing a great deal of the work and billing the most, are also the owners, the partners. There isn’t just one “CEO”, there are dozens, they form committees, many times made up with members who just love to over-analyze and debate. So how does this effect inefficiencies, it promotes it on the operations side of the business.

If a corporate CEO analyzed a mid-large size law firm roughly the same size as his business, he’d be amazed at the operational inefficiencies. Corporate CEO’s, in general, have discovered that operational efficiency quickly equate to bottom line profits. The CEO passes down to his vice-presidents and managers the requirement to be low cost producers. The CEO doesn’t need to be concerned about a few dozen other owners when it comes to lowering the cost of operations.

Law firm managers might believe they have the responsibility and authority to streamline operations and reduce the internal costs of processing. However, just try and reduce the manual paper process and you’ll have a partner up in arms over something. Process improvement is very important, so long as no one is inconvenienced.

Law firms are always looking for a competitive edge in pursuing client engagements. Clients are looking for law firms that they believe are efficiently run.

So the moral of the story is: don’t let your corporate CEO client spend a lot of time with your operational staff, inefficiencies will not be good for business.

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Categories: Best Practices, Productivity, Technology, The Legal Market

“The Money Machine and Human Nature – What a trade show draw reveals about adoption theories”

By on March 16, 2011

For some time, we have used a “money machine” as a trade show booth draw and incentive.  It’s a little “used car sales-ish,” but it really works in getting people to the booth, and it draws a crowd. Plus, it ties into our marketing campaign of “See More Green”.  The booth is a rectangular cube with plexi-glass sides and a fan on the outside. The fan, obviously, blows the money around while the player stands inside trying to collect as much cash as they can in 15 seconds. Once the timer goes off, the money stops blowing and the player has to stop collecting.

 I have been observing this game for a few years now, and, by far, the most interesting thing to watch is “the approach”. The most timid people have surprised me by going hog-wild in the machine once locked in – shoving money down their shirts (against the rules, by the way) and grabbing at the green like a victim being attacked by killer bees. Then there are those who take a more strategic approach and come up with a strategy ahead of time, e.g., let the money get at arm’s height and grab it. They also watch others and judge what they are doing wrong/right. There are those who have a fair amount of trepidation about getting in an air blowing money trap, and then there are those who beg to get in. A lot of these observations can be applied to many people’s approaches to purchasing new software/hardware/technology in general. It reminds me of the “Adopter Curve” that has been around for some time now (applied in a variety of arenas):

  1. The early adopter/innovators, aka killer bee victim: This purchaser buys something new because, really, they have to be on the cutting edge, and it is cool. It is more of an emotional purchase. They also have a problem that may be wasting a lot of time/resources and want to solve it so they make a quick buy. Sometimes this may lead to a non-fiscally responsible purchase and sometimes it works for them.
  2. The conservative/early majority/late adopters, aka studier:  These people purchase something new because it solves the problem at a reasonable cost. They study all of the ins and outs of the product and then, when the time is right, make an informed purchase based on facts.
  3. The late adopter/laggards, aka anti-machine: Usually the late adopter waits for the deal or they take the “if it ain’t broke, don’t fix it” approach. While they may have the same problems as others, they can live with it.

It is always a little difficult for me to understand why people have any reservations about winning free money. I guess they think there must be a catch or they just don’t want to put themselves in the spotlight. As the old adage goes, “it takes money to make money”. A lot of technology companies promise to make firms money if they purchase their wares. A lot of times they are right. Sometimes it’s just a waste of resources and other times it really will make your firm money. Make sure to do your research and you may inherit your own money machine.

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Categories: Going Green, Legal Marketing, The Legal Market

Corporate America …. want to lower legal costs, here’s how! (Part 2)

By on February 27, 2011

You hear it everywhere; companies want to lower legal costs. In my previous blog post I discussed the need to adopt standards. Law firms have a “hidden” high cost of e-billing because there is no single e-bill standard, there are hundreds or thousands of “standards”.

 Firms are delaying their billings, proof-reading every entry on every bill, submitting bills that get rejected or short-paid, and finally writing off a great deal of money. Corporations need to understand that all this is reflected back into law firm rates.

 Here is a simple way to fix this problem and lower costs to both firms and corporations:

  1. Quickly accept the current LEDES XML e-bill standard. The XML technology allows for tremendous flexibility for dealing with custom fields. Corporations should force the middle tier processors to accept this single standard. There won’t be a standard until the very top recipients of e-bills, primarily insurance carriers make the switch.
  2.  Work with Time and Billing vendors (or LEDES) to provide specific billing guidelines in an electronic format that the Time and Billing system can import and use for Bill Scrubbing. Law firms want to submit bills that fit your guidelines, but like e-bill formats, there are few standards. Time and billing vendors can provide tools to “scrub” bills if they had your guidelines in something better than just written documents.

 So, corporate America, do you want to collaborate to use technology to reduce costs for everyone involved?

 Your feedback is welcome.

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Categories: Best Practices, Financial Management, Law firm billing, Productivity, Technology, The Legal Market

Finally, Solving the Excel Data Insertion Problem

By on January 23, 2011

This is my fourth blog posting examining the problem facing law firm CFO’s who need to get critical data from their financial management system into Excel spreadsheets

 1st posting – Challenges faced by CFO’s

2nd  posting – Current choices and new requirements

3rd posting - Expose queries

We have already examined the challenges, looked at the requirements, and discussed the concept of using SQL queries to make it simple for CFO’s to get financial system data into simple or complex spreadsheets.

 Microsoft .Net technology allows a vendor to build an Excel Add-in utilizing Windows Communication Foundation (WCF) to expose queries that already exist thus allowing users to retrieve data with a simple point and click.

 Let’s look at a full set of capabilities users will have:

  1. Easily insert data into either a new or existing spreadsheet, by clicking on a description of the data from a pop-up Excel Task Pane.
  2. Allow the user to insert different data pieces in multiple sections of a single or multi-workbook spreadsheet.
  3. Validate the users level of security to access the data requested.
  4. Upon saving the spreadsheet containing the links to the data, save the links and all other formatting.
  5. Allow the user to specify what data will be automatically refreshed from the database when the Excel spreadsheet is opened and what data can be refreshed by manual selection.
  6. All the Excel spreadsheet to me moved around the firm’s network while always knowing how to reconnect to the databases involved.
  7. Allow users to store their personally used queries in a separate area for both convenience and security.
  8. Allow for the ability for anyone to add new or custom queries without programmer involvement. For example, copy and paste from an email sent by a vendor.
  9. Provide all of the above capabilities for PivotTables, charts and graphs without necessarily building spreadsheets firms.

 By providing the above capabilities CFO’s and other law firm members will be able to finally analyze information in the way they choose. Getting critical data into Excel and keeping it fresh will never be a problem again.



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Categories: Best Practices, Financial Management, Technology

More Insight into the Dilemma of getting Data into Excel

By on January 9, 2011

In an earlier blog posting I explained the issues with using Excel to try and analyze data from a firm’s financial management system. The problem is getting the data from the system to the spreadsheet.

 There are few choices:

  • Connect Excel directly to the tables and download from the database. This is difficult since joining the right tables and using the right indexes probably requires a programmer for everything other than simple lists. For example, a client list with addresses can be done by a mid-level Excel user with a little help establishing an ODBC connection to a SQL database. Try analyzing a 5 year revenue trend by billing attorney, it’s more difficult.
  • Most standard reports can be run with an Excel spreadsheet as the output. This is fine, however, if you want to further manipulate the data, add calculations etc. all of these are lost next time you want to run or update the same report.

 So, what is the answer?  We need vendors to provide an entirely new approach to getting financial information into an Excel spreadsheet, PivotTables, charts and graphs.

 Here are the new requirements:

  • Existing spreadsheet models. Allow a user to take an existing spreadsheet(s) and insert data directly into specified rows and columns. Allow for multiple insertion points in one or s series of workbooks. CFO’s already have dozens of important spreadsheets that get manually updated each month with information from the financial management system.
  • Choose data refresh sequence. Allow a user to specify the sequence of refreshing the data that comes from the financial database. Don’t just refresh all the data automatically when opening the spreadsheet.
  • Select data components from a list. Allow a user to build a new spreadsheet, PivotTable or graph by just clicking on a choice of data elements from a list (described in English). The user
  • Automatic database attachment. The requirements above should all be available from an Excel Ribbon Bar or Task Pane with a direct connection to the all the firms databases including the data warehouse.

 In other words, make all this real simple so we don’t have to be programmers to get information into our spreadsheets.

 In my next blog post I’ll describe how new technology such as Service Oriented Architecture and Microsoft Communication Foundation can meet these requirements by exposing valuable queries from existing databases.


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Categories: Best Practices, Financial Management, Technology

Scrub Bills to Substantially Reduce Write-off’s

By on January 2, 2011

Corporate clients have imposed daunting billing requirements on their outside law firms. These clients spend hundreds of millions on legal expenses and if they can reduce these expenses by 2-3% consistently, they save a ton of money. These clients have learned that complex billing requirements force law firms to write-off millions instead of dealing with all the appeals, delays and frustrations.

 Firms already spend a great deal of time (read cost) proof reading bills by billing specialists before sending them out. This manual process delays cash and at the end of the day costs firms a lot of money. Even after manual proof reading, the rejections still come and the specialists are back at it again, appealing, re-billing or in many cases just taking substantial write-off’s.

 So, how can law firm’s deal with this growing problem? By utilizing a Bill Scrubber™.

 New technology developments provide a way to “scrub” client bills prior to submission to insure they meet client requirements. A Bill Scrubber checks each bill for a series of client rules and points out time and cost entries that need “help” prior to submitting the bill.

 Firms using this new technology will make it harder for clients to reject bills or short pay because of not following the billing guidelines. The use of scrubbing technology will also identify clients with more difficult rules and additional training requirements that might be needed within the firm to reduce the billing violations.

 Bill scrubbing will make money for a firm and improve adherence to client guidelines.


Bill Scrubber is a registered Trademark of Rainmaker Software, Inc.

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Categories: Best Practices, Financial Management, Law firm billing, Productivity, The Legal Market

What are a few days worth ….. A Lot of Cash!

By on November 2, 2010

Law firms are clearly cash machines, truly nice high margin businesses. However, they are somewhat unique in that they operate on a cash basis, collecting cash is really important. Just ask Mary (see my blog postings of July 14 & 15, 2010)

Firms can improve cash flow by implementing best practices and using technology, but what is all this effort worth? If the firm improves collections by an average of 5 days what does it mean in terms of cold hard cash?

This posting will help you understand:

  • How to calculate the Average Collection Period – ACP
  • How much additional cash can be generated by improving the ACP, and a sample Excel report  

Using the Average Collection Period
The Average Collection Period measures the time it takes for a firm to receive payments, thereby determining cash flow.


The above chart can help illustrate the effect that a change in the average collection might have on the investment in accounts receivable for your firm. Remember, accounts receivable represent money that cannot be used for other cash outflow purposes. For example, assume that the average daily billed amount is $10,000 and that your average collection period is 40 days. Now assume that you were able to reduce your Average Collection Period from 40 days to 30 days. From the illustration above, you can see that the reduction in the Average Collection Period reduces the investment in accounts receivable from $400,000 to $300,000. This reduction generates an additional $100,000 annually in cash flow.

 Measuring the Average Collection Period
The Average Collection Period measures the length of time it takes to convert your billings into cash. This measurement defines the relationship between accounts receivable and your cash flow. A longer Average Collection Period requires a higher investment in accounts receivable. A higher investment in accounts receivable means less cash is available to cover cash outflows, such as paying partners.

The Average Collection Period is calculated by dividing your present accounts receivable balance by your average daily billed amount:


The average daily billed amount is computed by dividing your annual billed amount by 360:


Using the annual billed amount and accounts receivable balance from the prior year is usually accurate enough for analyzing and managing your cash flow. However, if more recent information is available, such as the previous quarter’s billings, then use it instead. Be sure to compute the average daily billed amount correctly using the number of days actually reflected in the billed figure (e.g., 90 should be used if a quarterly billed amount is used).


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Categories: Best Practices, Financial Management, The Legal Market

Stop sending those paper bills …. Please!

By on October 27, 2010

Here’s a question for law firms … Do your clients want paper bills?

 The answer …. NO!

 This is the digital era, many clients want bill in a digital format.

 More and more corporations are requesting law firms send them bills in a digital format, PDF being the most requested. These corporations have long ago adopted e-Payable systems that require all bills to be imaged and processed via workflow for payment approval.

 Why companies want digital bills:

  1. The email with PDF attachment can be routed to a specific person with much tighter security and less costs than the normal mail room handling.
  2. The PDF file can be immediately loaded into the e-Payable system, saving a costly and delayed scanning process. Confidentiality is also a much tighter.
  3. The bill will arrive sooner. See my blog post explaining why this is a benefit.
  4. If the GC or legal staff needs to print the bill for review they can do it themselves.

 What can law firms do?

Set your time and billing system to automatically email bills as PDF attachments to clients. The law firm also benefits by getting bills out faster, faster payments and substantially reduced costs. Did I mention “going green” by reducing paper and power consumption? One keystroke can send thousands of digital bills.


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Categories: Best Practices, Financial Management, Going Green, Law firm billing, Productivity, Technology, The Legal Market

Streamline your Way to Bigger Margins – #3 -“Is your Time Slipping Away?” – Time Capture Best Practices

By on October 19, 2010

This ongoing series will visit small (and large) overlooked ways firms can save (or gain) money that can add up to big dividends.

A few months back, I wrote a blog entry about law firm time entry. In it, I outlined the results of a survey on time entry and some best practices attorneys can use to avoid “leakage” or “slippage”. One of the points was “If you have a mobile attorney, let them try a Blackberry or iPhone time capture app; see if it will help improve productivity.” Since mobile applications are used for just about everything these days, I thought I would expound on the benefit of using mobile time capture to avoid slippage, and achieve the most accurate time capture possible.

To begin, what exactly is “slippage”? Although there are many different types of slippage (in stocks, foreign exchange, etc.), law firms experience this phenomenon when they simply don’t bill clients for the work performed. This can occur when work is forgotten, small amounts of time are not recorded that may add up to large amounts of time and/or work is underestimated. Slippage is a real issue that negatively affects revenue and may lead to longer billing cycles, and an overall poor reflection on an attorney’s time management skills.

There are many contemporaneous time capture strategies the mobile attorney can implement to avoid slippage, here are a few:

  • This seems like a no-brainer, but find a mobile time capture tool that not only allows you to create time entries at any time, but also interfaces with the firm’s billing system, saving the time spent re-keying, or keying, billable time.
  • Utilize automatic time capture applications that allow users to record time automatically based on the medium, e.g., phone call, email, etc.
  • Make sure the mobile application has an automatic reporting feature. This will allow you to quickly review time spent on specific client and matters and then simply feed it into your time and billing system.
  • Mobile applications not only help lawyers to actualize all billable hours, they also make it possible to get back to clients right away. In this day and age, stellar customer service is one of the primary keys to client retention.
  • Go beyond the “normal” PDA applications and utilize the technology to the fullest extent. For example, some BlackBerry phones offer digital dictation, document review, work product retrieval, etc. This is another great use of down time while on the road.
  • Don’t be afraid to explore the firm’s existing technology. There may be compatible features that an attorney may not know about – these features can help save time and, of course, help to increase productivity.

    These are just a few small things the mobile attorney can implement to increase client satisfaction, make the best use of time and decrease slippage overall.

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Categories: Best Practices, Financial Management, Law firm billing, Practice Management, Technology, The Legal Market

Please send me my legal bill …. quickly!

By on October 17, 2010

Here’s a question for law firms … how fast should you bill your clients?

 The answer …. quickly, as soon as possible.

 No client looks forward to getting their monthly bill in the mail. However, if you are going to send me a bill this month I want it as early in the month as possible. Why? Because, businesses (unlike law firms operating on cash basis) must outright “expense” or “reserve” for this bill in the month they receive it. Well run businesses are running almost daily P&L’s and forecasting both expenses and cash flow on a continual basis throughout the month, quarter and year. So, why is this a problem? Law firms are poor at getting bills to their clients. The process is just slightly better than in the days of quill pens and the Pony Express.

 Here’s the process:

  1. Billing dept. announces the deadline for time entries, maybe the 2-4thday of the following month.
  2. Print and distribute the pre-bills.
  3. Attorneys review the pre-bill, mark it up with changes.
  4. Attorney dictates to the secretary a cover letter (firms think clients want a nice polite letter with their bills).
  5. Billing enters the bill changes.
  6. Print the final bills, stuff the envelopes, apply postage … you get the idea.

 It’s now the 28th of the month, and surprise …..  in the mail today is a whopping legal bill, far more than I expected. My forecast for this month’s profits just took an unexpected turn south and I only have a few days to recover and see if I can still make my forecast.

 Message from Corporate Clients to Law Firms: Get me my bill as early in the month as possible, it will help me plan my expenses much better.  BTW, law firms benefit from “fast billing”, you’ll get paid faster.



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Categories: Best Practices, Financial Management, Law firm billing, Productivity, Technology, The Legal Market
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