Overview

Key Performance Indicators (KPI)

• Need the key data to make objective decisions.
• What you measure, you reward. The opposite is often true.
• Attorney Working Fee Receipts, Client Origination Fees, Profit per Partner, Results to Budget to Prior Year, Department approx. Profits, Overhead over time, Comparable to ALA Survey.

Trust Accounting

• Quarterly 3-Way Bank Reconciliation is required by the Office of Disciplinary Counsel (ODC). 3-Way is Book – Bank Statement – Detailed Client Register
• Court Refunds rules, refunds clients, and funds to La Bar Foundation.

Tax Issues – Working with the firm’s CPAs

CRM & Financial System New Client intake process from 1st contact to long-term client records (more in Technology below).

Unconscious Cognitive Biases influence our decisions

• Anchoring – the tendency to hold on when data no longer supports it.
• Loss Aversion / Pain bias – Emphasis on the pain of losing is stronger than success.
• Endowment Effect – Feeling a higher quality than justified
• Overconfidence – not so big at law firms
• Confirmation Bias – favor opinions & facts that support yours
• Herd Behavior / Precedent – Others are doing this, so it must be correct
• Regency Bias – Favor events that occurred recently

How do you react to an event? Many times, what and how we present and act determines the outcome. Event + Reaction = Outcome.

Hiring & Retaining qualified attorneys and staff

• Compensation & benefits - Retaining / Motivating – Use the ALA Survey!!!
• Mercer reported U.S. Employers salary increased 3.6% in Q1 2024. But employee expectations are higher, not declining, and will move.
• The average health insurance is up 6.5% in 2023 to $8,435 / $23,968 for a family, with employees contributing 5.6% / 7.72% for a family.
• Be Strategic and deliberate to keep talent.

What do attorneys and staff want?

• Opportunities, growth / training, player in a successful firm, meaningful work, treated with respect, compensation and benefits.
• Remote work/work/life balance attorney requirements.
• Flex schedules are very important, particularly with younger attorneys. In Business, 3 days in the office every 5 days most popular.

Performance Review processes for attorneys, paralegals, and staff (many in the firm to complete reviews).

401K Trends & Fiduciary Responsibilities
Payroll Record keeping

Efficient Meeting – preset agenda distributed in advance. Start on time, every time.

Payroll System – cloud-based, auto deposits, employees access their data.

Recruiting: LinkedIn, In-Deed, Recruiters (they are canvassing your attorneys).

Automated switchboard?

Change Management. The rollout of too many technologies will overwhelm many.

Security – 2-factor Authentication, Authorized IP address verification

AI Research, writing reports and HR documents, creating forms like RFPs, and confidentiality of AI research.

Cloud vs. In-House

• Cost, Support, Accessibility (Remote Access system dangers), Back-up, and protection from bad actors.
• Staffing in-house or outside support

Vendors – your business partners

All-in-one solutions.

• Pros: integrated solutions so should work efficiently. Pricing is better than one-offs. Improved Training. The support group, likely the same for each sub-system.
• Cons: Generally not the best solution for all systems. Likely get more than you need or can implement.

Financial Reporting System: Is it efficient to teach how to use good support when problems, enough users for life expectancy, provide your unique firm needs, and integrate with G/L, payroll, banking, and other systems?

Document Management System: Big players for law firms - iManage & Net Documents.

Many others are embedded in packages like Caret, Clio, Centerbase, Orion, Tabs3, Zoho.

Client Relationship Management (CRM) tracks client important people events & who attended, often packaged with other systems. Centralized database. Simplifies collaboration & tracking.

• Case / Time Management is more important for plaintiff firms, as it involves many cases, adverse parties, and judicial districts.
• IT Audit/evaluation and Request for Proposal (RFP)

Path Dependency – We are Aim-based creatures, set on a non-altering path.

The Plan

• Understanding the firm culture should be discussed before setting a plan.
• Are the results, as planned, within the range of acceptability?
• If outside range / impactful deviation, are the consequences of deviation minor or catastrophic?
• Working as planned, but inefficiencies slowing the firm down? Look to system planning, training, and technologies.

Retirement Plans and Expertise (not legal but managerial): Managing Partner, Board, Executive / Management Committee members. Who are likely replacements in 1–5 years?

• Problem – anxiety over planning. Relegated to the back burner.
• The shortfall of potential Partners.
• Partner retirement/buyout plans
• Client & other transitions
• Mergers & Acquisitions
• New Partner Development, Criteria & buy-in plans
• Non-Equity Partners

• Use of in-house or outside PR and Advertising services
• Client Surveys

• Consideration of space requirements because of work/home policy