What Makes a Private Client Department Profitable?

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What Makes a Private Client Department Profitable?

• Peter Scott
• Peter Scott Consulting

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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 cant manage me.Im a big biller!

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Do own thing
Thats 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 Maisters Predictive package

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Put the squeeze on your business
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Achieving maximum profitability practical steps
to make a real difference
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• Analyse your business

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Profitability factors

• Work types
• Leverage
• Clients
• Pricing
• Chargeable hours
• Recovery rate
• Major overheads

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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 / Trusts
• Probate
• Charities
• Family
• Financial services
• Others ?

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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?

• The TRIPLE WHAMMIES -
• Under pricing
• Under recording
• Under recovering

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• PRICING

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Pricing

• For each person/work type/group/client
• Headline rates
• Local comparables/competitiveness
• Recovered rates
• Latest rate changes
• Value billing arrangements
• Fixed 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 earners
• X
• Hours
• X
• Hourly 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 time
• Units of recorded time
• Frequency of reporting
• Available time
• Recorded chargeable hours by person/group/firm
• Set Targets

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Non - chargeable time

• Set maximum allowances depending on roles /
  responsibilities
• Stop use of unspecified and other codes
• Review excessive non chargeable time

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• Recovery rate

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Recovery rate

• Every 1 on your 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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If

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

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By reducing

• Under-pricing
• Under-recording
• Under- recovering
• how much more profit would you make?

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Put the squeeze on your business
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What are you going to take away from today
and do something about?An action plan?