The Key to More Net Income

Increasing gross doesn't necessarily mean increasing rates, but rather setting competitive rates. It also means

• developing a realistic financial plan of income and expenses on a short- and long-term basis so that decisions can be made on the prospect of future owner or shareholder earning levels.
• having a financial management system that allows for timely and accurate time accumulation that permits prompt reporting and billing to clients.
• billing clients currently and establishing procedures for prompt collection to reduce write-offs.   
• letting the work flow to the lowest level within the firm that can perform it satisfactorily and economically so that a $150 per hour shareholder isn't doing a $75 per hour project.
• better and more effective use of legal assistants and other nonlawyer personnel to free lawyers to perform more important and perhaps more profitable work, including many other functions required for a successful firm, such as marketing and management.

Obviously, increasing gross income is more than simply increasing rates. It's establishing a management system so the work flow produces the most profitable result. The process must have the flexibility to make the necessary adjustments as conditions change during the year.

From Results-Oriented Financial Management:
A Step-by-Step Guide to Law Firm Profitability, Second Edition
by John G. Iezzi, CPA
Law Practice Management Section

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