Profitable law practice
Here are some good tips from Attorney Paul Sullivan, vice chair of the ISBA Committee on Law Office Management and Economics, regarding the management of a law practice. He notes five essential components or RULES: Realization, Utilization, Leverage, Expense Control, and Speed of Billing and Collection.
Realization - the amount of dollars that are actually collected as a percentage of the dollar value of time billed. Low realization typically occurs from billable time being written off or bills being written off because the client didn't pay. This should be analyzed from various perspectives such as by client, by individual matter, and by attorney.
Utilization - simply the productivity of each timekeeper relative to the amount of hours each can bill in a particular period.
Leverage - the ratio of non-owner timekeepers to owner timekeepers. All timekeepers should be making contributions to overhead in excess of their direct costs.
Expense Control - the exercise of monitoring expenses and then taking necessary action...budgeting in short.
Speed of Billing and Collection of accounts receivable.
How's everyone doing? As a sole practitioner I feal like realization and utilization are my current challenges due to heavy administrative duties currently. As I head into 2006 one of my main resolutions is to add another employee and move more and more non-legal work off my plate.