Solo and Small Law Firms – Where is the Revenue?

The story may be familiar, but it has to be told so all can learn from it.

One or two attorneys decided to leave the Big Firm and start they own. The registration, preparing the Article of Incorporation and such is just a piece of cake. Then the Clients and cases show up on the horizon and the need to generate more and more business to grow. Incredible hours are put into cases to make the Clients happy and the practice run.

Somehow the cash situation does not feel like being in line with the amount of work done. Something is off. Looking at the heart of the matter, you may see the following issues:
• Working on a client matter without a fully executed contract
• Not invoicing the Client for a long time, then when invoiced, you realize that the contract is not executed; or if executed, due to the long delay of invoicing the Client is renegotiating the due balance
• No proper timesheets showing your time on cases
• You pay all your bills but not invoicing for revenues

The “excuse” is usually something like “Between cases and lead generation, I don’t have time to deal with administrative matters.” Sounds familiar?

The consequences of not taking care of bookkeeping, tax, payroll, invoicing, appropriate web site updates are that you are working a lot but not gaining much. Also, if your bookkeeping and accounting is lagging behind, how can taxes, invoicing or proposal estimating be completed in a timely and precise matter?

Time is what we sell – no question about it. An attorney with a busy schedule and lot of competing priorities (including lead generation) can’t spend hours every week with business administration. But being busy and successful with your clients’ cases should not cost you – it should earn you more.

So, what advice can be given to someone in this situation? When you work a lot, assume you earn accordingly, but you don’t because you can’t do it all? Why should you do it all?

Go to those working with small law firms. They are also professionals – of a different field. Be honest and state where you need assistance. The sooner you do it, the sooner your firm will be up to date and profitable again. It is not only about your bottom line – it is also about your peace of mind.

My name is Sylvia Pacher, managing director for the Virtual Corporate Services team, and I invite you to discover what a virtual corporate service group can take off of your shoulder to make you more billable, profitable, and probably happier because you can focus on what you do best. We can do everything else. Please let me know if you have questions – I am always here to assist you with making your business grow bigger, stronger, more profitable and competitive. Please email me personally: spacher@myvirtualcorporate.com

Organizational Changes for Increased Competitiveness

Those of you responding to RFPs, getting business by winning government grants and contracts learn a new rule. In the past, cost was not a determining factor to win a contract. If you could deliver exceptional results, you could have been funded regardless the fact that your proposal might not have been the cheapest. Now, you are competing with your cost proposals as well.

Discussions on necessary changes to make you more competitive for current and future work with local, regional and the federal government are must-haves. Let’s take a quick look at what the major discussion items are for these purposes:

Your direct cost (labor hour in particular) is the biggest item on your proposal. Comparing pay ranges to your competitors on the marketplace would be able to pinpoint a very telling issue you need to look into. If your employees are making 5-10-15% more than your competitors, you need to look into it.

Changes to fringe benefits could be very sensitive. Fringes include paid time-off, holidays, insurance payments such as health, dental, vision, long- and short-term disability. Also, employer taxes, 401K or other retirement plans are included in this pool. Employees are usually most sensitive to changes to insurance benefits. You may be able to change the carry-over limits, or change the vacation-sick leave ratio with positive impact to your bottom line but without major disagreement of your workforce. However, it may not be enough.

It is important to understand why fringes are as imperative to look at as it can be. In terms of government billing (and proposal preparation), direct labor equal the hourly rate of the employee times your fringe rate! So if you are working on a cost reimbursable proposal it is imperative to be sensitive to this matter. The below example demonstrates what it means:

Joe, a manager, is proposed on the upcoming grant application. He makes $50/hour. The company’s fringe rate is 30%. Putting all these together, the direct labor cost for the funding agency to have Joe working on the job is $65/hour. ($50 x 1.3 = $65)

You need to ask yourself the question: Is it my employee’s hourly rate or my company’s fringe rate that makes me less competitive? Or maybe both?

When it comes to overhead and G&A costs, your office space and “corporate officers” come to mind. Reducing office space needs could be achieved by being creative when offering telecommuting schedules. With the Cloud being available from everywhere, it is much more a question of finding positions that could telecommute.

The cost of a traditional corporate office is a very different question. Every business needs to look into options to outsource accounting, bookkeeping, HR, web issues and related matters. Need to look at the costs, risks and benefits. With the today technological advancements in virtual services, it may offer significant savings increasing the company’s competitiveness.

Remember, staying competitive and profitable in the today’s marketplace requires old-school and new-bee leaders to look into options that may first look overachieving or out of your comfort zone. It makes business sense to see how even small changes could increase your competitive edge when it comes to cost.

My name is Sylvia Pacher and I am always here to assist your company with strategic advice and recommendations on how to make your company more competitive and profitable in the today’s marketplace. Please feel free to reach out to me personally to discuss your special needs and challenges (spacher@myvirtualcorporate.com).

Getting back to business and rebuilding a dream – after Hurricane Sandy swept it away

Can you imagine yourself owning your business in the NY-NJ shore swept away by Hurricane Sandy? Not only the physical location of the business is gone, but all your books and records, contract files, vendor and client information. How can you continue your business? Can you at all?
Any business can find a new location to open an office. But how would you find your vendor information? How can one reconstruct a business when all books and records are stored on a computer located in a building that no longer exists? How can you file an insurance claim without a support of accounting records?

How many of such businesses exist? A lot. How many of them gave up and feels hopeless to rebuild what is gone – a lot of them. If lucky, the insurance company would cover some of the lost business income or similar expenses, but it can’t really help you get back to where you were.

Well, a well-versed accountant can make a difference. A big one. Using publicly available records, your business records can be reconstructed in a short period of time, your books and records can be rebuilt. You can have access to accurate books and records, vendor and client information. You probably lose the latest open timesheets you recording your most recent work, but you can get back to work, reach out to your clients, pick up the business where you left off.

When it comes to use the money you received from the insurance company, probably the best use of it is to invest it into yourself and your business – to get back to business, full-swing, sooner rather than later. You must turn some profit again, make a living. You earned it with years of hard work.

Possible?

Yes, it is possible.

And if you still believe in your business and want it (and what it had to offer you) back, please reach out to me. My name is Sylvia Pacher, I am always here for a free consultation to see how I can help you get back on your feet and back to business. Please do not hesitate to email me personally to schedule a free consultation or to forward my contact information to anyone who could benefit from it (spacher@myvirtualcorporate.com).