Law Firm Financial Leaders on Reducing Profit Leakage

Zach Rausch, Director of Financial Planning & Analysis at Fisher Phillips, and David Rueff, Chief Practice Group Solutions Officer at Baker Donelson, discuss how they reduced areas of profit leakage to better the financial health of their firms

Zach: As far as what we've identified, issues within our firm, it's really going back to those self-inflicted problems. Where are the write downs beginning? Right. I mean, is the associate writing down time before even gets to the billing attorney? We're getting a lot of discounts off of standard. And again, you're seeing that standard rate's linear progression, but you're seeing that worked right in that build rate not necessarily follow because of the write downs that seem to be increasing as standard rates increase six 7%, year over year.

So that's been a big key focus for us - what are we writing off, writing down off of standard? And then how are those write downs occurring. Again, educating our associates not to be bashful with the time that they enter because even if they are entering too much time, that becomes an education opportunity for the billing attorney that he or she may not otherwise know, unless it gets to them.

So those are some issues we have identified. And again, working through education, using data using dashboards to tell a story, look historically at what has happened. And, again, model what should or could happen. And so that's where my team has been, I think, provided some value in showing this history, but good, better best scenarios, and then going to care monitor, going to market surveys and saying, Where would this put us? Are we still a laggard? What do we need to do to become a leader in this area? So those are two key areas we've been focusing on.

David: In order to tackle write downs, and write offs it's all about communication and I think the data and tracking that helps you identify problems before they get out of hand. But there also needs to be some education training on both from a lead lawyer on communicating to the team what's expected, and then also to the team about what the clients requirements are in those billing guidelines.

And we're starting to see technology that can deploy that is going to help us capture some of those things as the time is entered. But you know, I think there's also a need here, and we do this, when we diagnose a client or an engagement that has heavy heavy write down, some write offs, will actually come in and do training to help the lawyers understand and the team understand, you know, what the client's requirements are.

I think there's also, Zack was talking about the data and how important that is, I think that's exactly right. But one of the things that we found years ago was that, you know, the write down codes, the write off codes, were not helping us be able to identify or get to the root cause of the problem or write down so that we could actually put a solution in place. Same thing with write off codes. So we did an overhaul of those codes couple years ago, to help us be able to flag better on the front end. What is the cause? What's the root cause of that write down? How can we, you know, remedy that same thing for write offs?

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