How an LPM System Can Improve Productivity and Profitability

  • March 05, 2020

To use a law practice management system, or not to use one, should no longer be the question.  If it still is, hopefully the good advice from your colleagues in this newsletter will convince you that you should be using an LPM.  The focus of this article is how an LPM can help you enhance your productivity and profitability. 

Integration of Work:   The idea of integration is what separated the iPhone from its competitors early on.  The seamless integration of all the various apps in one place made for an intuitive user experience.  The ability to integrate the different systems you have for time, money, billing and other administrative work into one, where the constituent parts speak to each other and you can easily move between them, will naturally enhance your productivity.  Adding or incorporating substantive work elements such as word processing, research, document management, communication, etc., into the same LPM will exponentially improve productivity. Cost, complexity, training time and suitability for your practice must all be considered, but the benefits are there for even the most reluctant lawyer.   

Utilization:  Our last article referred to the CLIO Legal Trends Report, which is published every year, available for free, and addresses a number of issues that are central to lawyer and law firm profitability and effectiveness:  utilization, realization and collection.  Realization-the number of billable hours that are billed, and collection- the percentage of billed hours lawyers are paid for, are both high percentages.  The eye-popping number is utilization- one that suggests lawyers spend about 2.5 hours out of their average day on billable work.  This seems too low- except that Clio’s number is based on thousands of lawyer inputs.  There must be something to it.  And what does that have to do with LPM solutions? 

The Starting Point is Data:  Increasing productivity and profitability starts with knowing what you are doing.  An LPM helps you to keep track of your practice in one place, that is not your head.  As your practice expands, your file numbers increase, and you start working with others, it becomes impossible to effectively keep track of most of it without a central system.  

Billable and Non-billable Time:  Let’s start with what you are doing now.  Obviously, before you can bill, you need to know the time you have spent on the file (unless you have moved away from time-billing).  An LPM allows you to accurately track the time on each file, aggregate the data on many files, and include the data from others working on the files, all in one place.

But that’s just the start.  What are you spending your non-billable time on?  It takes discipline to continuously record anything.  Recording time that will never be billed usually takes even more discipline as there seems to be little incentive to do so.  Does the time support a file?  Is it running the office, dealing with staff, etc?  Are you doing promotional work? 

Careful:  Ideally, this would be done for staff whose time is rarely or never billed.  However, you need to be careful about this.  It must not be seen as ‘checking up’ or watching your employees or colleagues.  Some thought as to the why you are doing this, how the information will be used, and how this will be communicated with all who will be affected is important before you start.   

Why in the Cloud?  The Cloud allows data to be inputted from anywhere.  Whether you are working from the office, home, court, or waiting for an out of office meeting, ease of collection will give you a more accurate picture.  As working habits change, offices become more mobile, and people work from different places at different times, system mobility becomes increasingly important. 

Facts/Trends:  Aggregating the data, knowing the facts and identifying the trends give you the insights you need to make decisions about how to do your work more effectively.  What are you doing (versus what you thought you were doing)?  Which files take up the time? Who does what work on a file?   Are you being paid for all of the time? 

Profitability/Decisions:   This all leads to one thing-knowing your business.  The more data you have, the better you will know your business.  The more you know, the better informed your decisions will be, and the more productive and profitable your practice will be.  You can develop a cost of service provided for the various services you offer by incorporating all of the time and effort spent delivering the service, and not just your time.   You might find that the service you thought was the most profitable is, in fact, less so. 

Could certain tasks be done differently?  Should you reallocate your time and effort to the types of files that will pay you better?  Maybe you should stop doing certain work entirely, or shift your emphasis to other work.    Or you can bill differently, remembering that this is a conversation that should happen with the client at the retainer stage, not the billing stage.

Could other software applications help?  One of the attractions of LPM systems is the integration some of them have with many additional software applications.  These give lawyers the ability to utilize tools they might not have been able to integrate into their practice.  You can try many, but probably better to focus on a few.  Dare we say it, but you could also change your work habits so that you have more days free from work. 

LPM systems provide a good foundation for a more productive and profitable practice.

Chris Bentley and Hersh Perlis
Legal Innovation Zone

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