What Makes a Private Client Department Profitable? Peter Scott Peter Scott Consulting

What Makes a Private Client Department Profitable?

Peter ScottPeter Scott Consulting

PETER SCOTT CONSULTING

Flabby law firms are failing

To drive up revenue

To drive down costs


Margins are being squeezed


Who feels like this?


Make the most of what you have

Work smarter, not harder


Your partners

Their performance

Their behaviour


“Heavyweight gorilla”

“You can’t manage me.

I’m a big biller!”


“Do own thing”“That’s a great idea… …for the rest of you”


“Winding down”“Ahh….only 5 more years to go”


Accountability

“We have no room for those who put their own personal agenda ahead of the interests of the clients or the office”

David Maister’s “Predictive package”


Put the squeeze on your business

Achieving maximum profitability – practical steps to make a real

difference


Analyse your business


Work types LeverageClientsPricingChargeable hoursRecovery rate Major overheads

Profitability factors


Overheads

Cost of: - people - premises - P I - I T

ZBB


Profitability – finding solutions

Focus on :

building the top line


Work types

Tax planning / Wills / TrustsProbate CharitiesFamilyFinancial servicesOthers ?


Work your ‘Wills Bank’

How many wills are you holding?


Work types

Each work type as a % of overall turnover?Net profit per equity partner for each work type/group?


Leverage

For each work type /group

Net profit per equity partner?Number of fee earners (including partners)?Age/qualification of each fee earner

(including partners)?Delegation?


Clients

% of turnover represented by top 10% / 20% of clients (by billing value)? Ditto for bottom 10% / 20%? Net profit derived from each of above categories as a % of total?


Who is never guilty of the ‘Triple Whammies’?‘Triple Whammies’?

The TRIPLE WHAMMIES -Under pricingUnder recordingUnder recovering


PRICING


Pricing

For each person/work type/group/client

Headline ratesLocal comparables/competitivenessRecovered rates Latest rate changesValue billing arrangementsFixed fee work


RECORDING CHARGEABLE TIME


‘Why should I fully record all my chargeable time?’


Time is a MANAGEMENT TOOL


1. Meeting your targets

‘I can meet my billing target but without having to work any harder’

How?


2. Budgeting for revenue

Fee earnersXHoursXHourly rate


3. Are we ‘on budget’?

Recording chargeable time enables us to compare performance with budget


4. How to estimate a fee?

‘How much will this cost me?’


5. Are we working profitably?

How do we know we are profitable if we do not know how much our work is costing the firm to do?


How easy is it for you to record time?

Do you need training?


Recorded chargeable hours

Methods of recording timeUnits of recorded timeFrequency of reportingAvailable timeRecorded chargeable hours by person/group/firmSet Targets


Non - chargeable time

Set maximum allowances depending on roles / responsibilitiesStop use of “unspecified” and “other” codesReview excessive non – chargeable time


Recovery rate


Every 1% on your recovery rate = ?

Recovery rate


Write off policy

How much do you write off each year?Introduce a write off policy eg:

- all time to be w/o more than £500 or 5% of recorded time whichever is the higher has to be approved by managing partner


you halve the amount you write off, by how much will your annual profits increase?

If…


By reducing …

Under-pricing Under-recordingUnder- recovering

how much more profit would

you make?


Put the squeeze on your business

What are you going to take away from today and do something

about?

An action plan?

Documents

What Makes a Private Client Department Profitable? Peter Scott Peter Scott Consulting