I hope you have set your goals for 2019 and have held a meeting with your team to discuss these goals. If you haven’t, how will you define success in your practice this year? How will your team know if they are helping you achieve your dream (believe it or not, most employees do want to know, and they do want to help)? If you haven’t set your goals, don’t worry, it’s not too late.
Often, lawyers will hesitate to set their goals because they are overwhelmed by the task. Hopefully, this article can help you get started. Let’s start with a simple question: How much money do you need to take home next year? Make the number realistic. Sure, we’d all like to double or triple what we took home last year, but you must ask yourself if that is realistic. Setting unrealistic goals is almost as bad as having no goals. This number will be your realistic profit number.
You will also need to have a copy of your 2018 Year End P & L Statement (if it’s not ready, you can utilize your November Year to Date copy –just remember to multiply the expense columns out to include 12 months of expenses).
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Now, look at your 2018 Year End Firm’s Profit & Loss statement. Find the line item for TOTAL EXPENSES. Remove any salaries paid to you (as that is technically profit) to determine the amount of money you need to make to cover basic operating expenses for your firm. If you anticipate increasing or decreasing this number (again, be honest and realistic with yourself) make that adjustment at this time to achieve your 2019 operating expense number.
Next, add your realistic profit number together with your 2019 operating expense number. Congratulations. You’ve just set your first goal, your revenue goal, for 2019.
With your revenue goal now set, you should ask yourself if this is a realistic number. You can determine the validity of the number by reviewing your current inventory and your firm’s revenue performing history.
Ask yourself these questions:
1. Did my inventory grow or shrink?
2. Will my team be able to resolve the same number or more cases in 2019?
3. Do I anticipate my average fee remaining the same, growing or shrinking?
You will also need to know your average fee.
As a side note: Some firms get hung up on their average fee and give up on setting their goals.
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Here are the instructions to follow to do a simple calculation on the average fee: Take the revenue generated and divide it by the total number of cases disbursed that brought your firm this amount of revenue. (If you have multiple practice areas with different average fees, you will want to divide the average fee of each practice area into the revenue produced by that practice area and establish a sign-up goal for each practice area.) There are ways to get much more detailed on your average fee calculation, but this is a simple review and is enough to help you get started setting your goals.
You are almost there. Don’t give up! After determining your revenue goal, you should set your intake goals. There are many goals within the intake department on an individual level, but that’s not what we are doing in this exercise. Stay with me, we are only setting your Intake Goal for your signed cases in 2019. While this seems simple, many firms do not pay attention to this process nor feel the need to set this goal for the firm. I would argue this is an extremely important aspect of your goal setting process. Your firm must have a steady stream of new business to produce the revenue you need to generate to ensure you have the profit you need to take home! To calculate your intake goal, you should divide your revenue goal by your average fee.
This will give you the number of signed contracts your firm will need to retain to reach your revenue goal.
With these three goals, you can begin to forge a path of operational decisions from marketing to expenditures and everything in between to ensure your firm achieves the profitability you are hoping for in 2019. Remember, you are working with a team that wants to help you achieve your goals. The best way for them to help you is for you to share with them how their work can help the firm meet the vision for 2019. I realize not all lawyers are comfortable sharing their profit goal or their revenue goals and that is okay. If you are not going to share the profit vision for the year, you will need to drill down to goals they can focus on that will organically help your firm achieve the revenue goal. Such as:
• Number of demands mailed per month
• Number of cases settled per month
• Average fee goal
• Time on Desk goal
Whatever goals you decide to set, make sure they are SMART (specific, measurable, attainable, realistic and timely) Goals. In other words, do not ask your intake team to reach 200 sign-ups per month and then refuse to spend any money on advertising.
I’ll leave you with a reminder to find a good book and read it! My favorite book to re-read every January is Mastering the Rockefeller Habits. It’s a great reminder of all the principles to follow to have a successful business.
