PPC in 30 Days, Day 2: Setting Financial Targets and Advertising Budgets

Tue, 28 Feb 2012 10:34:01 GMT

Budgeting a PPC (pay-per-click) campaign should be your first step after you set your goals. When you set up a budget, you should attempt to balance best-case desires and worst-case possibilities. No budget is guaranteed and resources that are allocated to a particular strategy may not generate additional revenue. The Internet is a powerful marketing tool, but there is also a level of saturation. Therefore, companies cannot simply build a website and then sit back and wait for the sales to come rolling in. [...]

Accounts receivable and Pipeline: Case study

Sun, 17 Jul 2011 22:31:07 GMT

At a recent presentation on our Road to Revenue National Tour, a young lawyer was concerned. She said that she has a new practice and has been successful in keeping her accounts receivable to a minimum. In other words, she has been able to work, bill and get paid quickly, the three elements of my 3Dimensional Lawyer® . Her concern, though, is that her pipeline for new business seems to be empty. She is concerned that prompt payment has an impact on additional work to be lined up for her to do.

In order of priority, one needs to get the work … marketing. Then, one must do the work. Production. Next, one needs to get paid. Finance. These are the three legs of the stool. The successful lawyer/law firm must focus on collections. Less than a 90% realization/collection rate is a symbol of future trouble.

In this lawyer’s situation, she is successful in the collection phase. In fact, it’s difficult to imagine a higher success rate when you have little to no accounts receivable.

The focus, then, needs to be on marketing, getting more work to fill the pipeline. These are separate and distinct issues. Relish in your success collecting your billings and address the marketing to attract more clients.

Single Claimant QSF: Plaintiff Cannot Compel Defendant and Insurer to Pay Into QSF Says Florida Court

structures@aol.com (John D. Darer) — Mon, 04 Jul 2011 05:58:18 GMT

A plaintiff cannot compel a Defendant or its Insurer to pay settlement proceeds into a Qualified Settlement Fund involving a single plaintiff says a Florida Court Order dated June 2, 2011. In the...

This is a content summary only. Please click on the title for the full content, If you find yourself on FAEMM community, back out and type in www. structuredsettlements.typepad.com

Managing Partners are few and far between

Sat, 25 Jun 2011 20:03:47 GMT

Bob Denney says "... “70% of the managing partners [or CEOs] do not have a job description and most partners do not know what their MP does. In addition, in firms of more than 100 lawyers, only 10% have full-time managing partners.”

No wonder that in 1995, the USPO concurred with me that "The Business of Law" was a unique phrase and granted my request for a registered mark. Major law firms still, as Denny confirms, require that "managing partners" maintain a full client load of billable time. There may be some concessions, but by and large, they are evaluated on their client production rather than their effectiveness in keeping the firm together and moving forward.

I think of the analogy with Lee Iococca. Though he was given credit for designing and producing the Mustang, he could no longer perform the design or product management functions in his position as CEO and later Chairman of Chrysler. How is it that law firms believe the managing partner (CEO) of a multi-million dollar professional service organization can do more than an industry giant?

Will The Bankruptcy Trustee Take My Tax Refund?

Wed, 02 Feb 2011 02:24:50 GMT

A common question I get this time of year is whether the trustee will take the debtor’s tax refund if he files for bankruptcy. The answer depends upon many factors. The Trustee has a duty to administer non exempt assets if those assets are worthy of administration. For a tax refund to be worthy of administration the [...]

A common question I get this time of year is whether the trustee will take the debtor’s tax refund if he files for bankruptcy. The answer depends upon many factors.

The Trustee has a duty to administer non exempt assets if those assets are worthy of administration. For a tax refund to be worthy of administration the refund must be large enough to justify the time and effort to take and distribute the money to unsecured creditors.

If the debtor can wait to file his bankruptcy, then often the simplest solution to the problem is to have him file his return and then receive and use the refund.

However, this is not always possible.

If the debtor is having his wages garnished or a garnishment is scheduled to begin, it may be necessary to file before a refund can be received. Timing issues will also occur if a house is in foreclosure, or a car is about to be repossessed.

If the debtor cannot wait for whatever reason, the following factors will determine whether the refund will be taken:

As previously discussed, is the amount of the refund worthy of administration? This is an issue of local practice and will often vary from court to court.
Is any portion of the refund for Earned Income Credit? Some states have specifically exempted Earned Income Credit. It is necessary to check state law on this issue. In Louisiana, where I practice, Earned Income Credit is specifically exempt, so a debtor with Earned Income Credit keeps it.
Does your State have a “Wild Card” or “Cash” exemption? Some states allow a certain amount of cash to be treated as exempt from creditors, other states have what is refereed to as a wild card exemption that will allow a debtor to exempt an item that is otherwise not exempt. Louisiana has no such exemptions.

As can be seen the timing of a bankruptcy when a tax refund is expected depends on many factors. Local practice and State law being the major considerations.

Consult an experienced bankruptcy attorney.

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Value billing in health care: Back to the future for law?

Mon, 15 Nov 2010 13:06:23 GMT

Insurance companies hire lawyers as in-house counsel at reduced (wholesale) rates, pay lawyers in accordance with insurance policies for their insureds, and otherwise have a dramatic influence over the billing practices in the legal community. Wasn’t it insurance companies in or about the 1960s that demanded lawyers submit bills that showed the time expended in matters for which they pay? And then, as a consequence, lawyers began using time increments as a basis for pricing, not just as a management tool. Before then, lawyers based their fees on the value received by the client.

Perhaps the insurance industry will, once again, have a dramatic impact on the legal profession, but indirectly this time. In Rhode Island, it’s reported that the Lifespan hospital group and Blue Cross have reached an agreement intended to overturn the way hospital care is financed. The goal is to promote and pay for health (value) rather than episodes (hourly) of treatment. Currently, when you go to a hospital, you pay (and the insurance company reimburses or pays directly) for your stay in the hospital, for tests performed and surgeries and related care. Does this remind you of the hourly bill that lawyers produce monthly (hopefully no less frequently?.

The agreement is the first to meet Rhode Island's unique rules concerning health insurance policies and their premiums. Blue Cross, the largest health plan in the state, and Lifespan, the largest provider in the state, have agreed in principle (details yet to be worked out). The program will provide for fixed fees (alternative, or value, billing) for given procedures, thus discouraging tests and procedures that might not be needed – but usually performed because of insurance payments or attempts to make sure “no stone is unturned” in the treatment. Does this sound familiar? Performing more discovery than needed just to make sure “no stone is unturned” and to avoid an accusation of malpractice for failure to uncover the hidden evidence.

The hospital will be eligible for bonus payments when they meet as yet to be determined quality standards. Again, does this sound familiar? Bonus payments for faster resolution of the litigation, payment for results below the insurance company’s reserve or other standards determined by the parties. Almost sounds like a sport’s figure’s bonus payments when playing more games or hitting more home runs, etc. than set forth as minimums in the contract.

Increased and more effective communications and streamlining payment processes to increase the hospitals cash flow are also part of the agreement. Again, does this sound familiar? When lawyers have effective communications in place, it is seldom that the client is upset with the lawyer and it is seldom the client refuses to pay in accord with the engagement agreement, thus increasing realization rates for the lawyer.

Tying payment to quality care is available elsewhere, but to a modest extent and never before to an entire state. The insurance commissioner in Rhode Island is mandating change in connection with premium rate reviews. As they say elsewhere, “follow the money.” In this case, when customers demand change, suppliers change. Here, the review process for payment of insurance premiums and health care will change, not overnight, but quite assuredly ... only because the customer (or regulator) demands the change. When will clients of lawyers finally say “enough is enough” and demand change? Until then, lawyers are not likely to alter current billing practices

Loan modification -- Interview lawyers handling this practice area

Wed, 10 Nov 2010 20:06:19 GMT

I'm seeking to connect with lawyer(s) who either did or are currently doing loan refinance work for homeowners. In some states, the bar and/or legislature has created regulations preventing lawyers from taking money from clients for this work in advance of completing the work.

I've written about this and now have a major newspaper interested in talking with such lawyers to inquire whether such work is still available and how the lawyer is handling the fee.

Please contact me directly at edpoll@lawbiz.com

Thanks.

Treasury Issues Guidance on Applications for Grants in Lieu of the ITC and the PTC

whholmes@stoel.com (William H. Holmes) — Fri, 10 Jul 2009 04:34:05 GMT

The American Recovery and Reinvestment Act of 2009 (ARRA), which was enacted in February, permits an applicant to receive a grant from Treasury in lieu of claiming investment tax credits (ITCs) or production tax credits (PTCs).

Today the U.S. Treasury Department issued much-anticipated guidance concerning applications to receive cash grants in lieu of claiming income tax credits for certain renewable energy projects. Although the guidance includes a sample application form, the U.S. Treasury has stated that it will not accept applications until August 1.

Click here to read the full analysis on this guidance including grant details, eligibility and the application process at www.stoel.com.

If you have questions about today's Treasury Department guidance and grants in lieu of ITCs or PTCs, contact:

Chris Heuer at (503... or ckheuer@stoel.com
Greg Jenner at (612... or gfjenner@stoel.com
Carl Lewis at (206) 3... or cslewis@stoel.com
Kevin Pearson at (5... or ktpearson@stoel.com
Adam Kobos at (50... or ackobos@stoel.com

Is Cash King For You?

auscher@uqur.com (Michael Quiat) — Tue, 09 Jun 2009 21:41:56 GMT

With financial earnings in the dumps and prospects for an early recovery dim, insurance companies with disability income and other long-term payouts on their books are on the prowl for claimants who need cash NOW!

Disability insurers know that many of their beneficiaries are having trouble making mortgage payments, meeting college tuitions or just plain paying their bills in this severe economic turndown.

With long term disability beneficiaries in a stressed and highly vulnerable mode, having lost a good part of their incomes and retirement packages in the stock market meltdown, what better time to dangle a relatively large lump sum of cash in front of the insured?

Policy and settlement buyouts are complex issues and broad experience in successfully negotiating such deals is critical. Insurers like nothing better than dealing with a novice in buyout negotiations, especially if the novice needs the money and allows personal involvement determine the outcome.

How tempting for a beneficiary to grab a lump sum now and not worry about the long term consequences.

Issues which must be carefully considered for the beneficiary are:

* Understanding the true value of the claim.
* Family circumstances and needs.
* Are there other investments or incomes (i.e., annuities? pensions? SSDI?) which will replace the settled-away insurance benefits for the family?
* In view of the nature of the disability, what is the likelihood of the beneficiary living to the end of the benefit term? These benefits usually end at death.
* In view of the nature of the disability, what is the likelihood of the beneficiary recovering the ability to resume work before the end of the benefit period? Ability to resume occupation as described in the policy would terminate DI benefit payments.

To try to answer some of these thorny questions, a knowledgeable, experienced, not-personally-involved, adviser in the beneficiary’s corner is a must.

no more cash, please

Thu, 28 May 2009 14:47:28 GMT

Interesting opinion piece in Wired about the disadvantages of cash - as in dollar bills and coins - and the general (albeit slow) trend of economies to move towards electronic forms of payment. It certainly makes sense, I think. Not only is cash inconvenient, but, as the article points out, it’s costly and not particularly [...]

The cost to taxpayers [in the US] in 2008 alone was $848 million, more than two-thirds of which was spent minting coins that many people regard as a nuisance. (The process also used up more than 14,823 tons of zinc, 23,879 tons of copper, and 2,514 tons of nickel.)

It strikes me as odd that e-payment devices had not gained much traction in North America. More specifically, devices that can be used in place of cash, without the hassle of credit card signatures or entering PINs for debit cards. Elsewhere in the world such devices seem to have been taken up quite rapidly. For example, in Hong Kong, the Octopus card, a contactless, stored value card originally designed as a payment mechanism for the Hong Kong subway system, has been a roaring success. Use of such cards has now expanded to stores, restaurants - even parking meters and vending machines. Similarly, I remember seeing a Coke machine in Singapore where one could buy a brink by dialing a short number and thinking, how cool is that? FTA:

“The cell phone is the best point-of-sale terminal ever,” says Mark Pickens, a microfinance analyst with the Consultative Group to Assist the Poor. Mobile phone penetration is 50 percent worldwide, and mobile money programs already enable millions of people to receive money from or “flash” it to other people, banks, and merchants. An added convenience is that cell phones can easily calculate exchange rates among the myriad currencies at play in our world.

In contrast, cash replacement systems in North America don’t seem to be faring all too well. I remember a few years back when Dexit made its debut in Toronto. It was a stored value chip that you could carry on your keychain and swipe to make payments. You could reload it easily through a website. Fees were quite reasonable. And it seemed to work quite well. I was quite a fan. That is, until Dexit was restructured in 2006 and more or less all the terminals at stores disappeared.

One survey has found that there is some resistance from consumers to the idea of using mobile phones, due primarily to security and identity theft concerns. Certainly an issue, but one I would have thought would be no more risky than the use of credit cards, e-commerce sites or even venturing on-line with a PC. I know this is a bit of a simplistic comparison, and that there are significant complexities involved in electronic security, particularly when it involves money, but I would have thought that both the development of a secure platform as well as the ability to properly market such a platform to consumers would not be beyond the capabilities of companies who have, for example, developed highly secure mobile e-mail devices, or set up nationwide, sophisticated 3G cell networks, particularly given the potentially lucrative market for such a service which as yet seems to be relatively free from much in the way of serious competition - at least here in North America.

In the meantime, I guess it’s off to the ATM again.

t3ch bl@vvg

Enterprise Finance Guarantee (EFG) & Personal Guarantees

juliandobbin@mercerhole.co.uk (Julian Dobbin) — Fri, 20 Mar 2009 10:11:39 GMT

There is much confusion over the requirement for guarantees under the Enterprise Finance Guarantee (EFG) scheme. The Bank must be satisfied that all available personal assets have been pledged, before lending under the EFG scheme. However it is at the...

The End of Lawyers?

edpoll@lawbiz.com (Ed Poll) — Sat, 07 Mar 2009 05:32:16 GMT

Richard Susskind has written a book suggesting that lawyers may become obsolete unless we make some dramatic changes.

I see nothing unusual about his conclusion … that legal work will be unbundled and that the work that is more mundane and routine will be systematized and perhaps even automated. Technology advances provide us with opportunities that didn’t exist before. We can, today, create better product for less money. Technology is only one aspect. Globalization is another. And this isn’t just for the large law firms. A client of mine, in Texas, opened an office in India for the specific purpose of document review and document production – it’s done for less money more quickly … And he can get a faster turnaround because of the time difference.

Law is slow coming to this process. My background is in manufacturing. I’ve owned and operated several companies. In order to retain prices, not to increase prices, we would do everything we could to automate. When automation, reducing the amount of labor costs, would go no further, we reduced the size of the container. For example, we would go from 32 oz to a 22 oz jar or a 10 gal. container to a 5 gal. container.

When we have time of challenge as we do now or changes in our economy and culture, we have the opportunity to innovate for improvements in products and services. We have the opportunity to create new demand. I see this beginning to happen in our parts of our economy. It will have to happen in the legal profession, nay the legal business (The Business of Law®), if we are to continue to serve our public as we know.

Without credit, we won't get out of our morass

edpoll@lawbiz.com (Ed Poll) — Fri, 27 Feb 2009 02:43:05 GMT

Our economy is in the doldrums ... or better said, we're experiencing a depression. Signs abound. From unemployment exceeding 10% and more in some areas, to now thousands of lawyers and staff terminated from the large firms. Who knows how many more there are in small firms ...

One large firm managing partner cited an even more frightening fact: Many lawyers have been given generous severance packages in order to obtain liability waivers/releases and to keep the goodwill of those departing. In other words, they won't feel the impact for 6 to 12 months after leaving. We will see a ripple effect. As bad as it is now, it will get worse .... Unless the federal government is able to pull the rabbit out of the hat.

Our country was built with credit. One of the major thrusts for the Obama administration is to get banks to start lending again. Banks didn't do this with the first half of the major funding passed in the Bush administration. They horded the money to protect their own balance sheet. Will they do it with the second half, and with other bailout handouts?

Today, I had a conversation with a banker. He said that the federal regulators are requiring a higher capital input from the buyer than ever before. "In the old days" (not that long ago), one could buy a building for very little down payment (10%, e.g.), Today, loan to value ratio has to be 30% and in many cases 40 and 50% This is not the way to growth.

With this type of stagnation of credit, one can be assured that the prices for real estate will continue to slide downward with ever greater consequences. And with continued worsening of our finances, law firms and lawyers will be further impact. If we have too many lawyers today for the work available (as discussed in an earlier post), demand will continue to shrink, and additional law firm layoffs will result.

Is the Recession Going to Kill Biotech?

cmintz@bioinsights.com (Cliff Mintz) — Wed, 03 Dec 2008 21:59:42 GMT

Recently, I have come across posts on blogs and websites reporting on lay offs and cost-cutting measures that are taking place at some biotechnology companies. A good example of this is a post that appeared yesterday on the Fierce Biotech Web Site. The headline read: “New round of layoffs, cost-cutting at biotechs.” I thought “OMG this can’t be happening—not the biotechnology industry too!”

However, I am happy to report that many of my concerns were assuaged after I read the post and realized that the reported downsizing was taking place at small companies, most of which were on shaky ground before the recession even began. Some of the companies that were mentioned included: Titan Pharmaceuticals, Pressure BioSciences, Insite Vision, WuXi PharmaTech Cayman and Targeted Genetics—not exactly titans (pardon the wordplay) of the biotechnology industry.

There is no question that the current economic downturn will hurt some biotechnology companies (mostly because debt financing is so difficult to secure these days). That said, I think that the biotech industry may struggle a bit over the next couple of years but it will survive because it is in much better financial shape than most other American industries.

It is important to note that the downsizing and cost-cutting taking place at many pharmaceutical companies is based almost exclusively on projected lost revenues that may occur 2-5 years two years from now—when many blockbusters drugs begin to lose patent protection— not on immediate cash concerns (most pharma companies have plenty of cash on hand). Pharma companies began downsizing in earnest about two years ago because they realized that they had gotten too big and their empty pipelines could no longer justify employing large numbers of unproductive employees. In my opinion, the current economic downturn provided pharmaceutical companies with a good excuse to continue to lay off employees, slash costs and maintain their stock prices.

Many of the companies mentioned in the Fierce Biotech post have been around for 5-10 years and haven’t been profitable since their inception. As a former business partner once said to me “You don’t really have a business unless you have a product to sell and are profitable.” I suspect that many of these so-called biotechnology “companies” will go out of business—not because of the recession—but because they were unable to develop financially-viable products or services.

Until next time…

Good Luck and Good Job Hunting!!!!!

Ask the taxgirl: Cash and Charitable Donations

kelly.erb@b5media.com (Kelly Phillips Erb) — Sat, 29 Nov 2008 15:26:32 GMT

Taxpayer asks: While we were out shopping, I put a $20 in the Salvation Army kettle in front of the store. I say we can take that as a deduction but my husband says no. Who is right? P.S. I have a...

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Will 2008 be a brief dip for law firms?

edpoll@lawbiz.com (Ed Poll) — Thu, 30 Oct 2008 04:00:16 GMT

Aric Press, editor in chief of The American Lawyer, wrote in this month’s edition that “Next year’s Global 100 is apt to be a less pleasant experience (than this year’s law firm’s financial results). The best that law firms can hope for is that 2008 will mark the bottom, a dip in the otherwise inexorable rise of firm revenues and profits. A brief pause: Those are the optimists talking.... the work is down, collections are slower, hiring is off, and law firm leaders spend less of their time plotting global conquests and more trying to decide if anyone will notice that the quality of the paper in the Xerox machine has been taken down a grade...”

Alan Greenspan said recently that this crisis will not go away in the near future; it’s a longer term challenge. I’m old enough to have experienced a prior economic crisis (no John, not the Great Depression!), and it took a full generation to overcome. My fear is that it will take a full generation, or more, to overcome today’s crisis. Although the participants of the recently concluded ALM Law Firm Leaders conference seem to be more optimistic. I’m hoping they’re going to be proven correct.

General Counsel & The Future of the Profession

edpoll@lawbiz.com (Ed Poll) — Mon, 15 Sep 2008 05:59:55 GMT

I had the pleasure of talking with Paul Williams of Major, Lindsey & Africa. Paul focuses his energies on placing lawyers as General Counsel of major corporations. From his perspective, he suggests that General Counsel today receive more respect. Of course, GCs today have a much larger budget for legal fees than ever before. And many GCs come from the ranks of major law firms. Coming from the elite law firms and handling such large sums of money, one would expect private lawyers to give the corporate lawyers more respect. Also, in many cases, GCs are increasing the size of their legal departments as one way to control legal costs ... they can “purchase” the legal talent at wholesale (as an employee of the legal department) rather than retail (law firm associate or partner).

Following are some of my thoughts and conclusions drawn from my conversation with Paul. Not wanting to attribute words or ideas to Paul that he may not have intended, I will accept responsibility for the following conclusions that I reached from our conversation:

1. Lawyers are risk averse, looking always at precedent. Consequently, one doesn’t see many lawyers working “outside the box” in the way they approach either their career or how they manage their practice. This may be why law firms are changing slowly; most change is forced on the law firm by their clients, Corporate America.

2. Executive search firms such as Paul’s are “agents” that help lawyers move laterally from one firm to another. This raises the image of “free agency” in the sports world. If a lawyer can get a “few thousand dollars” more from law firm “B,” the lawyer may very well move from law firm “A.”

Why would a lawyer make such a move when the change in his/her compensation would not be deemed significant and certainly would not alter the life style of the lawyer. Compensation is almost like the stock price of a large corporation. Because the lawyer has always achieved at high levels, the lawyer may feel less valued than the lawyer who earns even a small amount more than the first lawyer. And this would suffice to change law firms. Because of this movement, however, the cultural differences that used to distinguish one firm from another are flattening ... which means that one firm is looking more like other firms, with fewer differentiating characteristics than before. When one firm looks like others, there will be more difficulty in “branding” the firms ... and less reason to engage one firm over another. Then, price may become the major differentiating factor for clients. Another result may be increased alcoholism, unhappiness and depression among lawyers who see very little reason to stay involved and engaged with his/her law firm.

3.    Whether law is a business or profession is an interesting question, though not so important in today’s world. In part, one’s answer depends on how you define “profession.” A professional, by at least one definition is one who collaborates. The current law practice is not so collaborative as before. We are now far more competitive and far less collaborative than ever. Does this make us less “professional”? More business-like? One of my clients recently told me how a senior partner refused to give him credit for his business origination success. If this firm were more collegial and collaborative, and less competitive internally, this would not even be discussed. Perhaps we are less professional, though not more business-like.

4.    Lawyers exist in a hierarchical law firm environment but are individually power-centric. They command the associates working on their matters, and the staff surrounding them. This is contrary to the client-centric attitude that GCs must have to survive and thrive within their corporate organization. Thus, many private law firm lawyers could not survive within the corporate environment.

5.    The “second season” for lawyers will be dramatic as more than 400,000 lawyers (“baby boomers”) will retire in the next 10 years. This is equivalent to the entire membership of the American Bar Association. What will these lawyers do? Will they sell their law practice? Will they close the doors and walk away? How will they engage themselves in their remaining time? Where will the replacement lawyers come from?

The legal profession has experienced many changes in the last 10 years since I obtained the trademark, The Business of Law®. There will be many more changes in the next decade, for sure, as large law firms begin to mirror their large corporate clients more closely. And sole practitioners, the vast majority of the profession, strive to survive.

Why the Year End Collection Push is Not a Best Practice

Tue, 09 Sep 2008 14:38:57 GMT

It is that time of year again, at least for the early starters, when the legal industry begins its preparations for the year end collection push. The push has become an industry standard and buzz word over time. Each year countless hours are put into collecting massive amounts of receivables every December in order to meet targeted [...]

The “ideal” approach with respect to legal industry inventory management is to have a continual billing and collections push year round, so everyone can enjoy the holiday season without worrying about making a budgeted target for collections. Although ideal, given the history of the industry, this is unfortunately a practice that will take time to implement. Even if that happens, the remains of the year end push might still have legs. For most firms both lawyers and, more importantly, their clients are used to and expect a year end push. It is a behavioral pattern that is established and therefore not going away anytime soon. That said there are negative ramifications to such a practice and a few firms have recognized this and smoothed out their collection pattern.

The first obvious detriment to a year end collection push is the impact on client behavior. If clients expect a year end collection push then they are less apt to pay within a consistent, timely manner. Some clients even have said to relationship attorneys who have tried to smooth out the process, “Why pay now if I know you are just going to look for more in December.” In fairness to the client I would probably hold on until December as well. For example, if my mortgage company let me pay all of my mortgage payments in December, I would do so - which brings me to my next detriment of the push, the Time Value of Money impact.

A dollar today is worth more than a dollar tomorrow, so everyday a firm does not collect on a receivable they are foregoing the opportunity of re-investment. In my previous mortgage company example, I would take all of the money I owe the mortgage company invest it in some sort of portfolio that would give me a return on that money which would go straight to my pocket instead of the mortgage company. That is the same thing that occurs with the year end collection push within the legal industry: Investment income is left on the table as receivables age.

The next 2 problems are more internally focused within each firm. Not only can the collections push can have a negative impact on client behavior, it can as well with attorneys . A colleague of mine wrote a blog back in June on “Valuing your Firm’s Inventory” which I encourage everyone to read as it outlines how, as receivables age, the likelihood of realizing the original amount of those receivables diminishes. Since attorneys also exhibit the behavior of letting work age before it is billed, and billings age before they are collected, the probability of billing or collecting the original work/bill amount goes down.

Other obvious detriments include the ability to know where you are to your budgeted numbers as the year goes along, and how to budget for next year given a lack of information on your collections; a final drawback of the year end collection push is the impact on the age of your inventory. In the graph below, you can see three years worth of inventory pushes. There is a significant drop in balance each December (as depicted in the bar graph), but you can also see a spike in the age of inventory. Why does this occur?

I ask many of the firms I work with and they almost always point to the answer: At year end, with pressure to make budgeted goals, most of the collection effort is on receivables that firms know they can collect and are more recent in nature. Therefore, the older inventory that has been aging over the years continues to get older and may get to a point where it is completely uncollectable. This is an unfortunate side effect of the collection push and one that should be accounted for in any inventory management strategy.

Although I have gone over many reasons why the year end collection push is not a best practice, I am not blind to the fact that it is not easy to make a quick switch to a continual inventory management process. So given that the “ideal” practice is not a readily accessible current option, are there things firms can do to prepare and approach the year end billing and collection push to try to maximize its result while working on the before mentioned strategy shift ? The first suggestion is start billing early –nothing earth shattering. With most firms you see an upward trend in periodic billings in October and November. That trend should start in the 3^rd quarter, and those firms that have a more gradual collection slope in the last few months also have an increased slope in billings from August until November. The easy explanation to this is that billing is a more controllable portion of the inventory cycle than its counterpart. In the example below, you can see such steep a slope in each of the prior 2 year end pushes where as in the last year that billing was much more gradual and steady as the end of the year approached.

The natural benefit is that by getting the built up WIP out the door in a timely manner will give you the ability to focus on collections for a longer period.

The firms that I have worked with who have had the most success with respect to WIP management are those that have some stipulation on billing in a timely manner when it comes to their partner compensation. Knowing that many firms cannot simply switch their compensation system on a dime, this type of action is not widespread, but it is a proven method. Each firm has seen an improvement in inventory management when a portion of partner compensation has been tied to that driver. “Compensation” in this regard can be defined as a direct input into the partner compensation equation or, alternately, can equate to monetary “fines” for late billing and/or collections.

It may be inevitable within current industry conditions that December will be the month with the most collections. Again, it is in the best interest of the firm to change the status quo and begin collecting earlier and in a timely manner. Not only will you be able to have a better idea of where you will stand to budget sooner, but it will set your firm up for budgeting the next year. Still, if focus can be put on opportunity balances (those that have aged past an expected pay time) early in the process it may help avoid the side effect of the ever aging inventory. Those older balances can have the focus early on and perhaps generate collections while in December the focus can shift to the more readily available receivables.

I certainly hope that as time goes along the year end collection push will lose its luster as a buzz word and be replaced with continual inventory management. At the end of the year the firms that take this to heart just may see increased realizations, additional investment income, and perhaps most importantly a little more piece of mind that you are on target and can enjoy the holiday season.

- Posted by Russ Haskin

 It is that time of year again, at least for the early starters, when the legal industry begins its preparations for the year end collection push. The push has become an industry standard and buzz word over time. Each year countless hours are put into collecting massive amounts of receivables every December in order to meet targeted [...]

Work ON your business

edpoll@lawbiz.com (Ed Poll) — Mon, 01 Sep 2008 17:57:54 GMT

A thought from Alan Weiss, consultant: “If Hollywood's collective genius can create a $100 million film which flops at the box office, I don't see reason to exactly beat yourself up if you choose a lousy vacation spot, cook a poor meal, or scratch the side of the car. Stuff happens. Get on with your life, and don't let a momentary poor judgment create a lifelong depression.”

And in your law practice, the fact that you haven’t paid sufficient attention to “The Business of Law”® doesn’t’ mean you shouldn’t/can’t start now. Today is Labor Day, hopefully a day of rest for you … start tomorrow to work “on your business,” not just “in your business.” And build something of value (otherwise known as goodwill) that can be passed on to your family, your estate, when you’re ready to retire. You don’t have to just close the doors and walk away.

2 Step SEO Cash Machine

Thu, 14 Aug 2008 01:05:25 GMT

The devil’s in the details but… Your SEO? Content + Authority = Rankings The Payoff? Rankings + Analytics (including conversion tracking) = $ See also: ROI p.s. How ya’ like that zingy title?

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