Give Yourself Permission to Be Geeky
“Data seems overwhelming.” Jared Correia, host of Legal Toolkit, acknowledged in the December 22, 2020 episode. It can be really hard for lawyers, who are not trained in numerical analysis, to embrace data. But, like the efficiencies revealed in the book and movie Moneyballhe encourages lawyers to be more analytical.
“[You don’t need to do big data. You can look at] small data, I mean think about it, you’ve got a corpus of information in your law firm through which you can measure your clients and your staff and the activity of those two groups. Even if you start with basic financial data it’s good. Smart law firms are motivated to track effectively because if you want to get paid you want to track your financial information. Make it about value and efficiency. That’s a big win. Through the simplest action of applying KPIs and generating reports, you’d have a better sense of your profitability and your effectiveness. ”
“Legal is such a competitive field and has been for some time,” Correia said, “that solo and small firms should absolutely be using data to gain a competitive advantage in the marketplace yet they don’t. You don’t see innovation in this space for whatever reason. ”
Measure the Cost of Beginning a Relationship: Converting Leads to Clients
There are lots of ways to slice up the cost of acquisition and cost of conversion metrics. Some firms will just look at billable hours at the end of the month, but more and more, especially firms that are consumer-facing like personal injury and bankruptcy, will look at their client revenue against the costs to bring that client in the door.
Christopher T. Anderson, host of Un-Billable Hour, has an analytical approach to helping his law firm clients evaluate their real costs. In the May 10, 2022 “Community Table” episode, Chris took a call from a lawyer who wanted to make the compensation for her intake specialist a better incentive to convert at a higher rate.
Chris cut right to the quick asking about their case value as a basis for figuring out the right compensation. At $ 125 per intake, Chris thought the specialist was not getting enough of that case value to justify his time. He might go work elsewhere for more money, and the clients he was booking had to wait seven to ten days to meet with an attorney.
“So, here’s the deal. You’re going to find that the conversion rate for the drag-in in both your show-up rate and the conversion rate is going to be depressed at that timeframe. There’s a lot of people who won’t wait that long. They’ll continue looking for lawyers. ”
The analysis was revealing to Chris’s client: “Yeah. And they prepay. So, our show-up rate, well, we have had people who pay, and then when they realize they can’t get in, ask for a refund of the consult fee. ”
Chris advised her to look for ways to reduce that wait time and get the clients in sooner rather than later because that will ultimately increase the overall conversion rate. He continued to a harsh conclusion for his client:
“At $ 125 per intake, [your intake specialist] should be earning $ 42,000 in variable pay, on top of his $ 55,000, which means he’s earning $ 97,000. And I’m sorry, I promise you, I promise you, you won’t keep him selling $ 3 million in practice revenue for $ 92,000 and you want to know the main reason why? Because I’m going to hire him. I’m going to steal him from you. ”
Conrad Saam, co-host of Lunch Hour Legal Marketing thinks lawyers are not actually the best ones to convert prospects to clients. Their time is not well-spent in that first interview with a prospect. It’s better spent in serving that client, and allow that service to be performed by someone with better intake skills.
In their June 22, 2022 episode, Conrad argued with Gyi, in an agreeing-sort of way, that the real value is in intake expertise: “The person [answering] the phone does not need to be the lead attorney. The caller wants to talk to an attorney but that can be the worst lawyer in the world who is empathetic and listens really well to a client. This does not have to be the partner. How many of you are reviewing your calls? Because there is so much insight to be gained by listening in to the calls that are coming into your firm. And I suspect most of you will be disappointed if you take a listen to those calls. ”
Look for Faster Payment Channels
According to the 2021 Clio Trends Report, 73% of firms now accept online payments. Is it more expensive than taking a check with no fees? Possibly, but the value lost is in your time.
The 2021 Clio Legal Trends Report identified that clients are willing to step into the future and go online to pay their bills, even if lawyers are reluctant.
“For making payments, it’s clear that online options are strongly preferred by consumers. Online payments (66%) are the top choice, followed by automated payments (61%) and payments via mobile app (61%). In-person payments (59%) sit near the bottom of the list. At this stage, clients prefer options that prioritize convenience over any direct forms of interaction. ”
Gyi Tsakalakis, Lunch Hour Legal Marketing’s other co-host, characterized the client experience with antiquated payment methods in the May 21, 2021 episode, “I don’t want to have to get in my car and drive to see you,” or you know, “go find my checkbook that I haven’t used in two years to pay my legal bill because you’re the only business that I have to write a check to pay and mail to,” because everybody else accepts online payment. “
Traditional payments, upon analysis, prove to be tedious for the client and inefficient for the practice. If you have to turn in your billing report to someone who then converts that to an invoice and sends it out, you wait for the mail to arrive and then count on the client to turn around to write you a check. Then they have to send that piece of paper in the mail that you take to the bank. With a more analytical mindset, you can recognize that you’ve spent a lot more in your time than 3% of the transaction fees.
Despite the most forward thinking and analysis, Clio’s Legal Trends Report also pointed out that getting The money is still a challenge, even with the new payment systems.
“The average collection rate for law firms in 2020 was 89%, which suggests that most law firms struggle to some degree in getting clients to pay their bills.” Those firms in the “Growing” category, who have adopted technology tend to do better than those firms that haven’t embraced newer billing and tracking tools.
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