Know Your Numbers

            A few years ago the medical industry launched a preventative health campaign about the importance of knowing key numbers related to personal wellness.  If memory serves right they focused on things like blood pressure, cholesterol, and optimum body weight.  The idea behind the campaign is to take charge of your health before it is too late.  

           I think as lawyers, we can learn a lot from that campaign. The health of your law practice depends upon a few key numbers.  Just as the medical industry wants us all to know our health numbers while there is still time to do something about it-my goal is for lawyers everywhere to learn their key numbers before it is too late.

            So, what key numbers am I talking about?

1.     Your overhead

2.     Your profitability

3.     Your size of your portable book of business.

Your Overhead

As we all learned in contracts, there are costs to doing business.  Yet many great lawyers glaze over the importance of getting very granular on your overhead costs.  It is very difficult to make strategic decisions without understanding what it actually takes to keep the lights on.  And, just in case you are sitting there thinking, this paragraph is not for me because I am at a firm, this paragraph is for everyone.  Whether you are the writing the check for the utilities or practicing at a big firm where someone is paid to write the check, you HAVE to know what your overhead is.  

Your Profitability

I know, I know, I am not playing fair.  I told you there were three key numbers you needed to know and at this point you have probably realized that to know your profitability you have to know some other numbers as well (your billing rate, your collection rate, your overhead, etc)  Sorry, but at the end of the day the health of your practice depends on whether or not you are profitable and how large that margin is.

Your Portable Book of Business

When I first entered the legal industry people called a book of business a “book of business”.  However the last three years have taught many people that not all books are created equal.  To gauge the health of your law practice, you must know how many of your clients would move with you if you decided to house your practice under a different roof.  If you are a solo, it is an easy equation-your entire book of business.  If you are an attorney at a big firm, it is much more complicated.  Often the clients of big firm attorneys have multiple and complex contacts at the firm.  So, if you left your firm how many of your clients would actually leave with you?  Keep in mind, it is unethical to reach out to your existing clients about potential moves.  A little scary-huh?  Actually, it shouldn’t be, if you know your critical health numbers, you will have all the facts to evaluate your current practice situation and all the tools to advocate for the best deal. 

            While many of us missed the “how to run a law practice” class in law school, the stark reality for every lawyer is that the law is a business.  You will be fine as long as you know your critical numbers and run your law practice like the business it is.

About Jonelle- Jonelle Vold is a business development coach that is passionate about your success.  A mother of twins, former Assistant Dean at a tier-one law school, attorney, and seasoned sales professional, Jonelle understands the challenges of high-level professionals.  Her coaching philosophy is every person has the ability to be a rainmaker by cracking their own personal code and doing business with intention.  You can reach Jonelle at jonelle@jonellevold.com or www.jonellevold.com.