How to make money in a slowing conveyancing market
26 February 2019
by Hunter Steele
Smokeball’s belief and emphasis around conveyancing and legal business KPIs was born from a continuous observation of small Australian conveyancing and legal businesses not knowing where to look to chart their next steps and know the “health” of their business.
Most conveyancing or legal business owners would like to make more money and/or work less, of course, but the majority do not know how to accomplish those goals. Data and planning can help immensely, so let’s learn how using KPIs to increase law firm profitability isn’t as hard as you think.
DATA-DRIVEN DECISION-MAKING TIPS
Because small conveyancing and legal business owners are tasked with being every member of the leadership team on top of being a more than full-time conveyancer or lawyers, data and time spent analysing that data must be focused. Simply judging profitability by “feel” or by how busy you are is not a viable business strategy. The point is to put some substantive numbers behind conveyancers as business owners/executives.
There are five main ways to increase conveyancing and legal business profitability:
- Increasing volume of work
- Increasing price
- Reducing leakage (discounts and write-offs)
- Reducing costs
- Focusing on the best work
Within these five ways to increase profitability, certain KPIs should be put into place to ensure the goal is being met and to see red flags well ahead of the time to truly worry.
CONSCIOUSLY-CONSTRUCTED KPIS CAN HELP FOCUS YOUR BUSINESS
Certain KPIs can be used to achieve ultimate goals of making more money, growing the business, and working less (which is considered profit in itself). The five ways to increase profitability work towards these broad goals, and our KPIs will deliver the markers to let you know how it’s going. Of course, there are some KPIs all law firms should know, and all KPIs and goals can be mixed and matched to form the right potion for your firm to increase health and profit.
To increase the volume of work, one of the most important KPIs is tracking and increasing the number of new matters. Relatedly, a firm concerned with increasing volume of work should be tracking conversion rates, i.e., how many inquiries into the business are converted to paying clients. Another necessary KPI would be tracking and increasing new matters over a certain period of time. Within this realm, it is immensely helpful to track referral sources, who is giving you more work, and who is giving you less (warning sign!).
Increasing your price is perhaps the most touchy goal, as it requires tough conversations with clients, both new and old. If you have good data to back up your claim that you are worth more money, the conversation might get easier. With KPIs built around time spent and business money spent on certain types of matters, you will have the data to say, “I’m worth more than what I’m currently charging when I do this kind of work.” This is the type of conveyancing or legal insights that can transform how you run your business.
The discussion of reducing leakage can be tricky because clients expect you to discount or write off the cost of your services. This expectation must be adjusted and re-framed in order to become more profitable. One of the biggest sources of leakage is time and activities that go unrecorded. Arming yourself with data on your most valuable commodity (time) is essential when reducing leakage. Harnessing the power of a software solution that includes automatic time and activity tracking helps you realise (and charge for) the value you provide clients by tracking exactly what is done on each file without the need to do anything. Even if you charge fixed fees, tracking time and activities is vital. Clients want to pay for value provided, so you need to track not only time, but exactly what that time was spent doing and what value was derived from it on the matter. So, you can knowledgeably bill and adjust your practice to achieve more profit and less stress!
Reducing costs is a terrific way to increase profitability overnight. You need to ask whether you are providing your services in the most efficient way for your business while still providing top service to your clients. Often, the answer is “no”. Are you still printing everything out? That costs your firm money. Are you disorganised? That costs money in paying someone for the extra 5 minutes it takes to find a document — something a document management system can automate. Are you doing work that other less expensive employees could do? That costs time and money where you could be billing top dollar to another client. Build KPIs around reducing your costs, and the benefits will be felt almost immediately.
Focusing on the best work is the key to making any practice more profitable. If “busy-ness” is the only indication you use to track success, however, you will have no idea which matters lose you money or waste your time. With profitability numbers and KPIs on matter types, you can see what matters you should take more of and which should fall out of favour. With the best software for conveyancers and property lawyers, both time-based and flat-fee contingency firms can track these because Smokeball tracks everything you do and for how long. It saves everything in one system, and you get a clear picture of what matters are in the red and which are in the black.
HOW SMOKEBALL CAN HELP YOU FIRM
There are various Smokeball tools that provide KPI information directly from the Smokeball system without additional spreadsheets, graphs, and time spent to create them.
Smokeball’s Firm Insights feature provides dashboards on many KPIs like new matters and referrers, just to name a few. It also provides realisation, utilisation, and profitability analysis on a per-matter and per-matter-type basis. This information is integral to make sure a firm continues taking the best work.
The automatic legal timekeeping software feature tells you exactly how much time is spent in the Smokeball system, right down to the amount of time spent in particular matters on particular documents and emails. This is the most powerful feature on the market today, as it gives you transparency and knowledge about your most valuable asset as a business: time. Most KPIs require analysis of time, so you must be aware of how your time and your staff’s time is spent each day.
In all, running a small conveyancing or legal business takes data and dedicated time to review that data. There is no other way to see opportunities and warnings. To become a more profitable business, you must use KPIs as road markers for success and use technology to automate (aka save time) as much as possible.
If you want to learn more about business KPIs and how Smokeball can help you increase profitability and achieve your goals in the current slowing market, book an obligation free demonstration today!