Line Item: Do You Know Where Your Overhead Is?
Law firms tend to not track things well. That includes time and billing, where they regularly tend to leave hours on the table. But, it also extends to other parts of the practice. So, when was the last time you examined your budget? Lawyers who know their overhead are empowered because they have a baseline idea of what they need to make to keep the lights on, and what they need to make over and above that to earn a comfortable living. Knowing those things means that the law firm can better forecast revenue and also set revenue goals, both of which are important to effective law firm management. This all makes sense; but, the challenge lies in creating a current snapshot of the law firm budget. Many managing attorneys don’t track their expenses effectively, which means they never get an accurate sense of their overhead, which by extension means that their revenue projections are less likely to be accurate and the revenue goals are less likely to be...