Thursday, January 31, 2008

Leveraging Your Time - Part 2

In a recent blog, I posed the question: How can lawyers leverage their time? I suggested that there were four things lawyers can leverage: (1) other people’s time, (2) knowledge, (3) technology, and (4) packaged services. After thinking about it further, I would expand that list to include office space, equipment, and facilities. The truth is that you can probably leverage any asset or resource that is used in the legal profession. The challenge is to learn how to leverage those assets, and then to maximize your leveraging power.

Leveraging your time requires a different mindset. It is a change in the way you think about the practice of law. It is not just delegating your work to someone else or learning to use a Blackberry. It is not something you do just once. Leveraging your time requires continuous dedication. Also, leveraging your time requires separating yourself from your business. How can you run your business more efficiently without you personally doing all the work? As Michael Gerber wrote in his inspiring book The E-Myth Revisited, you want to think about "replacing yourself with a system."

Leveraging People

Leveraging people is what big law firms do best. Partners hire associates and paralegals and then bill out their time to clients at 2-3 times the amount of their costs. Leveraging people is an option open to every lawyer. Even a solo practitioner can do it. For example, Grant Griffiths mentioned that he uses a virtual assistant to help his home-based law practice. The virtual assistant can increase his staff and productivity without hiring a full-time person, without having to rent office space (or expand his home), and without having to educate and train that person. And with advent of the Internet and new technology, it is easier for lawyers to hire virtual assistants than ever before. In my practice as a corporate lawyer, I have used outsourced assistants from the Virtual Paralegal Services. Founded by Denise Annunciata, VPS has a team of experienced paralegal with a variety of different practice skills who are available on short notice.

Leveraging Knowledge

As noted a year ago, I believe Knowledge Management ("KM") will drive the law firms of the future. The ability to capture, organize, store and retrieve the knowledge and experiences of other lawyers will be critical for law firms in order to deliver high quality legal services in a timely and efficient manner. Leveraging knowledge requires an investment of time to create templates or forms that can be reused in the future. Most lawyers believe they are too busy with client matters and cannot afford to spend time developing "forms". However, if the legal profession goes into a recession and competition drives prices down, then lawyers may not be able to afford not to invest in KM. Cutting costs, improving product quality, and increasing efficiency will likely be the key to a successful law practice over the long term.

Leveraging Technology

Technology, by its very nature, is designed to be leveraged. The reason we buy technology is because it makes our work easier to do. Drafting documents with computers and printers is a lot more efficient than writing out multiple pages by hand. Today there are thousands of ways to leverage technology, more ways than ever before to reduce unbillable time and overhead. For starters, every law firm should consider implementing digital pbx, fax-by-email, voice mail by email, e-billing, e-newsletters, contact managers, client extranets, document assembly, remote access, PDAs, personalized scanners, desktop search engines, and Google alerts. If you are not already using or at least thinking about using these new technologies, now is the time!

Leveraging Packaged Services

Packaged legal services are the efficient delivery of repetitive matters. The first time you take on a matter in a new practice area, or even a slightly different approach to an old practice area, there is a learning curve. You can not know how to solve every problem or streamline the process the first time that you try to do something. However, by the 10th time, or the 100th time, you get pretty good at it. A critical component to leveraging your time is developing legal services that are repetitive.

Repetitive work, does not happen by accident. You have to design (and market) your firm around the kind of business that you want to attract. It is counter-intuitive, but the more you specialize, the easier it is to attract the kind of work that you want to do and the easier it is to develop efficiencies. If you market yourself as an intellectual property attorney, you will get work relating to patents, trademarks, and copyrights and be competing with all lawyers who practice in those areas. If you market yourself as only a trademark lawyer, it will be easier for people to remember what you do, you will be competing with much fewer attorneys (who "only" do trademarks) and the work you get will be more repetitive (and therefore easier for you to develop efficiencies).

After you define a narrow field in which to practice, packaged services requires a dedication to the simple mantra "documentation, standardization, and automation." Start with documentation of procedures (ideally, as you do them the first time), create standardized forms and templates that you can reuse, and then and continually improve those tools over time with the goal of automating the process. Many parts of the legal profession require creative thinking. As a result, legal services cannot be fully automated. However, by using document assembly, citation checkers, online databases, and other innovative tools, the service delivery process for lawyers can be streamlined. There is no reason for lawyers to continually "reinvent the wheel."

Leveraging Office Space, Equipment and Other Facilities

Today, lawyers do not need to be physically present in the office on a daily basis in order to be effective. There are many ways that firms can leverage office space, equipment, and other facilities by encouraging lawyers who want (or need) to work out of their homes or at a remote location. This opens the possibility of sharing resources among virtual staff members. Video conferencing, teleconferencing, and digital (IP) phones all help to reduce costs and leverage valuable resources.

Determining the Leveraging Factor

Once you have considered the different alternatives described above, you may wonder how you can maximize your leveraging power and, therefore, optimize your law practice. To do that, you need to develop a way to measure your productivity enhancements. I'm sure the experts have some other name for it, but I call it the "Leveraging Factor." The Leveraging Factor is the amount of leveraging you achieve by making certain dollar investments in new resources.

For example, if you hire a paralegal at an "all-in" cost of $60K per year who can produce $120K annual revenues (1200 billable hours invoiced at $100/hour), the leveraging factor is 2 ($120K/$60K). Note: if you charge $150/hour, the leveraging factor is 3.

Technology makes it easier to increase the leveraging factor. If you buy a high-speed scanner for $10K that reduces the amount of unbillable time a paralegal spends on organizing and finding case files by 30 minutes per day, the paralegal could convert 120 hours of unbilliable time each year to billable time, resulting increasing the paralegal's leveraging factor to 2.2 at a billing rate $100/hour or 3.3 at a billing rate of $150/hour. However, if the scanner saves time for 10 people in the office, the leveraging factor improves by a factor of 10. As a result, $10K spent to purchase the scanner would have a leveraging factor of at least 12 ($12K revenues x 10 people/$10K cost). If the scanner reduces unbillable time for lawyers as well as paralegals, the leveraging factor would be even higher.

For an investment in knowledge management or resources, the leveraging factor could be higher or lower, depending on the volume of business. By determining the leveraging factor for each investment you propose to make, you can begin to allocate funds to those resources that produce the highest return. The more successful you are at allocating resources, the faster you can grow your business.

To summarize, if there is an asset or resource that may be useful in your law practice, think about how you can leverage that asset or resource. What new technology should you adopt? Whom should you hire? What leverage will those investments provide? How can you replace yourself with systems? How can you make those systems more efficient?

If you have thoughts on how lawyers can leverage their time, I encourage you to share them by posting a comment on this blog. If you have any other feedback on this topic, feel free to post that as well.

3 comments:

Richard Granat said...

Web-enabled document automation is an under-utilized technology which greatly increases a lawyer's leverage and productivity. By enabling clients to complete an on-line questionnaire which results immediately in an assembled document ready for the lawyer's review and analysis, the entire process of cut and pasting to create a document from the clients information is eliminated. Even the process of a paralegal inputting the client's data from a paper questionnaire can be eliminated resulting in great cost savings. Client-facing document automation has great potential for increasing law firm profit margins as well as the speed and responsiveness of client service.

StricklandPI said...

As a paralegal and investigative services provider. It's nice to see attorneys promote the time and money advantages of working with a virtual employee.

Additionally, as you were talking about streamlining, that is another advantage an attorney can gain by working with a paralegal experienced in an area of law in which the attorney doesn't have a lot of experience in, like bankruptcy law. The paralegal would likely already have the process side down to a T.

Dan Cox said...

I can offer an example of leveraging people. It has to do with business development, in the form of publicity. Specifically, articles contributed to publications.

Hire a legal ghostwriter to perform the hard work of writing a good story, based on your insights and perceptions. You stay busy on paying client work, while enjoying the third party validation of the press.

It's a smart, cost-efficient way to build your profile with prospects.