Page 28 - First Coast Vol 4 No 2

JOSH SHILTS | Forensic Accounting Law Firm Management
Through my work in forensic ac- counting and valuation servic- es, I have had the privilege of working with hundreds of attorneys and their organization. rough this relationship, I have been able to grow close with rm leaders and share sto- ries on e ective leadership, and the “brass tacks” of running a rm. Law rms face the same organizational problems that other professional or- ganizations, CPAs included, encoun- ter. Cash ow issues, understanding their pro tability and meeting client demands rise to the top of their issues lists. Professional service providers are constantly chasing their tail try- ing to solve these issues and not step- ping back and allowing themselves to implement the structure needed to enhance pro tability and maintain order to meet client demands.
To improve pro tability, and their sanity for that matter, managers at law rms need to focus on the opera- tional aspects of their rm rst. Yes, this is a “blind” leap of faith, but it is one that is tried and true. Just ask GE how it has worked for them.
Utilization is a key aspect of rm performance, but in the small and mid-size rm levels where partners are workers as much as managers it is o en le aside. Partners and owners just assume everyone is doing billable work. Utilization is not as a much a key measurement as it is a change
in the rm’s culture. When emphasis is placed on utiliza- tion employees and managers know that
not only are they being watched but measured.
e measurement of utilization comes in realization. Realization tells us how much of our time or employ- ees’ time is actually billable. If you en- counter write downs and they become a constant than the problem solely lies with training that individual or nd- ing the right person for the job. Part- ners and owners should measure their own realization and utilization to make sure their time is appropriately used. In our rm, partners/owners know if they are not working (i.e. bill- ing) than their time needs to focus on potential revenue generating initia- tives or working with sta to improve e ciencies.
To improve pro tability, and their sanity for that matter, managers at law rms need to focus on the operational aspects of their rm rst.”
When you focus on these opera- tional aspects you will nd that work is produced in a more consistent and
e cient output. One of the reasons is you remove the stress of pushing items down for sta ’s responsibility and realizing that there are a limited number of hours to work. In doing so you ultimately improve:
• Cash Flow and Pro tability – more deliverables out the door within budgeted time leads to faster col- lections and use of time in other aspects to increase billings. Also, because your biggest cost (i.e. La- bor) is being managed appropriate- ly your pro tability will naturally increase.
• Decision Making – by running these numbers you realize which clients and sta produce the most and are the most pro tably help- ing you decide what is the best way for your time and sta ’s time to be used. Also, you can rely on these gures to help you make strategic decisions regarding sta ng or ser- vice lines instead of going o of a hunch.
Lawyers sell their knowledge in intervals of time. Becoming aware of how much capacity your rm has to provide work product, at a standard acceptable within your rm, will help you shape and develop the rm model you want. Once you develop this structure you can now turn your e orts to whatever other professional endeavors you may want to accom- plish knowing that your practice is working e ciently to churn pro ts.
Josh Shilts is a partner with Villela & Shilts LLC. He assists attorneys, individuals and businesses with complex - nancial matters and disputes. He has held roles with international consulting and public accounting rms in Miami and New York City as well as positions with large public organizations. Josh is a frequent lecturer on forensic ac- counting matters. He has been involved with hundreds of forensic investigations dealing with a variety of matters involving personal and business disputes as well as identi cation and mitigation of fraudulent activities. Clients have sought his advice and services because of his unique industry experience and knowledge.
ATTORNEY AT LAW MAGAZINE · FIRST COAST · VOL. 4 NO. 2 28