Keeping Your New Matter Reports 'Fail-Safe'
We began talking several articles ago about “tips” that create “fail-safe” systems in your office. There were eighteen fail-safe systems I suggested you put in place in order to be sure that all of the client matters in your office are being properly handled. “Properly handled” means the proper things are done at the proper time and in the proper manner.
Remember that “administration” is the second area after “clients” of the five areas that make up every business in the world. You can have all of the clients that you can possibly handle, but if you do not put the correct administrative procedures into place, you may loose potential clients.
Of the eighteen “fail-safe tips” that I suggested, we have already dealt with the first three, listed here:
1. An organization system regarding phone messages;
2. A system for Prospective New Matter Reports; and
3. The utilization of a system of non-engagement letters, either keep or kick.
This week’s “fail-safe tip” is the use of New Matter Reports, or some similar system for opening up individual matters for all of your clients. We have briefly touched on these New Matter Reports, but I want to focus on the “fail-safe” aspect of the reports in order to emphasize how important a systematic approach can be.
One of the biggest problems when communicating with clients about their legal matters is trying to sort which components of your work are billable. Clients are constantly questioning the risk/benefit analysis of legal matters, as well as the cost/benefit analysis of legal matters. If you do not have separate New Matter Reports for each and every matter that a client brings to you, your office systems will very quickly throw all of the expenses and the time for the client’s various matters into “hodge pot” and you will be hard-pressed to be able to separate all of this once your client has asked you to justify the cost of a particular matter.
I know you are all saying, wait a second, who ever said anything about any kind of warranty about our relationship regarding cost and benefits bestowed? The answer is, that’s probably not contained anywhere in your contract, it may not even be something that you have discussed with the client, although you certainly should have, but you better believe that it is on the client’s mind.
If you set up each client’s matter in your office so that the appropriate expenses and time can be billed to that matter, you will always have that information at your fingertips through the various financial systems that we are going to be discussing later
In our office we represent approximately 100 different corporations, and we try to open up a new matter on each and every issue our corporate clients brings to us.
I have one client that makes me put together a budget for every single matter that I am going to be handling. That way the client can measure the real results that are billed to them on a monthly basis against the projections that I have put into my estimate. I am hearing a collective groan from those who are saying how in the world can you do that? In a litigation matter you are at best in control of only twenty to forty percent of the equation because you are certainly out of control of the other attorney, the other client and the judge. How do you make an estimate in that set of circumstances? The answer is “very carefully.” Needless to say, you must build in a factor for being out of control of at least sixty percent of the case. The point that you need to establish with the client who wants a budget on a matter, is that the budget is only a baseline. A baseline by definition will have variances that can take the matter either up or down in terms of cost. The benefit of a baseline, as one client of mine constantly reminds me, is at least you have an agreed upon starting point. You can then measure which direction you have advanced away from the baseline depending on the result that you get. You will hear me make the following comment quite a few times before all these articles are over, “you can’t manage it if you can’t measure it, and you can’t measure it if you can’t manage it.”
As we continue to go through all of these “fail-safe tips,” I think you will see how all of these items fit together and as I have previously said, there is a marketing component, an administrative component and a financial component interwoven through all of these “tips.”
The moral to the story is wherever possible, open a new matter for each and every piece of legal business you are handling for a client!
Next week we are going to talk about additional “fail-safe tips” and we will be talking about four aspects of the New Matter Report that are absolutely essential if you are going to properly utilize a “fail-safe” component in taking on new business. We will be discussing these four components in more detail, but to get you thinking about them, I will set them out as follows:
1. Fee arrangement;
2. Conflict of interest;
3. Responsible person for generating the legal business; and
4. Statute of limitation or other due dates.
I think you will find the discussion about the “fail-safe” nature of these four items to be quite interesting. I hope our discussion drives home for you the absolute necessity of having some type of a system to instill such “fail-safe” concepts into your practice. These systems not only create a professional way of doing things, but because they are systemized, they create efficiency, better communication, and piece of mind because you know the matters that need to be addressed have been addressed and addressed at that proper time!
Talk to you next week!
Jim Wirken is a civil trial attorney and the Chairman of the Board of The Wirken Law Group in Kansas City.