The ONLY Three Variables that Drive Law Firm Revenue
Jun 21, 2024
Brian Glass
Ready to break free from the grip of billable hours and take control of your law firm’s revenue? This episode of Life Beyond the Briefs is your guide to mastering the three pivotal levers that can make or break your top-line revenue: number, size, and speed. We guarantee you'll learn why honing in on just one or two of these factors can lead to better results without overwhelming your team. Discover how focusing on the number of cases, adjusting your average transaction size, or speeding up case completion can transform your firm's financial health, especially if you're in a contingency fee model.
Join us as we dissect the intricate balance of these levers, specifically for contingency fee law firms. Learn why increasing your case load might seem like a quick win but could actually harm your revenue. Understand the implications of lowering your case threshold and the potential necessity for a larger team, which in turn impacts your bottom line. This episode is packed with insights that will help you strategically grow your law firm's revenue without sacrificing efficiency or profitability. Tune in and take the first step towards designing a law practice that serves you.
____________________________________ Brian Glass is a nationally recognized personal injury lawyer. He is passionate about living a life of his own design and looking for answers to solutions outside of the legal field. This podcast is his effort to share that passion with others.
Ready to break free from the grip of billable hours and take control of your law firm’s revenue? This episode of Life Beyond the Briefs is your guide to mastering the three pivotal levers that can make or break your top-line revenue: number, size, and speed. We guarantee you'll learn why honing in on just one or two of these factors can lead to better results without overwhelming your team. Discover how focusing on the number of cases, adjusting your average transaction size, or speeding up case completion can transform your firm's financial health, especially if you're in a contingency fee model.
Join us as we dissect the intricate balance of these levers, specifically for contingency fee law firms. Learn why increasing your case load might seem like a quick win but could actually harm your revenue. Understand the implications of lowering your case threshold and the potential necessity for a larger team, which in turn impacts your bottom line. This episode is packed with insights that will help you strategically grow your law firm's revenue without sacrificing efficiency or profitability. Tune in and take the first step towards designing a law practice that serves you.
____________________________________ Brian Glass is a nationally recognized personal injury lawyer. He is passionate about living a life of his own design and looking for answers to solutions outside of the legal field. This podcast is his effort to share that passion with others.
When you get down to it, there are only three levers that you can pull in your law firm that are going to increase or decrease, if you do it wrong your top line revenue, and those levers are number, size and speed. Welcome back to another Friday solo episode of Life Beyond the Briefs, the podcast for lawyers who want to avoid living life on autopilot, talking about lawyers who want to exit the traditional Bill Moore hours model and greet each other other with something other than I'm really busy, but it's better than the alternative. If you want to live a life of your own design and take control of your future, join us as we explore life beyond the briefs. So what do I mean? Number, size and speed. If you're trying to increase the top line revenue at your law firm, the only three variables that matter are number, size and speed, and it doesn't matter across your practice area, right? It's number of cases that you handle, size of your average transaction and speed with which you handle those cases. And actually, if you're outside a contingency model, speed becomes differently important, and I'll get to that in a minute. And the thing is that you can really only focus on one or maybe two of these levers at a time. If you are on a smaller team and you are trying to increase the number of cases, the average size of those cases and the speed with which your team handles those cases, it's probably going to blow up. And if you're on a large enough team that you can address all three things at one time, it's probably not one person who's in charge of addressing all three things, because as you start to move the sliders on one of the variables, other ones inevitably get hurt.
Speaker 1:
One way, for instance, to increase the number of cases that your injury law firm is handling is to take on more cases. Of course. What does that do? That decreases the average transaction size, because the easiest way to increase the number of cases without spending more money is to lower the threshold of the kind of cases that you'll take. Ironically, the other thing that lowering the threshold on the kind of cases that you'll take has is it increases the amount of time you have to spend on the case.
Speaker 1:
Right, because, as you're going outside of what case? Right, because, as you're going outside of what I call your buy box and you're taking these cases that you know maybe we shouldn't have taken, the team's got to do more work on a lower dollar per hour effective hourly rate, number one to work on that case. But number two often has to do research outside of the scope of what we're typically doing, which slows down cases, and in a contingency for fee world, that's a bad thing. Ironically, in an hourly billing model, if you decrease the speed and the velocity with which you're working on cases, you make more money. Right, you increase the size of the average case by spending more hours on that case, but then you decrease, typically, the number of cases you can handle because, at the end of the day, there's a finite number of hours that your team is able to work on a case, and in a solo or small firm, it's you, so there's a finite number of hours that you are able to work on a case. So I'm going to be talking primarily to contingency fee law firms in this episode about the three levers that you can pull number, size and speed. So, while number is probably the easiest variable to change right, because you can influence the number of cases that are coming through your pipeline by spending more on digital marketing, by decreasing the threshold of cases that you'll take on things like that it also is the one that has the lowest leverage because you have that additional spend or you're lowering your cost per case, but also because you have more cases coming through the pipeline, you almost always are going to have to hire more people to staff those cases, and so, while you can find a lower dollar per hour cost, maybe overseas in a VA model or something like that, at the end of the day you are going to, if you 3x the number of cases coming through your law firm, you're going to have to at least 2x the size of your team, and that provides you much lower leverage.
Speaker 1:
When it comes to the number that really matters, which is your bottom line number, everybody wants to talk about number of cases signed or top line revenue numbers, but really what? The only thing that's important at the end of the day is how much of that actually made it home into the owner or into the team's pockets. The bottom line is so much more important than the top line, and that's why I think the most important of the three is your average case size, and so you should have people on your team who are dedicated to thinking about increasing average case size in two ways. Number one how can we eliminate the bottom 20% of our cases, because I bet you, if you look at the bottom 20% of your cases by fee, they are disproportionately eating up hours and hours of your staff's time. Why is that? Because these people who have small cases have been sold oftentimes like the idea that the personal injury system is a lottery or is a crapshoot kind of system, and so they almost always will overvalue their case and expect more money in their pocket than they're actually going to get, which leads us to reduce our fee in already low fee kinds of cases.
Speaker 1:
If you can have somebody who's dedicated to looking at the bottom 20% and figuring out, how do we get rid of these either how do we prevent the mistake of signing them up in the first place, or how can we refer them out to a younger or greener lawyer who might be happy to have cases of that size. That's the first lever that you can pull when it comes to increasing your average case size. The other and equally important lever is how do you take cases that are worth $50,000 to an average lawyer and make them worth $100,000 or $150,000? And so you need somebody in your firm who's dedicated to looking at your medium cases and your large cases with an eye towards how can we make this worth 2x or 3x the amount of money that an average lawyer would get on this case? And if you can only do those two things, if you can only eliminate the bad and the low dollar figure cases that are coming through your pipeline and clogging up your pipeline and free up the strategic thinking lawyer in your firm to think about how do we make these cases worth more money at the top end you would see through the roof bottom line profit numbers in your law firm, which brings us to variable number three speed. So speed comes from having actual systems and processes that run cases.
Speaker 1:
Most law firms, most injury law firms, most small injury law firms, don't have actual systems and processes that run cases. You have paralegals and you have legal assistants and you have associates who run cases and the thing is that if any one of those people get up and leave, you've got to bring somebody else in and train them, not on your systems and processes, because you don't actually have those, but you have to train them on your style of moving cases through the machine and the better that you can get at having actual documented case systems, either in a CRM or in a written protocol somewhere, the more your time is freed up because you can now review cases, not from like a spot check, where you look back at the Jones file and you see what it's settled for and then you got to go in the records and see what do. I actually think it was worth. But you can just spot check was our system followed in every one of these cases, and that takes much, much less time, which again frees you up to do the important work of increasing the size of the largest cases in your firm. And all three of these variables are important. And again, it's really hard to work on more than one of these variables at a time and there will be times in your firm where it's time to work on number of cases, times in your firm where it's time to work on the size of the case and times in the firm where it's time to work on the speed with which we're running cases through the system.
Speaker 1:
And the question for you as a law firm owner is what's the current constraint in my business today? Because if you can elevate yourself out of the day-to-day doing of the business and you can begin to focus on what is the primary constraint for my business and try to solve for that, whether it's number of cases, size of cases or speed of the process, number of cases, size of cases or speed of the process. And if you can begin to solve for one of those constraints every quarter, then I promise you you're going to begin to see exponential growth in your bottom line. And if your lawyer and all of this sounds completely and totally foreign to you or it makes total sense to you, you just have no idea where to start, then I want you to know that you are not alone. There are so many lawyers out there that grew up in the law and law school and in their firms being great lawyers and that's awesome. And nobody ever taught you how to build a law firm. And, of course, that's what we do here at Great Legal Marketing.
Speaker 1:
So if this all sounds good, you just have no idea how do I start? Please reach out. You can send me an email at brian at greatlegalmarketingcom. I'm happy to point you to some of our resources. Invite you to a bootcamp, invite you to a summit. We are in the business of helping lawyers exit mediocrity and live epic lives, and I want to help you. Until next time, I'll see you later.