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Budgeting Essentials to Set Your Firm Up for Success

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Budgeting Essentials to Set Your Firm Up for Success

  1. 1. Budgeting Essentials to Set Your Firm Up for Success Building a Successful Law Firm: Session 3 February 15, 2022 Joshua Lenon
  2. 2. Housekeeping ● Session length: 60 minutes ● Use to engage with fellow meetup attendees and select “everyone” in the dropdown ● Use to ask questions directly to panellists ● Please fill out the survey at the end of the session
  3. 3. 3 Agenda ● Meet the panel ● Why you need a budget ● Setting up your budgets ● Clio’s offerings & polls ● Helpful resources ● Additional Q&A
  4. 4. 4 Joshua Lenon Lawyer in Residence at Clio Joshua@clio.com Amy Grubb Legal Consultant at Grubb Legal Consulting Amy@grubblaw.ca Today’s Speakers Beau Atkins Founder at Evolve Family Law BeauAtkins@evolvelaw.ca
  5. 5. Panel Discussion
  6. 6. Why you need a budget
  7. 7. Why you need a budget ● A budget is a planning tool. It sets your expectations for cash flow and expenses throughout the year ● Set revenue benchmarks ● Seasonality ● Set aside funds to cover the larger lump-sum expenses most law firms encounter: ○ Annual bar dues ○ Malpractice premiums ○ Quarterly self-employment taxes ○ Research and software subscriptions
  8. 8. Setting up your initial budget
  9. 9. Initial Budget One-Time Expenses ● Licenses and permits ● Insurance ● Market research ● Website launch ● Equipment & office supplies ● Capital deposits ● Repairs and upgrades Monthly Expenses ● Payroll / benefits ● Utilities ● Communications ● Rent ● Operating supplies ● Business development
  10. 10. Setting up your initial budget Revenue ● Best guess ● What is your magic number? ● Rates
  11. 11. Setting up your initial budget Expenses ● Mandatory vs optional expenses ● What do you have on hand? ● Get creative! ● Consider ROI Real Example: Budget walkthrough
  12. 12. Setting up your initial budget Now what? ● Review your numbers ● Hire bookkeeper ● Set up long term budget
  13. 13. Setting up your long-term budget
  14. 14. Setting up your long term budget ● Budget to keep your firm running – your annual budget based on growth goals ● How your budget changes during the the first 6 months and then 1-3 years
  15. 15. Four types of law firm expenses: 1. Real estate 2. Business Development 3. Salary 4. Technology
  16. 16. Law Firm Billing by Month
  17. 17. Rule of Thumb Law firms should spend 2-5% of annual revenue on marketing & business development Source: Ed Poll, consultant and owner of LawBiz.com
  18. 18. Yes, there’s math. Desired Annual Billings X 8% = Your Annual Marketing Budget. Source: Dustin Ruge, How Much Should My Law Firm Spend on Marketing? 2/19/15
  19. 19. Return on Investment Formula (Yes, there’s math part 2) (Return – Investment) Investment
  20. 20. Technology Spending ● 60% of all respondents spend between 1-3.99% of total firm revenue on technology ○ (44% of Small Firms, 39% of Medium firms and 17% of Large Firms). ● 24% of respondents spend between 4-5.99% of total firm revenue on technology. ● 22% of all respondents spend between $5,001-$8,000 per attorney on technology, followed by 20% who indicated spending $8,001-$11,000
  21. 21. Projecting your revenue
  22. 22. Target Billing Rate Cost Rate = Overhead / Expected Billable Hours Internal Rate = Cost Rate / Expected Realization Rate Target Billing Rate = Internal Rate / (100% - Expected Profit Margin)
  23. 23. Rates and Case Loads Immigration Insurance • $340 Rate • 78% Collection Rate • ~$320k revenue • 213 Cases • $186 Rate • 72% Collection Rate • ~$160k revenue • 38 Cases
  24. 24. Putting in the Numbers Immigration ● ~$320k in overhead coverage ● 5% on Real Estate ○ $16k ● 8% on Business Development ○ $26k ● 6% on Tech ○ $19k ● $259k remaining for salary, etc. Insurance ● ~$160k in overhead coverage ● 5% on Real Estate ○ $8k ● 8% on Business Development ○ $13k ● 6% on Tech ○ $9k ● $130k remaining for salary, etc.
  25. 25. Tools to increase efficiency
  26. 26. Key Tech for Running a Firm ● The basics (ex. Internet, laptop, monitor, headphones, webcam, portable printer/scanner, e-filing, VPN, company website w/ contactform) ● Email (ex. Gmail, Office 365) ● Internal communication software (ex. Email, Slack, Microsoft Teams) ● Video conferencing software (ex. Zoom, GoToMeeting, Google Hangouts) ● VoIP phone provider (ex. Vonage, Corvum, Nextiva, Jive) ● Virtual receptionist services (ex. Ruby Receptionist, Smith.ai, Answer1, and others) ● Document management & E-Signatures, cloud-based (ex. Lawyaw Netdocs, WealthCounsel, DropBox, Docusign, HelloSign) ● Case management software, cloud-based (ex. Clio Manage) ● CRM & client Intake software, cloud-based (ex. Clio Grow) ● Secure client portal (ex. Clio Connect in Clio Manage) ● Online payment services (ex. Clio Payments) ● Accounting software (ex. Quickbooks, Xero) ● Legal research software (ex. Fastcase, Practical Law, Westlaw)
  27. 27. An all-in-one solution for legal practice management and accounting Eliminate manual work and focus on your clients. ● Automatically sync transactions and stay on top of your firmʼs financials. ● Make trust accounting easier and less intimidating with journal entries and reports compliant with your bar association. ● Get more work done outside of the office with two cloud-based tools. Work on the go and keep your records up to date. Clio is a QuickBooks Solution Provider Get a 30% monthly discount off your QBO subscription for your first 12 months. Learn more about the QuickBooks Online integration at Clio.com/Quickbooks
  28. 28. 37 Clio’s Offerings & Additional Resources
  29. 29. Clio Manage Legal practice management software Our most popular product—the industryʼs leading solution to help manage clients, organize cases, and automate tedious tasks and month-end billing. Clio Grow Client intake and legal CRM software Standardize the client intake process with online intake forms, email automation, and e-signatures to build strong relationships, and get powerful data insights to grow your firm. The Clio Suite Legal practice management, client intake and CRM software. Get unmatched performance with Clio Suite, the industryʼs only end-to-end software solution for your firm. Visit clio.com/pricing to learn more. Clio’s Offerings
  30. 30. Clio Payments Clio Manageʼs new online payments platform makes it easy for your clients to pay online using a credit card, debit card, or eCheck—without the need for a third-party payment processor. Clio Drive Securely create, access, edit, store, and collaborate on documents without ever leaving your desktop. Clio for Clients Clio for Clients, Clioʼs new secure client portal allows you to streamline communication with your clients. Text Notifications and Reminders Use text notifications and reminders to avoid the costly no-shows and unnecessary administrative overhead that comes with organizing client meetings. Visit clio.com/features/whats-new to learn more. What’s New In Clio
  31. 31. Polls for Non-Clio and Clio Customers Poll 1: For Non-Clio Customers Would you like to learn more about Clio? a. Yes, I would like to learn more about Clioʼs Suite of products b. No, Iʼm not interested c. Clio Cloud conference d. No, Iʼm already a Clio Customer 40 Poll 2: For Clio Customers Would you like to learn more about: a. Adding Clio Grow to streamline client intake b. Adding Clio Payments c. Clio Cloud Conference d. No, Iʼm not interested or I already use Clio Grow
  32. 32. Additional Resources 41 ● Free PDF from Grubb Legal Consulting: The Ultimate Guide to Building a Profitable Solo/Small Firm Practice ○ If you’d like to learn more about Grubb Legal Consulting, please let us know in the follow up survey ● Meetup: Tips for Optimizing Your Firm's Billing and Collections [Feb 17, 2022] ● CLE-eligible webinar: Disaster and Succession Planning for Law Firms [March 8, 2022] ● Clio Cloud Conference October 10-11, 2022: Get your pass for $399
  33. 33. 42 Additional Questions
  34. 34. 43 Thank You
  35. 35. 45 CONTACT INFORMATION /amygrubb amy@grubblaw.ca https://grubblaw.ca/ Lawyer & Legal Consultant, Grubb Legal Consulting Amy Grubb

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