You might be the consummate personal injury attorney—a keen legal mind combined with experience, an empathetic nature and a passion for advocacy. You might take on only cases you know you can win. You might have a heavy workload with potential clients lining up to hire you. But without the right legal practice management software, you may not have the profits necessary to sustain a thriving practice.
Contingency billing — and budgeting for contingency-based PI firms — are tricky. Contingency is a boon for clients who might not otherwise be able to afford to hire an experienced attorney. It’s also a benefit to the court system. Since lawyers are paid only when they win their cases, they are incentivized to avoid dubious claims that could clog up the system.
The only party who potentially draws the short straw in a contingency case is the attorney. Most personal injury cases don’t resolve for one to three years. In the meantime, lawyers incur case-related expenses — court and filing fees; discovery costs; and fees for expert witnesses, medical records and incidentals. Additionally, the law firm itself must pay its regular business expenses—payroll, rent, malpractice insurance, association subscriptions, office equipment and supplies.
When money is flowing out and you have no guarantee of when the tide will turn, you need tools to help keep your business afloat. Here’s how Smokeball can help your contingency-based firm build best practices and successfully balance your budget.
1. Hire the right help
You went to law school to become a lawyer — not an accountant or marketing guru. But because your PI firm is also a business, you need the professional acumen to tackle these areas. If you or your staff don’t already have financial or marketing experience, bring on a full-time hire or contract a freelancer or outside firm for help.
Your financial professional will help your firm build a realistic, contingency-based budget. Make sure they’re an expert in managing cash flow for variable businesses like contingency-based firms. They’ll also help you navigate the complexities of case financing and taxes.
Likewise, your marketing expert must understand the intricacies, strategies and rules of law firm advertising to help your firm develop marketing that drives profit. A solid marketing manager will position you as an expert in personal injury law in media articles written by or about your firm.
2. Use metrics to manage your firm
Time is any firm’s greatest resource, but when you work on contingency, managing your time without sacrificing client relationships can leaving you feeling like you’re coming up short in at least one column. Your firm’s metrics exist to reassure you — or show where you can adjust to achieve a better balance. Compare your hours billed and worked against fees collected to gain an understand of your hypothetical per-hour rate, even if you’re billing on contingency. If you’re unintentionally working at a lower rate, look for areas where you can become more efficient.
You may also find it’s necessary to diversify your case load, practice areas and even billing types to achieve a balanced budget. Limiting contingency work to a certain percentage of your overall revenue is another way to avoid outside firm financing or drawing down your personal reserves.
3. Marketing matters
You’ve probably heard that referrals are the best sources of new business, but you can’t rely on a steady flow of quality clients simply showing up at your door — you must market your firm.
Your firm’s marketing budget also should factor in a mix of marketing tactics, including your own website, Google ads, social media, paid posts, outdoor media, TV, radio and direct mail. Measure the effectiveness of these initiatives over time by tracking the source of each new client against their profitability to refine your marketing sources and strategies.
4. Work smarter, not harder
How much time does your team waste repeatedly filling out documents, searching for up-to-date forms and completing other mundane tasks? No matter your answer, it’s probably too high.
This is where your legal practice management software comes in. Smokeball’s up-to-date library of more than 18,000 customized, self-populating court forms pull details from the related matter, saving you time and avoiding costly errors. Legal calendaring tools manage your calendar, docketing and case management in one place, to give you a streamlined view of your day.
Client retention is also an important — and potentially time-consuming — piece of your budget. Because personal injury clients are often going through the hardest time in their lives and looking to their attorneys for reassurance, they may leave for another firm if they feel they’re not getting enough attention. Smokeball Communicate provides an all-in-one tool for immediate reassurance with a personal touch. Because Communicate messages are also save to a client’s matter, your entire team can access every communication and create a consistent client experience.
Running a successful contingency-based law practice involves more planning and organization than other practices. But with the right professionals, planning and technology tools on your side, you’ll more accurately predict income versus expenses and achieve greater financial security.