The end of one year and the beginning of another is a time for reflection. We look back on the past year and consider our successes and failures — in our relationships both at work and home. It’s a time for resolutions and making the new year better than the one just ended.

If you’ve just finished yearend financials, you know whether 2004 was better than 2003. What steps can you take to ensure 2005 will be even better? Of course, the simple answer would be to work harder. The better answer would be to work smarter. The first step to a better year is understanding where your money went during the previous one. Don’t just file yearend financial reports. Review them carefully. See where your income came from. Consider whether everyone is doing the work necessary to reach the firm’s financial goals. It may not simply be a question of competence or effort. Maybe firm leaders didn’t use the staff as efficiently as they could have or didn’t assign the right tasks or clients to the right people. Maybe the firm was slow to collect fees. Maybe bills weren’t presented in a timely fashion. Perhaps too much staff time was spent entering time slips and preparing bills because timekeepers refuse or haven’t been encouraged or trained to enter their own time directly into the computer as they work.

Looking closely at the firm’s personnel, clients and procedures will enable you to make some smarter decisions about how to allocate staff, what clients to pursue, from which ones to request retainers to avoid collections issues and what internal steps to take to streamline recording time and preparing bills.

It’s 2005 — and some small firms’ billing programs are now 20 years old. Firms where lawyers continue to handwrite their time for someone else to read and enter into the computer must consider whether this is the best use of resources. While some attorneys argue they capture more time by writing it as they work, there are hidden costs in requiring a staff person to recreate those entries into the firm’s billing system — introducing the likelihood of errors, requiring the work to be edited and creating an inevitable delay between the time the work was done and when it’s ready to be billed. Some lost time is more than offset by payroll costs associated with billing clerks, especially when the alternative might be more paralegals or staff dedicated to client related activities.

Billing policies

Many firms raise their billing rates at the beginning of a new year. It’s also a good time to look at other billing policies. For example, if there’s a large amount of uncollected fees, what’s being done to collect it and, more important, what will be done this year to prevent accounts receivable from getting further out of control? Law firm management experts have many suggestions. Some are minor changes that can make big differences; others require careful consideration to see if they fit with your firm’s relationship to clients. Moving toward a regular billing cycle is a first step to even out cash flow and improve income. See if billing rates can be streamlined. I often work with firms that have a wide range of billing rates that are not determined by the client but rather by the whim of the originating attorney.

Billing a client as close to the time the work is done is the best opportunity to be paid in full. If considered from the client’s perspective, the day the transaction concludes successfully or the trial ends, even in a loss, the client knows you did your best and are entitled to be paid. If you wait a month or so before presenting a bill, the client is more likely to have begun to experience “buyer’s remorse” or think the fee is more than the value of the result. Consider asking for retainers from clients you think are likely to have payment problems. Some firms have been successful in allowing clients to pay via credit card. While there are fees associated with such transactions, they’re usually outweighed by receiving the full amount when requested rather than becoming your client’s banker.

Marketing

Look closely at the steps your firm takes to obtain clients, perform their work and retain them. Is it a haphazard set of steps or is there consistent information collected about each client so you're in a better position after their initial engagement to offer them additional assistance? How do new clients find your firm? Are they referred by former clients? By other attorneys? Did they find you by an internet search or an article you wrote? Is this something you ask potential clients? Do you know which marketing efforts paid off last year? I know that many potential clients who call me have already looked at my company’s website. This means that maintaining and improving the information on the site is a high priority to keep existing clients and attract new ones.

While it’s good to experiment and try new ideas, it’s also important to know what works in luring new clients. For example, I know that after each monthly column appears in New Jersey Lawyer, I get a few calls from potential clients. I also know that the person answering that initial inquiry can either help make them a client or send them to my competition by not being responsive. In the past, speeches at local bar associations often resulted in several new clients. But, more recently, unless it is a statewide or national event, these audiences are less likely to perceive the need to hire a consultant. (My experience is they’re looking for free advice.) By doing this evaluation, I’m in a better position to determine how to allocate my time toward marketing.

How you decide to accept a new client also should be reviewed. Do you do credit checks? Do you research their business history? Do you ask whether they’ve worked with other firms and what happened in those situations? Review the new clients you worked with during 2004. How did they find your firm? Were they the type of clients and work you want more of? If so, reward those who were helpful in bringing in those clients. Don’t limit this to attorneys inside your firm — often your support staff have helped win a client or have gone the extra mile to make clients happy when you weren’t available.

Technology upgrades

Lawyers who call me for technology advice often begin by saying something like, “We need X product.” As a consultant, my first question is, “Tell me what’s broken in your firm and what you’re trying to fix.” (Maybe that’s because too often they mix up similarly named products — thinking they need HotDocs for document management when they meant Worldox or that they need Timeslips for practice management when they’re more likely in the market for Time Matters.)

The beginning of a new year is a good time to look at all the work done on a computer and consider whether the firm has the right combination of products, if the staff is using them properly or could benefit from some additional training to maximize their use. With more complex programs for practice management, you also might want to consider whether it’s worthwhile spending time and effort customizing them to better suit the internal flow of information.

Consider the new year a time to do an “annual physical” for your firm. Take a deep breath and evaluate how the office not only uses its hardware and software, but also its personnel. Are your computers aging? Were they bought in the last century or are they running a version of Windows that Microsoft stopped supporting a while ago? Is the software still available? Are people available who can help if you need it?

While there’s no requirement to upgrade software each time a manufacturer offers a new version, you mustn’t fall so far behind that you can’t safely run older programs on new computers. Microsoft officially has a three year cycle for its Windows operating system. This means computers purchased with Windows XP have a shelf life of about three years. Since hardware manufacturers are forced to offer the latest version of Windows, it becomes difficult over time to purchase computers that will run older software.

Planning and budgeting for regular upgrades of hardware and software will ensure less downtime and less traumatic transitions between upgrades. Take time to consider what has worked well, what might need improvement and what new systems can resolve. Sometimes it’s simple things like replacing old monitors with large flat screen models that improve ergonomics. This could reduce absenteeism related to physical ailments resulting from a poor physical setup. Rethinking the allocation or location of printers or who has access to what programs can improve productivity with minimal expense.

Once you’ve determined what worked and what didn’t in the past year, the most difficult task is ahead: You must act on the advice you’ve received and implement the solutions.

Wishing you a happy, healthy and peaceful 2005.

Carol L. Schlein is president of Law Office Systems in Montclair, a training and consulting firm specializing in law firm automation. Copies of previous columns are on her company website, www.losinc.com. For information about her quarterly meetings for Time Matters users, check the website or e-mail info@losinc.com. Schlein formerly chaired the Computer and Technology Division of the ABA Law Practice Management Section.

Questions for Carol L. Schlein on law office technology may be faxed to New Jersey Lawyer at (732) 650-7010, e-mailed to news@njlnews.com or mailed to “Law Technology Questions,” New Jersey Lawyer, Edison Square, 2035 Lincoln Highway, Suite 3005, Edison, N.J. 08817.