Breakage

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Retail stores allocate a percentage of their revenue for breakage, to cover losses due to damaged, defective, or stolen inventory.

They also use it as a warning signal. If they allow 2% for breakage, for example, and they have a month or a quarter with 3% breakage, they know they have a problem with something (or someone) and can look into it.

Lawyers should also have a breakage fund. Your accountant may have already set this up for you under “contingencies”.

Contingencies cover uninsured losses: claims, deductibles, lost deposits, bad checks, embezzlement, write-offs, and so on.

If you don’t already have this, consider it. Allocate, say, 1% of your net revenue, to cover contingencies. Deposit the money in a separate account, to prevent yourself from dipping into it.

If you sustain a loss, you’re covered. If you don’t, you can move the funds into savings or another account.

There’s another type of contingency fund you might consider.

Call it a “mad money” account. Or a “don’t worry so much” account.

You can use it to buy the deluxe version of something you want when you can only justify the basic version.

You can use it to buy things you want but don’t need.

You can use it to cover a loss when you buy something you never use or that breaks and can’t be returned.

Without guilt. Without giving it a second thought.

If you’re the type that beats yourself up when you make a mistake, this might be for you. If you’re typically tight-fisted about your budget, this might be for you.

Put $100 a month or $200 a month or $500 a month into a “I don’t care” account and use it to cover mistakes, flings, extravagances, and losses.

Take some chances. Live a little. Don’t worry so much about mistakes.

Breakage happens. But now, you’ve got it covered.

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What are your three things?

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“Perhaps the most important personal productivity tool ever discovered is what we call the “Law of Three.” This law says that 90% of all of your results and eventually, your income, come from only three of your daily activities.”

So says Brian Tracy in a post on his blog.

In 80/20 parlance, those three activities are your “vital few”–20% activities that deliver 80% of your results.

And they’re different for everyone.

Tracy used sales managers as an example. He says their three things are recruiting, training and managing.

So, what are your three things?

Of all the things you do in your practice, what three activities create the most value?

Focus on those three things. Do more of them, get better at them, and you should be able to increase your income at an accelerated rate.

You may also find that you can let go of a lot of things that aren’t your top three. This will give you more time (and energy) for your top three activities, allowing you to compound your results.

But don’t stop there.

Once you’ve done this exercise and found your three activities, do the same exercise for each of those three.

If one of your 20% activities is litigation, for example, identify the top three activities that make you better or more successful at it.

If one of your top three activities is marketing (and if it’s not, what’s up wit dat?), make a list of all of the marketing activities you do and from that list, choose your top three.

Which marketing activity brings in the most clients? Which produces your best clients? Which activity do you do best and want to do more?

Focus your marketing on those three things and consider letting go of or doing less of everything else.

You’ll thank me later.

One of my top three: client referrals

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Too much or not enough?

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Most lawyers present prospective clients with a single option: hire me to do “x” [or don’t].

The problem is, if they don’t want “X” or think it’s too expensive, they have nowhere to go but out the door. If you give them two or three options instead of one, you increase the odds of getting hired.

Right?

Maybe. If you’re not careful, giving them too many options, or the wrong options, can lead to the same result.

Too many options can lead to confusion and indecision. They need to think about it (but don’t). They need to discuss it with someone (who is equally indecisive).

So they do nothing. Or find a lawyer who offers something simpler.

I’m not saying you should stick with one option. Sometimes, that’s the right choice. Sometimes, it’s not.

How do you decide?

There are many factors to consider: the legal issue, deadlines, the stakes, the client’s experience, their budget, how many other attorneys they’ve talked to (or hired before), and more.

It also depends on the quality of your marketing documents and salesmanship.

Most lawyers take the “safe” route. They look at what other lawyers do and copy them. If they all offer one option, they do too.

Some lawyers look at what other lawyers are doing and do the opposite. The masses are almost always wrong, they believe, and even if they’re right, being different is the essence of differentiation.

The smartest bears in the woods admit they don’t know and try different approaches. They offer different groups of prospective clients different options or they offer all clients one option for six months and a different set of options for six months and see what works better.

They might have different packages or price points for clients with different budgets, for new clients (to get them in the door) and returning clients, and for clients in different markets. They also have something to offer to prospective clients who balk at the first option.

They track their numbers and that’s how they know.

What’s that? You want a simpler answer? “Just tell me what to do!”

I just did.

This will help 

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12 lists for organizing and managing your practice

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I like lists. They keep me organized, focused, and productive. I use them every day.

Take a gander at this list of lists, to see if there are any you might want to add to your productivity toolkit.

  1. Current Projects. Everything you’re working on (or should be). Having these in one place will keep you from neglecting anything and see if you’ve got too much on your plate and need to offload something.
  2. Next Projects. What do you intend to work on once you’ve completed your current projects? This will help you prepare for those projects, e.g., write down ideas, research, etc., so you can start them without delay.
  3. Ongoing & Recurring Projects. Other projects or responsibilities, e.g., updating your website, networking activities, content creation, client relations activities, your newsletter, preparing reports, etc.
  4. To Do This Week. 3-5 important projects to focus on in the next week to ten days.
  5. To Do Today. Look at your “this week” list, your calendar, your project lists, and elsewhere, and choose 3-5 “MITs” (Most Important Tasks) for the day.
  6. Routines. Checklists of weekly or daily tasks for tidying up, organizing, and planning your work. Examples: weekly review, inbox zero, cleaning up computer files, paying bills, morning and afternoon “startup” and “shut down” routines.
  7. Goals & Dreams. Monthly, quarterly, and annual benchmarks. Long-term goals or vision.
  8. Someday/Maybes. Ideas you’re considering but aren’t yet committed to doing.
  9. What’s Working Now. Questions that prompt you to reflect on what’s working well so you can do more of them.
  10. What’s Not Working Now. Questions that help identify problems, bottlenecks, and poor ROI, so you can eliminate, curtail, delegate, or fix them.
  11. Budget. Track income and expenses to reduce debt, increase profits, manage investments, etc.
  12. Remember. Ideas, quotes, or accomplishments you want to keep in front of you, to stay motivated, focused, and on message.

Do you use any lists that aren’t on this list?

My Evernote for Lawyers ebook

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Rewarding and incentivizing clients

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Who says you have to charge all of your clients the same fee and/or the same terms?

You might offer

  • Former clients an incentive to return (e.g., lower fee, additional service as a bonus, extended payment plan, a free review, a free update, etc.)
  • First-time clients a special offer to try your firm
  • Existing clients an incentive to hire you for other services or to hire you more often
  • Longtime clients a lower rate or to “lock in” the existing rate for two years (by doing something)
  • A lower rate to new clients who provide a bigger retainer
  • Different packages, at different price points, to give clients incentives to “buy” more now instead of waiting

Are you getting any ideas?

Try it with a small segment of your client list. For example, you could send a letter to clients who haven’t hired you for ten years or more and make them a special offer. If you like the results, you could roll out the offer to other “old” clients.

Wait. Can you reward and incentivize lawyers and other professionals to provide more referrals? You betcha. You can learn all about it in Lawyer-to-Lawyer Referrals.

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Voicemail for grownups

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I don’t know about you but I hate voicemail messages like this: “Hey, it’s Don and I’ve got a quick question. Call me back. Thanks.”

Phone tag much?

If you want me to respond, ask me what you want to ask me or tell me what you want to talk to me about, and make it as easy as possible for me to reply.

Like this:

“Hey, it’s Don; it’s Monday and I’m trying to figure out which form to use for [whatever]. I have to file by Wednesday at 5 pm so if possible, could you get back to me by the end of the day Tuesday? I’d really appreciate it. You can either email me at [email] or text or call me at [number]. Thank you so much!”

Of course, your outgoing voicemail message should prompt callers to leave sufficient information:

“This is Joe Lawyer. Please leave your full name and a detailed message about the purpose of your call. Also, make sure you leave your phone number or numbers, even if you think I have it, and the best time or times to reach you. For a quicker reply, please email me at [email]. Thank you.”

You should also tell callers when you or someone from your office will get back to them so they know what to expect.

Oh, and when a caller follows instructions, praise them because so many people don’t.

Do you know the formula for getting more clients?

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Do you deserve a raise?

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Whether you work for yourself or for a firm or other employer there will come a time when you feel compelled to ask for a raise. (Yes, you can ask yourself for a raise.) I encourage you to first do an exercise to prepare for that conversation.

The exercise is simple. Write down all of the reasons you deserve to get paid more than you do now. Not why you “want” a raise or “need” one, why you deserve it.

This will prepare you for the time when the salary conversation takes place or allow you to justify increasing your “draw”.

It will also show you where you need to up your game.

You might note that you’re more qualified or experienced than your competition, you get better results in the courtroom or boardroom, you are regularly singled out by the Bar or your community, and the other usual yardsticks.

But that’s just the foundation.

Your value to your firm might also be measured by how you save your firm money, viz a vie fewer complaints, claims, negative reviews, or lawsuits. You might also make the case that you don’t engage in extravagant spending.

Your value might be extolled in terms of how you get along well with your subordinates and coworkers and how you help them. Note that this means less turnover and greater productivity.

You might mention how you regularly find and implement new ideas, adopt new resources and methods, and keep your firm on the cutting edge.

Do you do anything extra for the firm, anything not on the job description but that helps your employees, clients, and friends of the firm? Add that to your list.

Write it all down and wherever possible demonstrate how each item makes the firm more profitable because at the end of the day, increased profit is how you best make the case for increasing your pay.

Which leads me to the biggie: You bring in lots of business.

Describe how many clients or cases you bring in each month, the quality of those clients or size of those cases (e.g., lifetime value). Also note how little your rainmaking costs the firm, e.g., most of your new business comes from referrals which take little or no time or money compared to other marketing methods.

Note how you create quality content or presentations that bring web traffic that builds your list and leads to more business.

Note how (and why) you have less client turnover, how you help other lawyers in the firm cross-sell their services, or how you are building a great reputation and following in one or more key target markets.

Write it all down and take a good long look at it. You might see that yes, you truly are entitled to a raise, or you might realize you have work to do.

This is the big one because if you do well in this department, if you regularly bring in lots of business and increase the firm’s bottom line, you can almost ignore the other areas.

Create your marketing plan with this

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You’ve got to know your numbers

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How much is a new client worth to you? You need to know this so you can make better decisions about how much you can spend to acquire and service them.

If a new client is worth $5,000 on average and it costs you $1,000 in overhead to handle their matter, you might conclude that you can afford to spend another $1,000 to bring in a new client.

Spend $3,000, earn $2,000 profit, rinse and repeat.

To figure out how much a new client is worth to you, don’t limit yourself to the amount they pay initially. A new client might pay you $5,000 today and another $25,000 over their “lifetime”.

On the other hand, “lifetime” is a long time and you should probably use a shorter period, say two- or three-years. If the average client pays you $10,000 over their initial three years, for example, you’ll have a better idea of how much you can spend to acquire and service them.

Don’t forget to include the value of their referrals. If the average client refers one client or case every three years, and that client pays you $10,000 over their first three years, that means that a new client is worth $20,000 to you.

Knowing your numbers also tells you where you might need to make some changes. You may look at the average value of a new client and decide you need to get some better-paying clients. You might see that while you don’t make that much initially, you make a good profit on the back end and, therefore, can afford to spend more to bring in new clients. Or, you might realize the opposite. You don’t make a lot more after the initial engagement or case and so you have to maximize profits on the front end.

You might realize that you’re paying too much in overhead for each client. Or you may realize that you don’t spend that much per client and you can afford to hire more staff to handle the work, freeing up more of your time to do higher-margin trial work, networking, or other marketing projects.

Anyway, you need to know your numbers.

How many referrals does the average client give you?

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A simple way to cut your marketing costs

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When you’ve heard advertising spots on the radio or TV and even online, you’ve probably noticed that after a new ad has run for awhile, you start hearing a shorter version of it. The original spot may have been 30 seconds or one minute; the shorter version might be ten seconds.

The shorter version has the same message and offer but leaves out a lot of details. Advertisers will often run the long version for several weeks, followed by the shorter version for a period of time. They might then run the long version again, or run a mix of short and long ads.

Obviously, advertisers do this to save money. But aren’t the shorter ads less effective?

To some extent, yes. People who haven’t heard the longer version won’t hear all the details and thus won’t be persuaded to take the next step. But regular viewers/listeners have heard the longer version, and for them, the shorter version serves as a reminder to do what they “almost” did when they heard the original ads.

The shorter ads also prompt listeners to pay attention to the longer ads the next time they run.

If you don’t advertise (and never plan to), note that this concept can be applied to other kinds of marketing.

All marketing comes at a cost: money, time, or both. If you create content, for example, you either take some of your time to do that or you pay others to do it for you. Creating (or ordering) a mix of long and short content can reduce your costs without a commensurate reduction in effectiveness.

If you invest a total of four hours a month at networking events or engaging on social media, you might be able to get the same results (or close to them) by cutting out an hour or two.

Instead of writing 750 words once a week for your newsletter, you might get just as much engagement and results by writing 750 words (or 500 words) once a month, and 250 words the rest of the time.

This idea can be applied to direct mail (e.g., letters vs. postcards), printing brochures (e.g., full color vs. two-color or black and white), and any other marketing where your target market will hear from you more than once. Take the savings and spend it, or re-invest it in more ads, content, and so on.

Need more traffic? Subscribers? New clients? This will help

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I thought that was included

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I trust that most of your clients would describe themselves as “satisfied”. You want them to be thrilled (and let everyone know that), but you’ll settle for satisfied.

Because it’s so easy for a client to be just the opposite.

It happens when you don’t do something they thought you were going to do or you charged extra for something they thought was included.

If you read negative reviews posted about lawyers, after “not keeping me informed” or “didn’t return my calls” and the like, numero uno is a variation of not getting what they expected.

Of course, it’s never their fault. It’s your fault and the world shall know it.

That’s why you have to go out of your way to CYA. Not just to protect against bar complaints or lawsuits, but to make sure your clients know exactly what they get (and don’t get) so you have a shot at keeping them happy.

Especially when it comes to money. Especially because clients are stressed out. Especially because so many clients don’t trust lawyers.

You can’t just slide the retainer agreement across the desk and hope they sign it without reading it. You need to explain everything, slowly and in plain English. Give them a list of FAQs that spell out exactly what you will do and when, and what you won’t do and why.

Ask them to acknowledge that they understand everything. Asking them to initial lots of things is also a good idea.

Maybe give them a three-day cooling off period.

Because if it’s possible to misunderstand something, your clients will find a way to do it. And blame you.

Marketing 101: keep your clients happy

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