Law Firm Economics 102

So as you probably already know I had a dispute withthe guy I originally hired to build a website for me, it ended up inarbitration etc., etc. etc.

Not wanting tokeep this story private just for my Members I've been blogging aboutthe whole thing in case you're interested in the details. But Kristin asked a question in one ofthe comments that made me realize there are alot of lawyers who neverstudied law firm economics and that could be hurting you.

What follows certainly isn't a substitute for a more detaileddiscussion. Consider it to be an appetizer to get you thinking in theright direction about the financial management of your law firm:

Lesson # 4: In hindsight, should I have pursued the NetArb orsimplywalked away from the $500? I certainly made enough mistakes in thismatter but I still think I made the right call on this point of notwalking away from my money. Most small law firms operate on between a33-50% margin. Thatmeans in order to spend $500 to treat your spouse to a nice spa-day youhave to earn between $1,000-1,500 in gross revenues.

So consider thatwhen you walk away from a dollar you'll actually have to work to earnbetween $4-6 more of them to make up for theone you're walking away from, just to break even.

Now multiply that into the number of minutes or hours thattranslates into in your practice and consider the last time you had toapologize to friends or family because you couldn't be there with themdue to having to be in the office to earn your living. And let THATimage stay in your mind the next time you go into a negotiation whereyou're asked to hand over your money.

Gotyou thinking? Good!

Here's somethingelse to think about too...it's now official the year is more thanhalf-way over. Time to review the goals you set out for yourself sixmonths ago and either pat yourself on the back or else it may be time toget some help so you can celebrate on December 31, 2010 and start 2011on the right foot.

~ RJON

p.s. In case my hint above was too subtle, next week I amgoing to be opening-up 5 more spots in my Small Law Firm Management& Marketing Bootcamp Program. E-mail me if you think you may wantto reserve one of them for yourself!