Before determining what financial targets should be set it is critical to determine exactly where the firm is sitting. For example, what is the true profitability of certain streams of work and individual practice units and clients?

How is financial performance currently being measured?

Do existing systems allow for the harvesting of all essential information?

Strategic plans may be flawed from the outset because of an insufficiently precise understanding of how individual components of the business are performing.

PTM is able to provide an independent external assessment of a firm’s performance: a foundation for successful financial management planning.

Having successfully assessed where a firm stands through a baseline evaluation and with that, how the firm’s component parts (professional and administrative) are performing, the next thing is to set targets for improvement.

A business that does not set targets for improvement is on a path to terminal decline. Are the targets to be BHAGs ? Stretch targets? Incremental improvement targets? What best suits the culture of the firm or the culture that the business owners wish to promote?

What should the firm be aiming for? Is there an industry standard or do the characteristics of the firm demand a departure from any such standard?

How often should performance to target be assessed? Should the target itself be re-assessed? If so, when and what criteria should justify any such re-assessment?

Are there internal impediments to achieving targets? Is everyone in the team on board with the targets that have been set? What’s holding a team back?

Are there external impediments to success? Why does client X routinely pay late and thus distort targets for debtors and ‘lockup’? Was the revenue target for client Y too optimistic and if not, what is getting in he way of growth from that quarter? Questions like these demonstrate the importance of keeping close to clients and how qualitative client surveys → can be invaluable in this regard.

PTM assists law firms in establishing and implementing financial targets.

Revenue is the key to the success of any business. Pricing however is often the most fraught of the challenges confronting a law firm.

Questions that commonly arise include:

• What pricing options does the firm offer clients? How is pricing determined? Do prices produce adequate return on investment?
• Do clients expect to receive different pricing options?
• Does the firm invest too much of its resources in work or clients who produce too little return? Is there a strategy to repair the imbalance?
• Are rates set by the client? Is this a ‘must have’ client? How can work be done differently to make it more profitable?

Many of these questions can be answered by reference to the firm’s own knowledge of its clients and their expectations. For the firm to obtain real insight it could include ‘pricing’ as an issue to be explored in a qualitative client survey.

Law firms can look to PTM for assistance in analysing pricing practices and developing pricing options and cost reduction strategies.