By Larry Port, CEO of Rocket Matter
Let’s be clear: when I write about getting Lean, I’m not discussing losing the belly fat accumulated over the holiday season, nor the perennial resolution to get in shape and shed some pounds. And I’m not talking about slashing budgets either.
Lean is a specific discipline to run your law firm better. Or your boy scout troop. Or your stationary store. In fact, Lean, which has its roots in the Toyota Production System, is a methodology employed in healthcare, government, software, and many other industries. Yet legal services have yet to enjoy widespread adoption of Lean.
The core concept of Lean is to view your firm as a system that you continually improve. You have inventory, which are your cases, and they move through a series of stages: intake, discovery, trial prep, settlement, etc. By measuring the value of your cases and the speed at which they move through your system, you naturally evolve towards a better understanding of your law firm, which results in a more profitable enterprise.
Lean firms know what their KPIs are (KPI stands for Key Performance Indicator.) They are aware of their ACUV, or Average Case Unit Value, which measures how much each case they have is worth. They understand Cycle Time, which is the amount of time it takes for a case to travel through their system. And they understand their Throughput Rate, which is the number of cases their firm can close and collect on in a given time period.
For example, if a law firm knows their ACUV is $3000 and they can complete 100 cases a year, they know that their income will be $300,000.
Just knowing this information is crucial: when analyzed, firms can then change processes to finish cases more quickly and collect sooner. If you can reduce your Cycle Time, you can finish more cases per year, thus increasing your Throughput Rate. And if you raise your fees, you can increase your ACUV. Both of these boost income.
To do so, Lean law firms invest in technology to automate clunky, manual processes. For example, they can leverage document assembly to rid the need to draft original documents. They can set up workflows so the same deadlines and tasks are established automatically for every new matter. Lean law firms streamline billing and collections, so that invoicing is reduced to a click of the button and clients can pay online or through automated recurring billing.
So good luck in 2019, and I hope you finish Leaner than you started!
Larry Port is the Founder and CEO of legal practice management software Rocket Matter and the co-author of the ABA’s bestselling The Lean Law Firm. Larry Port is the Founder and CEO of Rocket Matter and the co-author of the ABA’s bestselling The Lean Law Firm. You can learn more about Lean and listen to Larry’s podcast at LeanLawFirmBook.com. He can be reached at email@example.com