15 Dec Law Firm Planning for a New Fiscal Year
It’s that time of year again – the impending new year celebration at your law firm most likely means you are also gearing up for a new fiscal year. That planning and strategizing typically involves reevaluating how you are spending your law firm’s money and where your money is being allocated.
Setting yourself up for success in the new fiscal year can be a daunting task to take on if not properly prepared. This article will dive into all the different areas attorneys should consider when making fiscal decisions for the new year, regardless of what the future entails.
Consider Your Clients
Knowing who your client base is key to understanding your law firm’s financial status. Patterns in your client base can tell you where you are billing the most hours and where you are making the most money. Reviewing what your current client base looks like enables any lawyer to understand what their target market is, and what it can transform into for the future. In other words, opportunities to reach new clients and create new business can be identified by performing important client portfolio reviews.
A shortlist of items to consider when assessing your client portfolio includes:
- What referral sources your clients are coming from. This will help you determine where to spend your marketing dollars.
- Where repeat business is coming from.
- What are the demographics and geographics of your clients?
Taking a client-centric approach to your law firm and striving to understand how you are building your client relationships is crucial to starting off your fiscal year right. There are simple steps you can take to become instantly more client centric, such as making sure you are present in your client’s case, effectively utilizing your legal staff, defining expectations with clients, communicating consistently, and explain fees and expenses.
Figuring Out Financial Performance
It’s no secret that a large amount of law firms of all different practice areas suffered significant business decline throughout the COVID-19 pandemic. When it comes to financial performance, it is now more important than ever before to assess your law firm’s strengths and weaknesses as well as market trends and risks taken.
Addressing your financial performance is one part – the next is setting up your law firm for the new year ahead. Creating a long-term financial strategy and ensuring you firm has access to sufficient capital is a big part of being ready for the new fiscal year. Tracking different reports such as income statements and retained earnings is also vital to understanding your firm’s financial performance and using that knowledge to ring in the new year ready to take on whatever the future brings.
Taking Talent and Culture into Account
Talent management does not always come easy to attorneys but cannot be ignored when it comes to the new fiscal year ahead. Understanding and making tricky decisions on what you can spend on talent management and recruitment can make or break a law firm in the new fiscal year. An annual talent review must be performed to find out if an improvement in talent can be reached, and if what you spend on both inside team members and outsourced work is helping to streamline your firm operations.
The pandemic also brought new considerations for lawyers when working to keep current employees happy and appreciated. Offering things such as career development, engagement, rewards, and performance feedback helps to improve overall firm talent and maintain a steady retention rate.
While evaluating and promoting talent management in your workspace and achieving high financial performance is important, it can’t overshadow your law firm culture. An adept lawyer must evaluate their law firm’s culture and operations each year in order to recognize which employee initiatives are working for the betterment of your firm and which are hurting your values and internal processes.
Setting the Stage with Succession
Lawyers must have a strong succession plan in place for their law firms, or you leave your clients and the future of your firm in jeopardy. A leadership succession plan is important in ensuring your law firm is in strong hands and will continue to be prepared for each new fiscal year. Client relationship succession planning is also essential to knowing how your clients will be taken care of year after year.
An annual review of your succession plan will set your law firm up for the success you need to continue into the new fiscal year with the confidence your law firm will continue to be stable.
Don’t Forget Cybersecurity
One last, but certainly not least, area to consider at the start of your fiscal year is your law firm’s cybersecurity practices. According to a study performed by the FBI, there has been a 300% increase in reported cybercrimes since the COVID-19 pandemic began.
It only takes one data breach to ruin your law firm’s reputation. Client data can be lost or stolen, revenue can be lost, and your local bar can take action in the scenario of a cybercrime that affects clients. That is why it is just as important perform an annual cybersecurity assessment as you prepare for the new fiscal year as it is to evaluate financial performance or your client base makeup. Knowing the risks and understanding their impact will ensure your law firm is ready for anything the digital landscape brings your law firm each year.
Here is a checklist for you to run through when conducting a cybersecurity assessment:
- Create a security feedback loop. Follow security.txt standard to allow researchers and users to contact your security team with known vulnerabilities.
- Enforce strong passwords.
- Establish an incident response plan.
- Regularly update permissions.
- Use multi-factor authentication.
- Make sure you’re training your employees on cybersecurity best practices.
- Maintain an audit trail of data access.
- Stay up-to-date with government regulations.
- Update software.
How does Lexicon help manage your fiscal year plan?
Even with knowing which areas to evaluate and which expenditures to focus on, the new fiscal year can be an intimidating task for any lawyer. Everyone wants to start off the year on the right foot, and with a thoughtful plan in place to set up your law firm for success.
Lexicon is a one-stop-shop with a holistic suite of legal services and software that makes it easier than ever before to make new fiscal year decisions. With expertise and more than a decade in managing law firms and everything you need in one place, the hassle (and expense) of multiple vendors disappears. Find out more about what we can do for your law firm by visiting LexiconServices.com or contact us today to learn more.
Happy New (Fiscal) Year from all of us at Lexicon!