The Lawyer's Office

I first heard the term benchmarking years ago when I was a sales manager for a computer manufacturer.

We were asked by our prospective customer to run specific programs against a specific standard so the relative performance of our product against other computer manufacturers we were competing with could be assessed.

We've heard a lot in the news in recent weeks and months about benchmarking. It's a term members of Congress have been using to identify certain “checkpoints” in the progress of the Iraq war.

In this case, many members of Congress say if the United States doesn't reach certain goals by specific dates, then they want the U.S. to get out of Iraq.

From its original computer connection, the term benchmarking has evolved into a term commonly associated with relative performance compared to a standard.

Whether my computer runs a program faster and more efficiently than yours, or whether you agree or disagree with the current debate between Congress and the White House, benchmarking is a method of measuring the progress of a project or a process.

You, too, can measure the success - or lack thereof - of your law practice by establishing benchmarks.

Think of benchmarks as you would the score in a sporting event. Your favorite team may trail the opponent by a few points, but if it's early in the game, you can still hope they can do what it takes to eventually overcome the deficit.

As the game progresses, and as you monitor the events on the playing field, you begin to set little goals for your team.

In basketball, it might be to reduce the lead to 10 points by the five-minute mark. In football, it might be to get it below a touchdown by the five-minute mark. If your team is winning, you probably aren't comfortable until the lead is above a certain mark at a certain point in the game.

In sports, you can't change the outcome of the event by simply being there, but the fun of spectator sports is watching the event unfold and feeling like you're part of the process.

In business, you also need to know the score, but to succeed, you must be more than just a spectator. To win in business, you need to outscore the opponent by being a participant.

Participating means setting goals to be achieved at certain points in time, monitoring the progress, and taking corrective action along the way, if required.

In this discussion, think of your opponent as not another lawyer or firm, but rather the dollar amount you must generate to reach the expectations you have.

Generating those dollars is the contest, and to win the game, you need to bring in dollars in the most efficient, productive and profitable way. It's an ongoing challenge with distractions and detours all along the way, and you need to know the score during the process, not after the game is over.

Measurable benchmarks give you that ability to see where you are during the game. Traditional financial statements and accounting reports are more like hearing the final score.

Distractions and detours will impact your progress negatively. Getting bogged down in non-profitable files, dealing with delinquent accounts, and even losing a key employee can turn a smoothly running operation into a money pit instead of a money machine.

Having the benchmarks in place and continuing to focus on reaching them will get you through the more difficult times. Following are some general benchmarks you may wish to consider:

• Set a reasonable billable hour (billable hour equivalent for plaintiff firms) goal for each day. Monitor it weekly.

• Set a reasonable marketing-hour goal for each week. Record it in your time-and-billing system as marketing time. Monitor it monthly.

• Make a personal contact with at least one delinquent account each day and write it off if it's truly uncollectible

• Review your operating expenses monthly, and be alert for unexpected changes. Always be prepared for a big surprise by keeping a reserve, or have a plan to deal with it.

• Monitor your cash advances on files each month.

• Have an established next-bill date on every open file and stick to the schedule.

Know the score!

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