Let’s talk benchmarks, what are they and why do you need them? Benchmarks are a way to track whether or not you’re earning enough to meet your financial goals. The way that I have set up benchmarks in my law firm, and the way that I encourage you to set benchmarks in your business and for your law firm, is to start by figuring out how much money you want to make a year within your business. Let’s call it a million dollars. If you want to make a million dollars a year, then you need to figure out how to get there on a monthly and weekly basis.
It’s a pretty simple calculation. As much as I personally don’t like math, it’s still simple enough to figure out, even for those of us who don’t like math and say, “That’s why I became a lawyer.” You take your goal number, let’s call it $1,000,000, and you divide it by 12. That number is how much you need to earn each month, which in this case is $83,333. Then you’re going to take $83,333 and divide it by 4 since there are 4 weeks in a month. That will give you what you need to be tracking to see if you’re going to be on the right path to meet your goals. I rounded it out to be $20,000 a week, more or less, which then became my goal of what I want to make each week. I know that comes out to a little bit less than 83,333, but it still keeps me on track and gives me an idea.
After setting this goal what I do is every single week, on the 7th, 14th, 21st, and 30th, I look at the numbers in my law firm to see if I am hitting that goal. One of the questions I get asked a lot is, “Well, are we only going to count new contracts towards that number?” The answer is no. You count everything, every single cent that comes into your law firm, whether it’s a contract, a consult, or a monthly payment needs to be tracked in this. I have a case management system and that’s what we use to process our receipts and our payments. We have a credit card system, we have all of those things. However, there is nothing that can take the place of a master Excel sheet.
Our business manager and I are the only people who have access to this Excel sheet. My business manager goes in and logs every single payment that is received. When it comes to your money, you can never, ever, ever be too careful. You can never overdo it when it comes to tracking your money. Even if you have a great system through your case management system, I urge you to keep just a simple master Excel spreadsheet. On the master Excel spreadsheet, you divide it by month, just all in one list, and then you put the date of the payment, how much the payment was for, indicate whether it was a monthly payment, a contract, or a consultation, and then list the name of the client. Every single thing is tracked on this master sheet, so it makes it really easy for me to check in with my benchmarks every seven days.
Another great thing about having this Excel spreadsheet is that you always have a backup. For instance, let’s say that someone makes a payment, and for some reason, they weren’t issued a receipt. Then it can be really hard to track down that payment, especially if it wasn’t made by credit card. What if they paid with a check, or in cash? By having this Excel spreadsheet, it’s like a backup plan to keep track of all of the payments that come in your firm. It has that dual purpose, it’s a backup for your records, and it’s a way to track your benchmarks.
At this point, you may be wondering what you do if you see your benchmarks and say, “Well I’m on the 7th, and I’ve only gotten $10,000 this month, and by the 7th I’m supposed to be at $20,000?” Let me tell you, that should light a fire underneath you and get you moving towards your benchmarks. Let’s say that I’m down a lot in my benchmarks, what I do is get on Facebook Live and I’ll run a promotion. I will say, okay, I’m going to do a discounted consultation. I will host a legal clinic. I’ll plan it, and I’ll do it for two weeks from that date so I can get people in the door. Because if I’m short in my first week, then that means I have to make it up for the rest of the month. I start to put some strategies into action to help build my income as fast as I can so I can meet my benchmarks.
Someone asked me, “Oh, well don’t you feel like you’re focusing then too much on the financial part and you’re not focusing on the legal part?” My answer to that is no because you have two roles if you are running a law firm. One role is being a businesswoman, and the other role is being a lawyer. These are two separate roles, so I have to be making money and I also have to be doing legal work. I have to do both things. My financial goals have nothing to do with my legal goals. Of course, I have to keep up with the caseload, but my cases are very streamlined so I can turnaround cases in one week or less, so I’m not as worried about that.
What I have to focus on more than anything is making sure that I’m meeting my numbers. My numbers are determined based on what I want to earn for myself, and on the amount of money I want to be in place in order to support everyone who relies on my law firm. Not a single member of my law firm should ever have a late paycheck, nor should they ever have to worry where their money’s coming from, and they never have, because I’m very focused on making sure that we are earning enough to keep our practice running and our staff happy. The way that you can do this is to start by creating benchmarks. You have to make financial goals, and then benchmarks on how to reach them, and track, track, track those benchmarks!