My friend and partner Dan Hutchison from Hutchison Consulting has written this guest post to explain how to update PCLaw for the recent change in the IRS allowed mileage rate.  I look forward to speaking with Dan and Wells Anderson at “A Side-by-Side Comparison: Law Practice Management Software Applications” sponsored by the Minnesota State Bar Association on Febuary 5, 2010.

The first step is to make sure “Use Quantity x Rates Entries” is checked.  This is in System Settings> Data Entry>Expenses area.

The next step is to create an Explanation Code for Mileage.  You may have noticed that the default explanation codes in PCLaw are either lowercase or they are UTBMS codes, which have an uppercase letter followed by three numbers.  When someone in the firm adds or edits an explanation code I recommend using all uppercase letters.  You should also make sure everyone in the firms knows not to delete any codes that are in all uppercase letters.  I would not delete the UTBMS codes in case you need them in the future.

If you have already created an explanation code for mileage you need to change the default rate to .50.  To do this go to Options>List>Explanation Codes> and scroll down to the code you use for mileage.  If the default rate is grayed out make sure “Use for Quantity x Rate Entries” is checked.

While there is a “Global Change Time” feature in PCLaw, which would allow you to make changes to all time entries that have not been billed, there is not a feature that will make changes to Expense Recovery.  For those expense recovery items you have already made you will need to go in and recreate them with the correct default rate.  Therefore it is important to make the changes as soon as possible. 

This link provides the breakdown for mileage rates by dates: http://www.irs.gov/taxpros/article/0,,id=156624,00.html

Standard mileage rates:

From 01/01/08 through 6/30/08 it was 50.5 Cents a mile.
From 7/01/08 through 12/31/08 it was 58.5 Cents a mile.
From 01/01/09 through 12/31/09 it was 55 Cents a mile.
And now since 01/01/2010 it is 50 Cents a mile.

I setup Mileage as an Expense item under Billing Codes.  File, Setup, Codes, Billing Codes.  If you don’t already have a mileage bill code you can add one here.  If you already do, simply adjust the unit price.  Either way, refer to the illustration below.

Billing Matters Mileage Bill Code

I will post a description of how to do this in PCLaw later today or tomorrow.

I moved to dual monitors about two and a half years ago when I started Krause Practice Management.  Honestly, I cannot imagine going back.  At one point, one of my (originally 17 inch widesreen) monitors stopped working.  After one day of being back to one monitor, I ordered two brand new 22 inch widescreens as replacements.

My typical dual monitor layout is to have Time Matters and Outlook on Monitor 1.  I rarely view them both at the same time, toggling between them when I need to.  On Monitor 2, I have everything else, which often includes Word, Excel, QuickBooks and ScanSnap Manager.  Internet Explorer may be up on either screen depending on which other application I am using with the Internet.  This setup allows me to use my two primary applications on Monitor 1 and reference others on Monitor 2.

Here are some of my personal tips to get the most out of dual monitors.  First, get two of the same monitor.  Not only does it look better, it is actually easier to move your eyes from one to the other.  I suppose it is because your eyes do not have to refocus to size, shape and picture quality.  Second, find monitors with the smallest side edge possible.  This minimizes the amount of space (and the inherent distraction) between the actual screens. Third, make sure you have a video card that can actually run two monitors.  Nothing is more annoying than the little glitches that can be caused by an underpowered card.  Finally, a simple monitor management program, Ultramon, provides a lot of nice dual monitor features.

My experience has certainly been different than Mr. Ryder’s.  Like many other things, I suspect that how much you like dual monitors will depend on a lot of factors such as the specific tasks you perform, how you organize your workday, etc.

Like many CICs, I pride myself on being able to resolve most Time Matters and PCLaw issues without having to call LexisNexis technical support. Unfortunately, there are situations where one of our consultants has to call LexisNexis for a serious technical issue.  This new policy means that we will not be able to obtain support unless the customer has a valid AMP.

Regardless of this change, there are very good reasons to have a valid AMP. In addition to providing LexisNexis based technical support, an annual maintenance plan provides you with the opportunity to always install the most recent version of Time Matters or PCLaw.  We have been encouraging our clients all along to have a current AMP because of the upgrade benefit that it provides. This change in policy is one more reason that it makes sense.  It is also worth mentioning, while this is certainly a change for LexisNexis, especially with regard to Time Matters, annual maintenance requirements are quite typical for specialty software applications used in the legal industry.  PCLaw, TABS and Worldox have all had annual maintenance plans for years.

Lexis has informed us that each customer will be entitled to one complimentary technical support call after the new policy goes into effect.  During the call, you will no doubt be strongly encouraged to purchase an AMP.

If you need assistance in purchasing an AMP or deciding whether to purchase one, contact your CIC or Time Matters sales.  If you don’t work currently work with a CIC, I would be happy to help if you contact me directly.

The webinar is hosted and sponsored by LexisNexis.  You can register by visiting Growing Your Personal Injury Practice.  CLE credit is available in many states.

I had the pleasure to speak on practice management with my friend and colleague Nerino Petro as well as do a solo presentation on virtual law offices.  Interest in both topics was high with extra chairs having to be brought in for the former and a full room at 10AM on Saturday for the second.

Another thing that struck me was the great traffic in the exhibit hall - probably better than any show I have ever attended.  Topics I found many people to be interested in (no particular order) were scanning and going paperless, case management software, digital dictation and overall office efficiency.  There was so much traffic at the Krause Practice Management booth that I found it difficult to keep track of everyone who visited.  That is a first and I am glad that so many of you who talked to me a the show have already contacted me.

Next year, the conference is going to be held at the Wilderness Resort in the Dells.  My kids are already looking forward to it.  Hope to see you all next year.

I did not want to add the new drive a secondary drive because it was faster and quieter than the old one.  I wanted to clone the old one and simply boot to the new one.  This used to be SO EASY.  In the old days, all you needed was Ghost.  You would simply put the new drive in as a slave, clone to it, then make it the master.  So, my first thought was to get a new copy of Ghost.  Ghost is now owned by Symantec.  I spent $70 on it only to find out it does not work.  It says it is supposed to work - but it just doesn’t.  I wasted a lot of time finding this out, not to mention the money.  Research of the issue I was having tells me that many, many others are experiencing the same issue with it.  After switching the drives, it boots to a blank desktop.  Notice that I have not linked to Ghost or Symantec?  Why would I point you to a product that does not work?

After doing some research, I found a product that does work.  I always like to send a shout out to products that are easy and do what they are supposed to do.  The product I found was EASEUS Disk-Copy.  It worked just like Ghost used to.  Boot to a CD, clone the disks, switch the system to the new disk as primary.  The only issue I encountered was it created a new partition the same size as the old smaller disk.  However, EASEUS also had a Partition Master tool that resized it for me right in Vista.  The whole process took maybe an hour.

Best of all, the home versions of these two products from EASEUS are free.  Kudos to the folks who made these great utilities.

In the October issue of Harvard Business Review (HBR), Andrew Likierman wrote about The Five Traps to Performance Measurement. If you don’t have an HBR subscription you will only be able to see a portion of the article using the link, however with this in mind, I’ve summarized the five traps to performance measurement with insight on how they apply to law firms.
 
Trap 1: Measuring Against Yourself

If you are like most law firms, billable hours or fee targets are set sometime in the third or fourth quarter for the upcoming year. In other words, they are set looking inward. The drawback of looking solely at your last year’s performance to set next year’s performance is that you may not be doing as well this year as the same time last year according to your firm’s budgets and financials skewing your forecast. But perhaps compared to the broader legal industry and other firms, you are doing better than they are. Look beyond your budget and plan, find relevant benchmarking numbers to see how you are doing compared to other firms similar to yours, e.g. law firms practicing similar areas of law by region and perhaps by size. (Note:  Although many surveys, including the LexisNexis Economic Survey shows size doesn’t always matter, its more about the way you manage and leverage the key metrics that drive profitability.) There are a lot of outside factors you cannot control but need to consider when measuring your firm’s performance, so don’t just depend on your numbers alone.

Trap 2: Looking Backward

A common law firm measurement is a comparison of financials from this year to last year. Although it is a great indicator of a firm’s performance, the article highlights the importance to review how decisions you make today impact your business. E.g. a decision to add write-offs as a component to consider when allocating bonuses may result in immediate decreases in write-offs or more accurate recording of time. In the end, it would also add to your profitability. Also, don’t be afraid to tweak your course along the way if you made a decision and it is not working. Change the criteria to make it relevant to meet your objective. Look for numbers that lead rather than lag the profits in your business. I would venture to say most law firms report on a cash basis or at least on a modified-cash basis. Look at your firm’s work in progress, write-offs, client advances, accounts receivable turnover and most notably your pipeline of work with existing and forecasted new clients. These numbers will be a sign of what you should expect in revenue in the coming months. However, you should not completely avoid looking backwards. In addition to looking at what lessons you have learned on matters or cases that were successful, you should look at those matters and cases that didn’t fare so well. For example, initiate debriefs’ to discuss what went well and what could have been better – don’t leave staff out of this process, include the billable and support staff on the matter so everyone can learn and take responsibility for the outcome, good or bad. The lesson here is more about learning and not repeating the same mistakes to improve your firm’s efficiency and profitability.

Trap 3: Putting Your Faith in Numbers

A common pitfall of law firms who depend highly on numbers to make decisions is understanding how those numbers are derived. You need to make sure they are relevant to your firm’s objectives. If you rely on a timekeeper analysis report to evaluate the performance of your staff, be sure to clearly communicate the expectations to your staff and provide them ongoing progress reports so they can work on shortfalls before the end of the year. Performance measurements are not just about numbers on a financial statement or billing report. Other numbers you need to consider include employee and client satisfaction scores. Studies have shown that employee and client satisfaction can directly impact profitability of a company.   As an example, surveys like Frederick Reichheld’s Net Promoter Score (NPS), measures the likelihood of a customer to recommend a product or service and the Employee-Customer-Profit Chain, a program used by Sears measures employee satisfaction levels in relationship to customer satisfaction.  Both have proven value in the marketplace. However, when it comes to NPS, I believe it is good for law firms who depend on client referrals as their main source of new clients.  A prominent Philadelphia lawyer I interviewed this past summer said, “the value of a referral from an existing client is like gold.” But NPS is not for every firm. There is an array of satisfaction surveys available to use, and which one you use can depend on how you manage client development and the areas of law practice.

Additionally, how information is obtained can greatly compromise the value of the numbers or data being collected.  An example of this is providing your clients or employees with a satisfaction survey that is not anonymous or standing over them while they are completing the survey. The surveys will likely be skewed and not provide the feedback your firm truly needs to improve. One way to mitigate this problem is to hire a third-party company to conduct the survey for you.  This way they can ask additional questions or get verbatim feedback to help explain a rating. This may provide more confidence in the participants knowing that they are anonymous but provides you with the information you need to know if your administrative staff is unhappy or if clients who are being managed by a particular partner are not satisfied.

Trap 4: Gaming Your Metrics

Using performance metrics to measure staff may also invite unwanted gaming by them. In law firms it could mean some staff pad their hours worked in order to meet the expected billable hours. That’s why it is critical to diversify the metrics. If you are going to set billable hour or fee targets for your lawyers, you also want to set metrics like realization rates. Realization rates will measure how much they collect vs. how much they billed. Likieriman’s article references the Clifford Chance law firm who replaced a single metric measurement system with seven metrics. Not all of the metrics were based on billable hours and included measurements for soft skills as well, i.e. respect and mentoring, excellent client service, integrity, and community service to name a few. The type of skills you want the up-and-coming lawyers to develop as part of your law firm’s succession plan.

Trap 5: Sticking to Your Numbers Too Long

When a law firm is young and just starting out it is more about survival, but at some point your firm begins to mature, and mature firms often become complacent with how they operate. Don’t get stuck in this trap. Don’t be afraid to grow! Know when to start benchmarking your law firm performance to others and honing in on profitability. David Maister identifies in his book “Managing the Professional Service Firm,” the Law Firm Economic Business Model. Under this model, Maister cites five key metrics that help drive profitability: (1) Standard value of production – commonly known as fees worked (pre-adjustments), (2) Utilization – fee capacity, (3) Realization – Amount net of any write-ups or write-downs performed at billing and any credits or write-offs done at receipt, (4) Leverage – how well you utilize your staff based on their relative costs, what is their profitability, and (5) Margin- how well you manage your expenses and how you stack up to other firms. These are the key metrics to hone in on achieving a higher profitability. According to the 2008 LexisNexis Law Firm Economic Survey, the top performing law firms were managing multiple key business drivers resulting in 55% higher profits per partner compared to the next level of law firms.
If you are stuck in survival mode by choice, consider an off-site retreat with your partners and a law firm management expert, just Google” law firm management expert” and you will find a source  to help you develop a plan to higher profitability.

What I know is that Billing Matters is not being discontinued outright.  It is being sunsetted.  This means that Billing Matters will continue to be supported by LexisNexis.  If you have an issue with the program, Lexis will support it and help you fix it.  However, it also means that, at some point, they will stop doing this.  At the same time, Lexis will not be offering new versions of Billing Matters or adding new Billing Matters customers.  There is a Billing Matters 10 but it is only included for customers who already used an earlier version of Billing Matters.  Because there are no new versions of Billing Matters, there will be no new features added to Billing Matters.

Here is what I think.  Billing Matters will sunsetted in 2012 or 2013.  At that time, you will no longer be able to receive support on the program.  Even then, the program will not stop working.  However, because a billing system is so critical to your business, it likely that you will want to move to a program that is supported.  I think this program will be PCLaw.  However, there is a lot that has to be done in that regard.  There is no easy conversion from Billing Matters to PCLaw, especially with regard to the General Ledger. Therefore, if Lexis wants to keep you as a customer (and they do) they will need to strengthen this conversion.  I suppose there is another possibility.  There might be a common program that combines the features of both PCLaw and Billing Matters and allows an easy conversion from either one.

What should you do?  Well, if you like Billing Matters, just stick with it for now.  There is no need to change.  There won’t be any new features but what new billing and accounting features do you need?  It is part of Time Matters, so as long as Time Matters evolves and stays compatible with new versions of Windows, Office, etc., so will Billing Matters.  By the time you need to switch, your options should be more clear as to whether you should switch to PCLaw or some other program.