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Many people are resistant to change. Oftentimes, that resistance comes down to two factors: the fear of loss or the fear of having to adopt new processes. Whatever the reason may be, change is often the inhibitor preventing innovation and improvement.
With this in mind, ask yourself this, if change is necessary for the advancement of society and businesses alike, how can you help your firm embrace the change that will help improve your business?
There are three types of change that impact our firms.
Regardless of the type of change, people fear they are losing something. To address those fears and have as smooth a transition as possible, there are steps you can take to encourage your firm members that you are taking the matter seriously and working to ensure the change is made for the good of all. Let's take a look.
Firms who have a clear strategic plan and clear vision of where they are going will find it easiest to identify where change is needed. By identifying where you want your firm to be in ten or five or three years, you can assess external and internal environments and determine what challenges are going to interfere with your goals and what changes you need to make to overcome those challenges.
For firms who do not have a clear strategic plan and vision (don’t feel bad if this is you, as this is the majority!), the need for change is often ignored until there is a financial loss that is impacting the firm in a negative way. By ignoring the need for change, a firm will eventually lose its competitiveness in today’s market, impacting its bottom line, and then there will be a scramble to make the necessary changes to overcome the challenge. This reactive instead of proactive approach creates a firm environment that can be unsettling for its members, and the more you can work toward becoming a firm that is proactive, the better off you will be.
Without the buy-in and support of leadership, any attempt at change will be a challenge. Firm employees are intelligent people, and if they are reporting to a partner who is not on board with a change, they will see it, and they will follow suit. You will not get the entire firm steering your ship in the same direction if your leadership is not all turning the wheel in the same direction.
When considering a change in your firm, it is important to communicate early and often. Do not assume that leadership discussions stay within the upper ranks. There will always be a partner who trusts their long-time staffer with management information, and before you know it the rumor mill is buzzing. With the exception of people changes that are inappropriate to share, it is important to communicate with your firm members. Today’s technology allows for such communication in a face-to-face environment even if you are not all in the same location. One communication with everyone at the same time is ideal so that everyone receives the same message.
What if, after communication among firm members or while still on the leadership level of communication, you discover the issue is not yet ripe for change, but you know it is important to your firm’s long-term vision? Do not despair. Over time, you can gently move communication in a direction that it becomes ripe for change.
We already know that humans do not like change. How can we help them overcome their fears? Part of the communication process involves including all stakeholders in the process. Consider a technology change, for example. Who are your end users? How will they use the product? Do you know all the ways in which they use your current system and what their needs or wishes are for a future product?
When it comes to technology, there are many reasons for change, but the most important reason is to meet the expectations of our clients. Clients today want efficiency, transparency, service delivery, and technological savvy from their law firms. While this is what your external stakeholders want, your internal stakeholders may be harder to convince. Where do you start?
Follow-through is important. If your firm has a habit of implementing changes but not following through on them – saying we are going to do things one way, then finding it doesn’t work and going back to the old ways that don’t work – eventually you will not be taken seriously. If firm members see you taking change seriously for the greater good and evaluating what went right and what went wrong, they will be on board with you.
By knowing what you hope to accomplish at the beginning of your project, you can easily identify benchmarks of improvement that the change is meant to accomplish. Once the change has been made, are these benchmarks being met? Things don’t always work out as we had hoped, and that is okay. It is also okay for your firm members to see that you are not afraid to try and fail – it will encourage everyone to be a change agent looking for ways to improve for the greater good without fear of failure.
Some examples for positive changes you might see from a change in technology, for example:
By identifying similar benchmarks for what you hope your change will accomplish, you can easily pinpoint what worked and what didn’t. By allowing your firm members to participate in these processes, the changes necessary for the growth of your firm will have a much better chance at being successful.
Change can be hard, but without it, your firm will lack the progress and development needed to stay relevant in a very competitive industry.
Many firms, upon deciding it’s time to evaluate new technology, make the mistake of immediately sprinting toward a solution, especially when they have been forced into addressing a sudden problem.
They dive headfirst into the search for new practice management software and completely forget a huge step – arguably the most important step: meeting with the people who are going to use it the most.
As soon as you realize your practice needs new technology, the first thing you need to do is take the discussion internal. Too often, the decision to buy software is made by a handful of people within the organization, which makes firm-wide adoption more challenging. It leads to greater conflict and pushback, and makes training on the new system considerably harder. Without team buy-in, implementation of new technology could even make the team’s job harder.
You might be wondering how introducing new technology could make your team’s job harder. Let’s go over some examples:
The takeaway here: Don’t call an audible and buy software on your own without speaking to the people who have the most skin in the game!
If you’ll be the one organizing and collecting all of this internal data, start by putting out some feelers to people in order to get a grasp on the politics of your firm. Plant the seeds to gauge how they would feel about adopting new software. It will be more helpful than you think to know exactly what people’s gut reactions were prior to processing any feedback.
When you do reach out to speak with your team formally, lead off with the following two steps to get the best results:
Conducting the actual discussions in person as opposed to over email encourages open dialogue and ensures your team feels like part of the process.
If you’re a small team, you may talk to everyone in the firm; if you’re a midsize firm, you want to speak with at least one person from every department. On the administrative side, it is advisable to speak with everyone regardless of firm size because they will be such heavy users of the software. Consider speaking to:
• Partners
• Associates
• Paralegals
• Legal Assistants
Additionally, you want to speak directly with both the more technology-adept team members and those who don’t love using technology. If you don’t diversify your sample, you will end up with vastly different responses and reactions when it comes time to go live.
Avoid asking leading questions when you do speak with the team. Don’t come into this with an agenda. Ask open-ended questions that allow your staff to freely express their raw opinions and thoughts. The best software you can buy is the one that your staff will like and actually use.
Once you have spoken to everyone you need to, compile a list of all the feedback you received and categorize it into buckets. These buckets can be whatever you want, but if you need a kickstart, use Billing, Accounting, and Practice Management as a guide. From there, you could break each category down further. Consider the following breakdowns:
Billing:
Accounting:
Practice Management:
In the end, you want to create your own categories based on what your staff is telling you they need.
Oftentimes, the two parties that push back the most when presented with new software are the Billing team, who don’t want to change their processes, and the Shareholders, who may not feel the expense is justified.
To address Finance concerns, the first thing you should do is ask them to identify any major pain points or complaints they foresee with moving to a new system. Listen to them, make sure they feel heard, and point out the key benefits and shortcuts that the new system offers. In most cases, the initial change is the biggest hurdle to get past. If you can get them excited about the long-term benefits of the technology and emphasize that the road to get there isn’t as cumbersome as it sounds, you’ll be more likely to get them on board
For the Shareholders, it’s all about the value proposition – show them the money! Highlight some of the ways that new technology stands to make your firm money, both in the long and short term: It will enable you to capture more billable hours, increase client satisfaction and referral rates, and attract top talent for a long-term competitive advantage.
It is easy to jump into a process you're excited about, but there are many intricacies and considerations that go into buying new legal software. Rushing this process can result in either miscommunication, wrong expectations, and an unhappy team. Take your time and do your internal due diligence before you start knocking on vendor's doors.
Timing is everything, right? The old adage holds true when thinking about upgrading technology.
Maybe you’ve been on legacy software for years. Maybe you work entirely on paper. Perhaps you’re still dipping a fountain pen into an inkwell (by the way, if that’s the case – cool). Wherever you’re at, how do you know when it’s time to start evaluating new technology? Is there ever a bad time? And why do you need to make a change anyway? If you can’t give sound answers to these questions, then figuring out where to begin is going to be considerably more difficult.
When firms begin to think about evaluating new software, two distinct mindsets come into play: reactive and proactive. Which one your firm holds will set the stage for how you kick off this process.
For firms with a reactive mindset, one of five primary motivations tends to drive them to reevaluate their legal technology.
Just like car batteries, servers don’t last forever and eventually need to be replaced.
Picture this: Your server is on the fritz but still operational. The IT guy says it’s got six months to a year. You hold off on any major moves and it dies unexpectedly three months later. Now you’re looking at anywhere between $1,000–$30,000 to replace it (depending on server size, payment plan, configuration, and duration of use). Maybe you’re a midsize firm and you need an even bigger server to replace the old one, maybe you even need two. So not only do you have to buy a server or two, you also have to get all the required software and networking – and you have to have someone or some way to monitor it for security and performance. We won’t go down the dark hole of law firm data breaches, but that is not something to take lightly.
A reactive firm will wait until their server is at the end of its life, which forces them into making a sudden choice to either buy a new one or move everything to the cloud. Since buying and maintaining a server is such a big capital expenditure, the firm often realizes at this point that the costs associated with replacing the server do not outweigh the benefits of going with cloud-based technology.
Virtual Private Networks (VPN) are common in most legacy software; without them, users wouldn’t be able to access their data remotely.
Traditionally, most firms set up a VPN only for those individuals who may work from outside of the office. In these cases, its capacity is only set to be operationally functional for about 20–25% of the firm’s workforce. The more people who need to rely on the VPN to work from different locations, the more the functionality of the private network will suffer. VPNs were not made to host 100% of your workforce.
A VPN is dated technology, especially when looked at alongside cloud computing. In some ways, you can think of it as the first version of the cloud. With teams all over the world shifting toward remote or hybrid models, the timing has never been worse for you to feel the burden of a struggling VPN’s impact on productivity. A reactive firm will wait until sluggish functionality forces them to consider other options.
Many firms already use some form of cloud-based technology, but that doesn’t automatically mean they’re happy with the software they chose. There are a number of reasons that may cause a firm to think about making a sudden switch from one cloud-based technology to another. The most predominant reason is that the current system lacks features that the firm needs. This is the unfortunate result of either poor communication from the vendor or the firm not being explicit enough about their needs during the initial discussions with the sales team.
Another pain point that often leads firms to switch software is how their data is distributed. If their current software doesn’t have the necessary integrations they need to manage their day-to-day operations (think document management, court deadline scheduling, etc.), they have to rely on additional third-party programs. At first, firms may not feel that this is an issue. However, as time goes by, they realize how inefficient their operations are becoming as a result of their data being spread across several programs. Working out of multiple systems makes it significantly harder to utilize the data effectively enough to make sound business decisions. Firms end up having to train their staff on each new program, all while dealing with the human errors that commonly arise from working piecemeal with large quantities of information.
Think about a software program that only has billing features and lacks accounting functionality. In this case, firms have to rely on outside technology for all of their accounting needs, which leads to copious manual work and, subsequently, more chances for human error (because let’s face it, none of us are perfect). If you’ve ever had to enter information into multiple systems like this before, you know very well the pain we are talking about here. Firms also sometimes overlook the importance of a mobile app. In the fast-paced, on the-go environment of today, a mobile app is essential. And just because a vendor offers cloud-based software, it doesn’t mean they also have a mobile app, leaving some firms with buyers’ remorse as they remain glued to their desktops unless they switch to new software.
Another reason firms consider making the switch to cloud-based software is that they’re late on their annual maintenance plan (AMP) fees.
Many legacy software programs have this annual maintenance fee to provide users with an annual software update. Sometimes it may get you additional help from the support team, but you’re really paying this fee to get the latest software update.
When firms purchased software 20 years ago, it meant they were also getting the latest and greatest features and fixes every year. Nowadays, the model is to shell out for the software, watch as new bugs and performance issues emerge, and then, come the end of your year (whether that is calendar-based or not), pay for those bugs to get fixed. Naturally, many firms have found themselves asking, “Why would I pay thousands of dollars every year for fixes to problems I didn’t create?”
After about five minutes of soul-searching, firms typically respond by refusing to pay the AMP. And then what happens? Firms fall so far behind on their payments that they are left with outdated and bug-ridden software until they pay back everything they owe for their years of update neglect.
Once again, a reactive firm will find itself forced into a decision. Paying the AMP certainly isn’t appealing at this point since they won’t even get better software. When they look at the burden of paying all that money back, they start to wonder if it would be a better use of their money to ditch the software entirely and go with something new.
Did you know that one out of every four law firms has been a victim of data breach? In 2020, there were 3,932 publicly reported data breaches, comprising over 37 billion records. If your jaw didn’t just drop, it should have.
At one point in time, cloud technology was viewed as a security hazard compared to on-premise servers. Today, however, that reality has changed. On-premise servers are at significantly greater risk for breaches because they are exposed to way more physical elements. If you have on-premise hardware, think about where it is. Who has access to it? How securely locked up is it? What would happen if there were a natural disaster? Unfortunately, at the end of the day, if a firm has on-premise hardware, it’s the firm’s job to manage and protect that technology. The simple truth is if a firm is hacked even once, it needs to react quickly and decisively to make a change.
The easiest way to take server security off your plate is by working with a cloud-based provider. Ask yourself what you can do better to protect your firm and your clients and how you would react to a breach. The data you handle is sensitive and hackers today9 use sophisticated techniques to gain access to it. If you aren’t relying on companies who protect data for a living to keep yours secure, you are exposing your firm to significant risk. As soon as a security breach happens – a very real risk when you look at the numbers – a reactive firm is pushed to evaluate new cloud-based software.
If any of those scenarios resonated with you, it is time to start looking at new legal technology while you have the leisure to do so.
Now, firms with a proactive mindset are intent on staying ahead of any problems and motivated by a desire to improve. Instead of waiting for issues to occur, these firms pursue action-driven solutions to maximize their operations. This road often leads them to consider cloud-based software much earlier than a reactive firm.
Any number of areas of improvement may serve as motivation for a proactive firm. Here are five of the most common ones.
Proactive firms are motivated to meet the current state of technology. They take active steps to adopt modern solutions that may not have existed five years ago, taking note of their current pain points and strategically planning how they can alleviate them. Generally, they set out to improve current processes, become more efficient, and implement software that allows them to be agile, grow, and develop.
Younger attorneys view technology as a means to push themselves ahead. They see the modernization of old practices as a way for them to do a better job.
When younger attorneys evaluate firms, they are also evaluating the tech stack each firm has in place. Proactive firms realize that buying that new technology allows them to more easily recruit top talent. Think of your tech stack as part of your benefits, right alongside the number of PTO days you provide and the strength of your healthcare plan. The technology you offer can be a deciding factor for whether an up-and-coming attorney wants to work for your firm, just like those traditional factors. The difference it makes might be the competitive edge you need. And if you have yet to notice that difference, you will soon.
Many of the more established attorneys do not see the importance and value of legal software. They see it as an unneeded change to a successful career they’ve managed without digitization and automation tools. However, you shouldn’t turn a blind eye to the younger generations because one day they will be the dominant force within your firm.
Your clients are expecting three basic things from you:
We call the need for immediacy the ‘‘Amazon Effect,” where people need things yesterday. Obviously, that type of speed is not feasible in the legal industry, but proactive firms look for ways to emulate that type of service.
To start, your firm needs to be available. No one hits a panic button faster than a client who either doesn’t feel heard or can’t quickly get the information they need. And you have no idea when your client may or may not need something from their files. On a related note, your staff does not have time to be on the phone constantly. Utilizing software with advantages like a client portal not only helps reduce the number of client calls, it also helps your firm stand out by getting your clients what they need faster. You should always be striving for transparency, not just because it is good for your clients but because it also frees up your time. Today, your clients and potential new clients (PNCs) are looking for that white-glove service. If you cannot offer that, another firm can.
And if you don’t believe us, a study by BTI Consulting Group showed that 80% of participating clients expected immediate responses to texts and emails. But don’t worry, “immediate” in this study was defined as between 1–2 hours. Unfortunately, when firms were evaluated, attorneys considered “immediate” to be between 4–8 hours. With that big of a time discrepancy between attorney and client expectations, clients can get anxious, grow impatient, and become less likely to refer service post-matter. Although you may be juggling many clients at once, the goal is to treat each client like they’re your only client. A client portal helps you achieve that by giving clients autonomous accessibility, which has the added perk of reducing the time you spend answering their questions.
This responsiveness can be translated into how successful your business is as well. When people are searching for representation, oftentimes it is the firm that responds to their call or email first that wins the business. Not only are these firms setting the tone right off the bat, they are also making the client feel prioritized – a huge factor when it comes to converting potential new clients into billable clients.
An ABA Benchmark study on intake process found that 42% of the time law firms took three or more days to reply to a voicemail or web-generated form from a prospective client. That’s a long time! Firms spend time and money to collect new leads, yet are slow to capitalize when new leads come due to responding inefficiently. Your availability, response rate, and transparency all contribute to the client experience. Legal software is the best place to start if you want to improve these aspects.
If a firm’s goal is to increase revenue, the initial reflex for many is to try to hire more attorneys. But if you leverage technology, you can increase that revenue by capitalizing on features that allow you to capture more billable time.
This can be as simple as entering time on the go, whether it’s on the train, at a dinner event, or in line at a grocery store – or it can be complex like being able to instantly track and create billable events for text messages, calls, and emails as the conversations occur. On average, attorneys only capture 2.3 billable hours a day, so automatically capturing your time as it happens is the easiest way to grow your business without hiring more staff.
If your firm has plans to move to a more distributed workspace, it has a huge reason to invest in technology. Leveraging the connectivity that legal tech provides minimizes the negative aspects of working remotely (such as communication problems, connection issues, organization lapses, etc.). On top of that, it improves overall productivity by giving everyone access to resources that were built to enable agility and efficiency away from the office.
It shouldn’t matter where your staff or attorneys are. They need to have access to their work and your firm is going to lose money if they don’t. Firms that are proactively seeking flexibility inevitably pursue legal software because that is exactly what it gives them.
There are many reasons why your firm may need to evaluate new technology and depending on that reason, your journey into the buying process could look very different. Knowing why your team is evaluating new technology will help you stay prepared and give you better insight into what you ultimately need.
With the continuing change in the landscape for law firms, it is increasingly important for firms to understand where their most profitable areas of practice lie. Gone are the days of multi-generational client loyalty. As a result, firms must hone their skills and identify the areas that are most beneficial in adding to the bottom line. Regardless of how altruistic your firm’s core values are, without a profitable business, you will be unable to support your clients or your employees.
There are multiple metrics a firm can monitor to ensure financial success. Having good billing protocols is a good place to start. Once those procedures are functioning well, you can accurately identify which areas of practice are most beneficial to your firm. Knowing where you should be focusing your assets (time) allows you to strategically make decisions on what cases to accept and what cases should be declined or referred out.
Begin this process by identifying the practice areas in which your firm most often practices, and ensure they are entered into your billing system. Using a billing system that allows you to identify practice areas and run reports quickly and efficiently is an important piece of this process. The identification of practice area should be a part of your client intake protocol to ensure that cases are properly identified at the outset.
Depending on firm size, there are different ways to go about the identification of departments. If your firm typically has specific attorneys and staff working in each practice area, it is intuitive to define your departments by practice area. You may have a real estate department, a civil litigation department, a criminal litigation department, and a corporate department, for example.
If most of your attorneys are working across multiple areas of practice, you may want to define your departments by supervising attorney rather than by practice area. This will allow you to determine whether profitability is impacted by practice area or by managing attorney, for example.
Once you have identified the practice areas you want to track and how you would like to divide your billable timekeepers (attorneys and paralegals) into departments, you can start monitoring the revenue you are seeing from each practice area and department. By putting your clients into buckets of practice areas, you can:
The cost to acquire a client may be different depending on the practice area. Your physical injury cases may come to you through television advertising, which is going to have a different cost than your probate clients, who may come to you through word of mouth. By identifying your client acquisition costs by practice area, you can get a more accurate evaluation of the true profitability of each case type.
Likewise, the lifetime value of a matter is going to be different by practice area. As is the case with acquisition costs, by identifying your average lifetime value by practice area, you can drill down even further on profitability by case type.
Once you have calculated the average acquisition cost and lifetime value for your cases by practice area, you can determine an overall average net revenue for each area. This does not take into account the costs of your timekeepers or firm overhead – this is strictly net revenue after taking into account the cost to acquire the matter. For example:
Once you have calculated the net revenue by practice area, you can break things down even further to determine your revenue by department. In this calculation, you add in the direct costs of your timekeepers in each department.
To begin, you need to have calculated the hourly cost for each of your timekeepers. By knowing what it costs for each of your timekeepers to work one hour, you can calculate their costs in each practice area by running a report showing total hours billed by practice area or department. In the example below, the firm’s departments are identified by practice area:
Now that you know what it costs your firm to conduct business by practice area and department, how can you use this information?
By identifying these important metrics for your law firm, your firm can become more profitable, and your attorneys will be more fulfilled and effective with an improved clarity of focus.
Because of its prevalence, most people already know what this is, but put simply, the cloud allows an internet user to access a third-party computing resource located in almost an endless network of interconnected servers that allow you to run your computer’s applications over the internet without having to buy, install or manage your own servers.
What this means is you could run your firm’s IT operations with nothing more than a browser and internet connection. By using the cloud, firms of all sizes can reduce IT costs, manage data storage needs more effectively, and improve staff flexibility. In a short amount of time, the cloud has emerged as one of the most meaningful innovations in technology.
The cloud symbol was first used to represent the public telephone systems on our dial-ups and since the original basis of the internet was through dial-up modems, that symbol has been used and now represents what we know of today as “the cloud.” Before we go on, it is important to note that when we say “client-server,” the word “client” does not refer to your customer. Depending on your role, this word means two different things (depending on if you’re on the IT team or an attorney.) The word “client” to an IT person means a device used by one person at a time to access the internet. Essentially it is just an access point, whether it’s a smartphone, tablet, PC, you name it. These access points (or clients), and central servers which supply applications and data, are shared amongst several clients and can be accessed at any one time. So when you sign in to Gmail, or anywhere on the internet, you’re not the only person at that exact moment who can gain access. Thousands, if not millions of people could access their Gmail account at the same time through their own client-server.
Let’s take a look at the five essential characteristics of the cloud:
On-demand service essentially means you order what you want when you want it. You can unilaterally make such provisions either regarding server settings or network storage without the need for any interaction from the provider’s IT administrator. Further examples of such resources include storage, processing, memory, network bandwidth, and virtual machines.
Broad network access means you have access to your data over the standard network through client platforms such as your smartphone, PC, or laptop.
Resource pooling simply means that providers serve multiple customers, with provisional and scalable services. These services can be adjusted to suit each customer’s needs without any changes being apparent to the customer or end-user. When you access a server on the internet, it’s not only your information on that server, there is other people’s information as well. Sometimes there may just be one server for 50 different people and sometimes it could even be located overseas. As attorneys, this is incredibly important to be aware of. Many firms will just sign up or pay for cloud services and have no idea where their actual data is being stored, or who it’s being stored with. Sometimes it’s because they don’t care, and other times it’s because they don’t know to ask. So make sure you ask your vendor this question!
Rapid elasticity allows users to automatically request additional space in the cloud or other types of services. ... In a sense, cloud resources appear to be infinite or automatically available. That's very different from older systems, where the limits of storage or memory were immediately visible to a user. Compared to on-premise servers, this process is significantly easier and more convenient.
Resource usage can be monitored, controlled, and reported. This provides transparency for both the provider and the consumer of the service. Your firm can actually get insight into the performance of your network with statistics that monitor your usage.
The first question that many firms ask cloud providers is, “how much will it cost?” This is a logical question, but the price range varies so drastically, that it makes more sense to narrow down specific goals and aspects of your firm. Let’s take a look.
Take a look at the chart below. The first thing you need to consider is the upfront expenditure. Let’s look at the on-premise category first. A good quality single server with no redundancy can run anywhere from $3,500-$8,000 if you’re going low end. A decent, middle-of-the-road server will land you north of $10,000. With that, you will need a backup system, which incorporates both software and hardware which could easily tack on another $2,000+. Next, you will want a quality APC battery or locate your system in a colo-data center to protect all of this valuable equipment. Following that line item is your server licensing. This is not per physical server, but per virtual server which typically runs inside of one box. Traditionally, you will be running an active directory, a file server, and a database server. Best practices dictate you separate these roles into multiple servers, but you could combine some of these roles into two servers, which is where you get the $1,900. Next are your user licenses or your client access licenses. This is required for each person who needs access to the server. If they run slightly over $40, and you have 15 people at your firm, you’re looking at about $840. Another expense is your Microsoft SQL licenses which almost every on-premise case management system requires. You can pay for this by the processing core, or by the user, but either way, it comes out to about the same. Finally, There will definitely be implementation fees to get this all together and have your firm up and running. With the going IT rate, you’re looking at about $5,000 of total labor.
The next two columns are much more simplistic. All the listed services are either included in a private cloud or are not applicable. With the cloud, you will still have a labor fee that will either be due upfront or spread out with payments over a designated period of time. For web applications, if you’re considering a change, this will oftentimes require the assistance of a third-party consulting firm.
| Expenses | On-Premise Servers | Cloud | Web Applications |
| Server(s) Hardware | $5,500 | Included | N/A |
| Backup Solution | $2,000 | Included | N/A |
| APC Battery | $1,500 | Included | N/A |
| Microsoft Server Licensing ($950/ea.) | $1,900 | Included | N/A |
| Microsoft User Licenses ($42/ea.) | $840 | Included | N/A |
| Microsoft SQL Licenses ($209/ea.) | $4,180 | Included | N/A |
| Terminal Server Licenses ($133/ea.) | N/A | Included | N/A |
| Setup Fee | $5,000 | $4,425 | $7,500 |
| Total Up-Front Cost | $20,920 | $4,425 | $7,500 |
Now that we have talked about the upfront costs, let’s look at some of the common monthly expenditures:
| Expenses | On-Premise Servers | Cloud | Web Applications |
| Server Maintenance ($200-$350/ea.) | $5,500 | Included | N/A |
| User Support + Anti-Virus ($49/user) | $735 | Included | $735 |
| Offsite Backup (25-75 cents/gig) | $100 | Included | N/A |
| Remote Access (GoToMyPC: $30/user) | $450 | N/A | N/A |
| Cloud Storage ($0-$50/user) | N/A | Included | $105 |
| Total Monthly Costs | $6,785 | $2,085 | $840 |
The first line item is your server maintenance. If you have a server, you will want to make sure that it is properly maintained, monitored, secured, and audited on a routine basis. This is especially critical with the security threats we face today. Assuming you’re running 2-3 virtual servers, you’re looking at about $500.
User support entails the support for each computer, anti-virus work, print capabilities, and general network support. The average spend for this is about $49 per user, per month. Some firms will have an in-house IT team, others will outsource the help. The former is quite costly as you’re salarying these additional team members, but outsourcing your support can be tricky if you need immediate assistance. For web applications, keep in mind that if you can eliminate all of your servers, this cost will remain, and in some cases, this cost may increase as computer management becomes increasingly difficult with no server to help automate management.
Next is the offsite backup category, this is native to almost all cloud solutions, whereas on-premise servers need to be backed up nightly. Be warned that if you are not backing up your data, you risk losing it in a crash. Paying for such solutions varies drastically in price, if you’re looking for a full backup and disaster recovery solution, you could be looking at thousands per month. For the sake of our example, we took the very basic backup system which typically charges between 25-75 cents/gig.
Now, looking at remote access, this also runs natively to any cloud-based solution. If you have an on-premise option, you can get a dedicated terminal or Citrix server. This would add significant spending to the upfront and server maintenance columns. Since we’re considering a 15-user law office, chances are, they’re using RDP over VPN directly to their desktop, or more commonly, a GoToMyPC or log me in a type of solution.
For storage, most firms with on-premise servers are using their file server which could be your S drive or your T drive (for example). Additional costs here come from when your file server runs out of space or there’s a server malfunction or breach.
Everything we just mentioned encompasses the average base cost for each solution. Each service provider is different, and fees will vary depending on what your firm chooses to adopt vs. waive.
The chart below looks at some features that cannot be quantified mathematically, but they hold immense value.
Each firm has to evaluate which of these intangible assets are most critical, and which are considered to be more of a luxury. Consider things like mobile access and liability. Do you have plans to geographically expand your firm? Do you want your staff to be connected with centralized access to the same data? Do your due diligence before signing on the dotted line.
Ultimately, all of these intangibles should help you evaluate whether your firm should pursue cloud, on-prem, or web application services, so don’t take them lightly!
| Intangibles | On-Premise Servers | Cloud | Web Applications |
| Mobile | Limited | Robust | Medium-Robust |
| Security | Low-Medium | Robust | Robust |
| Reliability | Low-Medium | Robust | Robust |
| Scalability | Limited | Flexible | Flexible |
| Centralization | Centralized | Centralized | Fragmented |
| Liability | Risky | Limited | Limited |
| Software Robustness | Robust | Robust | Limited |
| Support | General | Legal-Centric | Fragmented |
The legal billing process can be a challenge for every law firm, but it doesn’t have to be. A combination of the right policies, procedures, and technology can be used to stay on top of attorney time and make the billing process efficient and accurate.
Software that encompasses both practice management and time and billing in one platform is an effective way to keep everyone on the same page and meet your clients’ needs. Use your firm’s legal software and good policies and procedures to:
Your law firm’s billing protocol should start with your client onboarding process. Using your practice management software, create a standardized client intake form that captures all of the necessary information upfront. It is important to set appropriate expectations from the start. Once the client and attorney have agreed on a budget and a billing rate, an engagement letter should be sent to the client for signature to ensure all parties have acknowledged in writing what is included in the representation and what the fees will be for that scope of work. Best practice steps include:
Once the client has been engaged and you have received the returned EL (and a retainer payment if one was requested), it is time to get to work. Your firm should have protocols in place that set clear expectations for your attorneys with regard to posting their time to your time and billing system promptly. Research shows that up to 30% of fees are lost when time is not captured concurrently. Best practice steps for a firm billing policy include:
Some clients require LEDES e-billing, and it is important that your time and billing software support this requirement. The American Bar Association has created a Uniform Task-Based Management System (UTBMS) that allows large clients (typically insurance companies, but sometimes large corporations), to track the work their law firms are performing by task. The Litigation Code Set is most often used, but there are other sets for Counseling, Project, and Bankruptcy Codes as well.
For your clients who use the LEDES e-billing practice, it is important that your time entries are drafted very carefully. Your invoices will be reviewed by a third-party administrator who is looking for anything that appears to have the potential of being an uncovered activity. Best practice steps for LEDES e-billing include:
When it comes time to send your clients their invoices, if your attorneys and paralegals have kept accurate, concurrent time and they have followed your firm protocols for time entries, the billing process should be painless. Your time and billing software should allow you to have a billing template that is specific to your firm. Some software will allow you to review invoices in the pre-bill state within the system, where partners can review the pre-bills, forward questions to timekeepers on their time entries, and release the pre-bills to be invoiced when questions have been answered. Best practice steps in the billing process include:
The monthly law firm billing process does not have to be painful. With the right technology and a few policies and procedures in place, your process can run smoothly and you can have accurate invoices that show value your clients are willing to pay for.
In 2021, whether you realize it or not, you’re a “mobile” lawyer. The digitalization of the world we live in has made the proliferation of cellphones and on-the-go devices an undeniable part of our everyday routine.
Did you know that as of 4 years ago, nearly 100% of lawyers were using mobile computing tools for at least some aspect of their practice? So now, it isn’t “nearly,” it is a resounding “everybody.” Everyone has a cell phone and everyone uses it both for personal and professional reasons. We are all working in a mobile world these days and the expectation is that we will have access to our information from wherever we are.
The first time many of us remember seeing a mobile device was in the 1987 action flick, Lethal Weapon. It was this massive square hunk of material connected to this even clunkier receiver that Roger Murtaugh lugged around across LA. Since then, we have seen this evolution from our Nokia candy-bar phones to flip phones and Blackberrys. But now many decades later, 80% of attorneys are using these beautiful slabs of indestructible (so they say) glass called iPhones. We think of these devices as mobile phones that happen to do a few other things on top of making calls and sending texts. But, think about all the things your phone has replaced… we’re talking about email, calendaring, camera, books, TV, games, tickets, GPS the list goes on and on.
What you should be taking away from this is the fact that these devices are no longer small, single-serving phones. They are an entire personal computer. Our phones have become the primary PC that most of us use on a constant basis. Of course, we have desktops and laptops, but these sleeker and portable devices are one of the first places we go to when we wake up and the last thing we put down at night. There is no other piece of technology that we own that is so pervasive in our lives.
You may be asking yourself, so what? Isn’t technology supposed to grow and evolve and improve? And obviously, the answer to that is yes, but what hasn’t evolved with the changes in our technology is how we protect the information we interact with. Right now, our mobile devices are still thought of as “phones.” And how we protect and monitor them reflects that. However, we go to much greater lengths to protect our servers and our computers. But think about what we just talked about. Our phones are our computers too, and they must be protected as diligently.
A few years ago the ABA President started a Commission where they were tasked with looking at whether or not they should make any changes to the Model Rules of Professional Conduct to address the idea that technology today affects nearly every aspect of our legal work. This includes how we store information, how we communicate with clients, how we conduct discovery, and so on.
The ABA went on further to say that: “In the past, lawyers communicated with clients by telephone, in person, by facsimile, but today, lawyers communicate with clients electronically. Confidential information is stored on mobile devices, including the cloud.” Ultimately, this Commission determined that there needed to be some changes to the Model Rules of Professional Conduct. These changes emphasized that it is part of a lawyer’s general and ethical duty to remain competent in a digital age.
To be more specific, this change was most reflected in Rule 1.1- The General Duty of Competence. There was no major change to this actual rule, but an addition was made to comment 8. The section opener remained the same: “To maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology..” This means the technology you use to run your practice. Every firm uses technology in its practice. Whether it’s simply Microsoft Word or a billing software, everyone uses something. We hear some firms say that they only care about the states that are relevant to their operations. Currently, 38 states have adopted this revised Duty of Competence.
So what does this mean when it applies to your daily practice, from a practical level? We typically think of technology competence as protecting our client’s information, but if we dig deeper, we will find that it incorporates these 5 things:
Let’s dig a little deeper into points 1 and 3…
What does that mean exactly when we say the benefits and risks associated with relevant technologies?
The benefits of mobile devices are incredible. That is an undisputed statement. We can now get our work done anywhere at any time, and now with the necessity to work remotely, this capability has become even more critical. Speed is also another advantage, we can communicate so much faster with both our internal teams and our clients without missing a beat. And if you’re on a cloud-based practice management system, you can truly access any file, any document, anything about all your matters from wherever you are all from your phone.
The first and most obvious risk with mobile devices is the chance of either misplacing, losing, damaging, or getting it stolen. The question isn’t if this will happen, it is when it will happen.
It was reported that women are 42% more likely to have their phone stolen while men are 57% more likely to drop their phone in the toilet. And a recent study released from Kensington revealed the costs associated with the loss or theft is far greater than the cost of the device itself, thanks to lost productivity, the loss of intellectual property, data breaches, and legal fees.
Regardless of whether your phone is stolen or lost, there are a lot of associated risks that come with that. But no application on our phones runs as much risk as our email does. Today, we use email to communicate with our clients and colleagues. Today we use email as the primary means to transport files and documents. If someone was able to access your phone, they may not be a hacker, but they know what the mail app looks like. If they are able to open this app, they will have complete and unfettered access to the most confidential and sensitive information that has been entrusted to you. And it isn’t just the messages or communications, it’s the attachments! Even with eDiscovery, a vast number of loose files (word documents, pdf, photos), are attached and sent via email.
Ultimately, this is the inherent risk involved.
So what can we do? Let’s find out...
No one expects you to be a mobile security expert. Things happen and the best you can do is be prepared and stay informed of the things you can do. So, with this in mind, when you’re using a mobile device, be aware of these things:
All of these best practices serve to help you protect the information stored on your personal computer (your cellphone). It is important to note that “reasonable efforts” and “reasonable precautions” means reasonableness. Not perfection. You have an obligation to do what you can, stay informed, and mitigate risks. You do not have to be a technology or smartphone expert to practice the above-mentioned best tips.
How are changes in today’s climate impacting your law firm profitability? Technology has changed our world significantly, and law firms are slowly catching up to the rest of the business world in many areas. Gone are the days of the large offices, where every attorney has their own secretary, and the firm houses a large library full of books that must be manually updated with those supplements that would arrive on a regular basis, much to our chagrin.
As we have slowly joined the rest of the world in the ways of online research and paperless offices, we are also considering more appropriate ways to look at profitability. This is due, in part, to client demand. Clients no longer accept the idea that they will pay our firms by billable hour, with no budget or foreshadowing of what their final out-of-pocket expense may become. Technology allows for broader communication and stiffer competition, and if we want to remain competitive, we must become more efficient and readily able to consider alternative fee arrangements (AFAs) such as flat fees, risk collar agreements, etc., or at the very least, offer accurate budgets that clients can count on so that they know their worst-case scenario.
While we may have given in to the fact that we must agree to these terms in order to get the work, many firms find themselves no longer profitable as a result. Where they are falling short is in the failure to recognize that, like other businesses, they must have a cost accounting model that allows them to understand what their cost is for producing the client’s product before they can agree to a sale price.
If you think only manufacturing companies can use cost accounting methods in their businesses, think again. Law firms who are using these methodologies will leave behind those who don’t educate themselves in these practices. You may not be producing widgets, but you are selling a “product” (time) that can be measured in order to determine the cost to produce that product. By implementing a cost accounting system, you will be able to determine profitability by producer, department, office, client, and matter. (You may be surprised to learn that your largest fee income client is not necessarily the largest contributor to your bottom line!)
So how does a firm determine the cost of their product? It isn’t as complicated as you may think. By determining the direct costs of your timekeepers (salary, payroll taxes, insurance, training, etc.) and allocating the remaining firm overhead to your timekeepers (how the overhead is allocated to differing timekeepers is another article in itself), you can determine an annual cost per timekeeper. By then looking at the number of hours each timekeeper bills per year, you can determine their hourly cost. (Timekeeper annual cost including overhead allocation ÷ number of hours billed = timekeeper cost per hour.)
Once you have determined the timekeeper’s cost per hour, you can readily understand what you can (and cannot) afford to offer as your billable rates and AFAs. You can determine the necessary billable rate for each timekeeper in order to meet your profitability goals, taking into account anticipated write-downs and write-offs (typically 10 percent). You will also know very quickly whether you can afford to offer a client a discount on any given invoice and still receive a profit on that work.
By doing a small amount of legwork on the front end to create a model that works for your firm, you can
One final note – be sure to require your attorneys to capture their hours, even on flat fees and other AFA arrangements. If you don’t, you will not be able to determine how successful your AFA models are working for you in helping you to maintain profitability.
There are a lot of fancy definitions for the term “strategic planning.” But at its core, all it means is to pinpoint a direction you want to go and then make decisions on how you plan on allocating your resources to get there. It is important to see the difference between strategic planning and marketing. And you may raise an eyebrow at that, but you’d be surprised how often people view these as the same thing. Strategic planning encompasses many operations of your business. Marketing is merely a piece of that coupled with things like your budgeting and reporting.
It is very important to note that strategic planning is not about grand ideas or mission statements. It is about where you want to be and how you’re going to get there, all within a short and defined timeframe that is typically no longer than 5 years at a time.
Typically, smaller firms can respond more quickly to changing conditions than larger firms, and because of this, there is a temptation for the smaller firms to get lackadaisical in their planning. Larger firms know that it is significantly harder to pivot, so they prepare and they do not take their strategic planning lightly.
From a high level, strategic planning consists of what we call a top-down planning process. Your firm has to first set the overall goal and then create a realistic framework and path that will allow you to get there.
For instance, if you set a goal for your firm to have a family law practice area in two years, the next question you have to immediately start asking is how are you going to achieve that? Your goals must always be measurable. Period. There have to be measurable objectives, otherwise reaching that end target is going to be very difficult and you’ll be more likely to set goals that are unrealistic in that proposed time period.
Once you’ve set your goal and defined your measurable objectives, the next thing you need to do is analyze your resources. What skills do you already have within your law practice and if you’re missing skills, what are you going to do to fill those gaps? Are you going to go out and learn them or are you going to hire people with those skills? When you begin analyzing your results, you need to also ask yourself, what do you need to get there? Sometimes firms will opt to hire an outside consultant to help guide them, others prefer to make those decisions on their own. Either way, you should figure out what assets you have and which assets you still need.
Schedules are busy, but it is essential that you and your team find time to pencil in status meetings into your calendar. Part of the reason you set measurable goals is so that you can measure them. These meetings don’t have to be once a week, they could be bi-weekly or once a month, but they do need to happen, and you do need to communicate with your team and constantly be monitoring your progress. Time always moves faster than you think, don’t let timelines and due dates sneak up on you.
Set a reasonable budget and adhere to it. You need to be asking yourself, what does your law firm's cash flow look like this year? How about your net income by year-end? Having a quality budget in place removes the guesswork and ensures you end up where you want to go. Additionally, ensure you have a good general ledger chart of accounts. If you are not familiar with the chart of accounts, it is simply a list of income and expense categories used to track your spending. Building a budget is a very crucial step in the process, if you’re wavering on how to begin, check out our 4 tips on building a better budget.
Planning is not everyone’s strong suit and that’s okay! However, having the ability to plan is crucial when you begin targeting and mapping out your firm’s future. Fortunately, being a planner is a learned skill for most people. But they say you don’t know what you don’t know, so if you’re unsure if you fall into this category, there are plenty of personality tests that you can take that will give you an idea of what your strengths and weaknesses are. The Myers-Briggs Type Indicator® is a great resource if you’re curious! Additionally, check out seminars from the American Management Association and the Chamber of Commerce.
Strategic planning sounds great, right? But what if you don’t have the financial background to adequately develop these plans? Don’t sweat it, you don’t need to have a degree in economics to know what you’re doing.
The key is to have a benchmark or expectation to see why your actual figures differ from expectations and take action based on what you find. The expectation in our financial management function is why we need a strategic plan and a sound budget. To start, use current and past budgets to create an expectation. Don’t make this part harder than it needs to be, take the information you already have and use it to build out the broader picture.
There are five basic financial statements you should be reviewing every month to help your strategic planning efforts:
This shows the financial position of a company at a specific point in time. This is usually run or prepared the first week after the close of each month. So if you’re going to look at your March financials, for example, you’re going to run them the first week of April.
This is why it is so critical that you have all of the financial transactions posted to your chart of accounts on a timely basis. If you’re at a larger firm and the accounting team starts putting pressure on you to get your timesheets in, this is why. If you haven’t posted all your costs, advances, your time, and complete your billing, then your reports will not be accurate.
Remember this formula: Assets = Liabilities + Equity
Your balance sheet is somewhat customizable when you’re comparing your designated points in time. You could choose to report on your current month, your activity year-to-date in a comparison against budget, or it could show you year-to-date in previous years. If you’re using a practice management system, you should have the ability to generate such reports. It is important to note that not every software gives you the ability to customize your reports whenever you want them. Many vendors will only offer boxed, off-the-shelf reports, so be wary of this, as typically firms end up needing more flexibility in their reporting than they initially expect or anticipate.
This reports on a company’s revenue and expenses over a period of time. Typically, the income statement is reported every month. Most law firms tend to lean towards cash basis accounting meaning that revenue is not earned until it has been received. Therefore, your income statement and balance sheet do not show accounts receivable or WIP. Those are separate, internal reports that you can run with your accounting software. Keep in mind that although these reports are run separately, they are crucial for your law practice.
We cannot express to you enough how essential it is to have a good chart of accounts so that your reports are meaningful. An issue that will make your accounting reports difficult to read is if there is not enough account detail in those chart of accounts. The chart of accounts should reflect the way your law firm is organized, for example (to name just a few) you could have reproduction expense, marketing expense, technology expense, partner compensation expense, etc. Doing this will make your reports more specific and meaningful to you.
Now, when you’re looking at gross profit and net income, or net profit, an important test to conduct is to look at your top paying clients and add up what these people or groups are earning for your firm. Then take that number and look at it as a percentage of the gross revenue. This is a good indication of how flexible your law practice would be if you suddenly lost that work. An even more telling test would be to do that same calculation, take your most lucrative type of work, and view that as a percentage of your net income. For a lot of law practices, this can be quite scary because it will show that they have very little to no flexibility at all.
This reconciles net income to the change in cash by showing sources and uses of the cash.
On cash flow statements, you’ll typically see net income first, followed by adjustments in reconciled net income, cash from operating activities, and depreciation. Other line items you might have include cash flows from investing activities and financing activities.
The owners’ equity statement outlines the changes in the owners’ equity accounts during the year.
In this statement, you will have members’ equity at the beginning of the year, then any contributions added by those members, added net income (money before distributions), and then finally the members’ equity at the end of the year following the dispersal of those distributions.
Now that we have taken a high-level look at these key statements, how do they all relate to each other? Are they even connected? Do they make a difference when you begin thinking about your strategic plan for the future of your firm? Let’s see...
So let’s look at the balance sheet, statement of owner's equity, the cash flow statement, and the income statement. If you look at your cash, this will be showing on your balance sheet and your cash flow statement. Your net income is also shown on your statement of owners’ equity, the cash flow statement, and it is also shown on the income statement. Owners’ equity is shown on the balance sheet, and of course on the statement of owners’ equity as well.
So you can see why naturally, all the statements have to balance and agree with each other. They are all interconnected and work to provide checks and balances to your firm.
All of these statements will ensure that your books are balanced and in order. Without this information, you will not be able to strategically plan for your future. Finance is all about the details and monitoring the cash coming in and the cash coming out of your firm. You don’t have to go at this alone, technology today has made it much easier to strategically plan and build out these reports the way you need them. If you’re unsure of where to start, take a breath, think about the direction your firm wants to go, and slowly begin mapping out how you will get there.
What does your law firm's cash flow look like this year? How about your net income by year-end? Having a quality budget in place removes the guesswork and fear from your financial picture and ensures you end up where you want to go. We have all heard the phrase, “Failing to plan means planning to fail.” A good budget will not only help to forecast net income and cash flow, but it will help you to plan for potential problems before they become emergencies.
The two most common types of budgets are zero-based and incremental. If you are a new firm with little to no history, you will need to start with a zero-based budget. A zero-based budget is just what it sounds like – you start at zero and forecast each expense you anticipate incurring, as well as the revenue you hope to achieve.
With incremental budgeting, you have the luxury of looking back at your history and creating the next year’s budget based on what you have experienced before. Be careful though – with incremental budgeting, it can be easy to fall back on past numbers with little effort made to improve efficiencies and drill down on ways you can do better.
Regardless of the approach you take, the first step is to ensure you have a good general ledger chart of accounts. If you are not familiar with the chart of accounts, it is simply a list of income and expense categories used to track your spending. In a law firm, typically your income is fee income. You may also have a rental income if you own a building and rent a portion of it to other tenants. When it comes to expenses, you want to find the happy medium between having enough detail to aid you in future years without having so much detail that it is a cumbersome system to use. It is also helpful to ensure you keep any expenses pertaining to meals separate – your CPA will need to know that number at tax time because your meals are not 100% deductible!
Don’t plan in a vacuum. Start by reaching out to all stakeholders in your firm. What do their CLE expenses look like for the year? Any conferences planned? How is the equipment looking? Is anyone going to need any major purchases to replace outdated equipment? What about staffing? If leadership is planning to add more employees to the firm, you need to know whether you are going to have the money to cash flow that addition. Attorneys typically take six months before they show a profit for the firm.
It is helpful to use a spreadsheet for planning your budget. You should have a sheet for income, a sheet for expenses, and a sheet that links the bottom line of your total income and expenses so that you can see your forecast net income.
Begin your budget by estimating income. In your budget spreadsheet, you can estimate the fee income for each timekeeper in your firm. It is a simple list for each timekeeper, with their estimated billable hours for the year multiplied by their average realization rate. Your financial software may be able to run this realization report for you – if it does not, you can estimate a fairly accurate number by looking at the timekeeper’s previous history and dividing their fee receipts by their billable hours. If your firm has any contingency matters, don’t forget to account for them as well – some may be at a stage where there is guaranteed income to the firm, and some may still be truly contingencies – you should account for the contingencies in a separate line item that is not counted on.
When it comes to budgeting for your expenses, be sure you have a good plan for your GL accounts before you start. Try to anticipate everything you may want to be able to track in the future. Your financial software should allow you to have parent accounts and sub-accounts. For example, you may have a set budget for firm events for the year, but you may want to be able to track what the firm spends on the annual holiday party v. its summer outing and its annual Administrative Professionals’ Day celebration. You can have a parent account for firm events, with sub-accounts for each of those sub-items. This will allow you to easily plan in future years by having a quick picture of your historical spending.
Another great way to use sub-accounts is to track costs the firm incurs for each attorney. Examples include insurance, association dues, CLEs, conferences attended, etc. By creating a sub-account for each attorney, it is very easy to run a report from your financial system to track their direct costs when you want to determine their true profitability for the firm.
When you have completed your income and expense entries into your spreadsheet, ensure that you end up with the desired net income at the end. If you don’t, you need to sharpen your pencil!
When it comes to entering your budget into your financial system, be sure you are entering the expenses in the month that you expect them to occur. Some items will be spread equally throughout the year, like rent and equipment leases. Others will occur in specific months, like professional liability renewals and holiday parties. By planning for your professional liability renewal to occur in the appropriate month, you can have your eye on the ball in cash flow planning and avoid the extra expense of paying for financing your premium.
Use your budget for decision-making. If someone is requesting something that was not planned in the budget, is it necessary? Is it something that can wait until next year? If not, is there a way you can make up for the added expense by changing your spending in some other areas or increasing firm revenue?
Once you have entered your budget into your system, make sure you monitor it regularly. You should be running a monthly YTD income v. budget report to track how you are doing against your budget. Don’t despair if you see variances v. your budget. No budget is perfect, but by having one in place and monitoring it regularly, you can prevent any big surprises and make contingency planning when necessary.
