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Budgeting Essentials to Set Your
Firm Up for Success
Building a Successful Law Firm: Session 3
February 15, 2022
Joshua Lenon
Housekeeping
● Session length: 60 minutes
● Use to engage with fellow meetup attendees
and select “everyone” in the dropdown
● Use to ask questions directly to panellists
● Please fill out the survey at the end of the session
3
Agenda
● Meet the panel
● Why you need a budget
● Setting up your budgets
● Clio’s offerings & polls
● Helpful resources
● Additional Q&A
4
Joshua Lenon
Lawyer in Residence at Clio
Joshua@clio.com
Amy Grubb
Legal Consultant at Grubb Legal
Consulting
Amy@grubblaw.ca
Today’s Speakers
Beau Atkins
Founder at
Evolve Family Law
BeauAtkins@evolvelaw.ca
Panel
Discussion
Why you need a
budget
Why you need a budget
● A budget is a planning tool. It sets your expectations for cash flow and expenses
throughout the year
● Set revenue benchmarks
● Seasonality
● Set aside funds to cover the larger lump-sum expenses most law firms encounter:
○ Annual bar dues
○ Malpractice premiums
○ Quarterly self-employment taxes
○ Research and software subscriptions
Setting up your
initial budget
Initial Budget
One-Time Expenses
● Licenses and permits
● Insurance
● Market research
● Website launch
● Equipment & office supplies
● Capital deposits
● Repairs and upgrades
Monthly Expenses
● Payroll / benefits
● Utilities
● Communications
● Rent
● Operating supplies
● Business development
Setting up your initial budget
Revenue
● Best guess
● What is your magic number?
● Rates
Setting up your initial budget
Expenses
● Mandatory vs optional expenses
● What do you have on hand?
● Get creative!
● Consider ROI
Real Example: Budget walkthrough
Setting up your initial budget
Now what?
● Review your numbers
● Hire bookkeeper
● Set up long term budget
Setting up your
long-term budget
Setting up your long term budget
● Budget to keep your firm running – your annual budget based on
growth goals
● How your budget changes during the the first 6 months and then 1-3
years
Four types of law firm expenses:
1. Real estate
2. Business Development
3. Salary
4. Technology
Law Firm Billing by Month
Rule of Thumb
Law firms should spend
2-5% of annual revenue on
marketing & business development
Source: Ed Poll, consultant and owner of
LawBiz.com
Yes, there’s math.
Desired Annual Billings X 8% =
Your Annual Marketing Budget.
Source: Dustin Ruge, How Much Should My Law
Firm Spend on Marketing? 2/19/15
Return on Investment Formula
(Yes, there’s math part 2)
(Return – Investment)
Investment
Technology Spending
● 60% of all respondents spend between 1-3.99% of
total firm revenue on technology
○ (44% of Small Firms, 39% of Medium firms and 17% of
Large Firms).
● 24% of respondents spend between 4-5.99% of total
firm revenue on technology.
● 22% of all respondents spend between $5,001-$8,000
per attorney on technology, followed by 20% who
indicated spending $8,001-$11,000
Projecting your
revenue
Target Billing Rate
Cost Rate = Overhead / Expected Billable Hours
Internal Rate = Cost Rate / Expected Realization Rate
Target Billing Rate = Internal Rate / (100% - Expected
Profit Margin)
Rates and Case Loads
Immigration Insurance
• $340 Rate
• 78% Collection Rate
• ~$320k revenue
• 213 Cases
• $186 Rate
• 72% Collection Rate
• ~$160k revenue
• 38 Cases
Putting in the Numbers
Immigration
● ~$320k in overhead coverage
● 5% on Real Estate
○ $16k
● 8% on Business Development
○ $26k
● 6% on Tech
○ $19k
● $259k remaining for salary, etc.
Insurance
● ~$160k in overhead coverage
● 5% on Real Estate
○ $8k
● 8% on Business Development
○ $13k
● 6% on Tech
○ $9k
● $130k remaining for salary, etc.
Tools to increase
efficiency
Key Tech for Running a Firm
● The basics (ex. Internet, laptop, monitor, headphones, webcam, portable printer/scanner, e-filing, VPN, company website w/ contactform)
● Email (ex. Gmail, Office 365)
● Internal communication software (ex. Email, Slack, Microsoft Teams)
● Video conferencing software (ex. Zoom, GoToMeeting, Google Hangouts)
● VoIP phone provider (ex. Vonage, Corvum, Nextiva, Jive)
● Virtual receptionist services (ex. Ruby Receptionist, Smith.ai, Answer1, and others)
● Document management & E-Signatures, cloud-based (ex. Lawyaw Netdocs, WealthCounsel, DropBox, Docusign, HelloSign)
● Case management software, cloud-based (ex. Clio Manage)
● CRM & client Intake software, cloud-based (ex. Clio Grow)
● Secure client portal (ex. Clio Connect in Clio Manage)
● Online payment services (ex. Clio Payments)
● Accounting software (ex. Quickbooks, Xero)
● Legal research software (ex. Fastcase, Practical Law, Westlaw)
An all-in-one solution for
legal practice management
and accounting
Eliminate manual work
and focus on your clients.
● Automatically sync transactions and stay on top of your firmʼs
financials.
● Make trust accounting easier and less intimidating with journal
entries and reports compliant with your bar association.
● Get more work done outside of the office with two cloud-based
tools. Work on the go and keep your records up to date.
Clio is a QuickBooks
Solution Provider
Get a 30% monthly discount off your QBO
subscription for your first 12 months.
Learn more about the QuickBooks Online
integration at Clio.com/Quickbooks
37
Clio’s Offerings &
Additional Resources
Clio Manage
Legal practice management software
Our most popular product—the industryʼs leading solution
to help manage clients, organize cases, and automate
tedious tasks and month-end billing.
Clio Grow
Client intake and legal CRM software
Standardize the client intake process with online intake
forms, email automation, and e-signatures to build strong
relationships, and get powerful data insights to grow your firm.
The Clio Suite
Legal practice management, client intake and CRM software.
Get unmatched performance with Clio Suite, the industryʼs
only end-to-end software solution for your firm. Visit clio.com/pricing to learn more.
Clio’s Offerings
Clio Payments
Clio Manageʼs new online payments platform makes it easy for
your clients to pay online using a credit card, debit card, or
eCheck—without the need for a third-party payment processor.
Clio Drive
Securely create, access, edit, store, and collaborate on
documents without ever leaving your desktop.
Clio for Clients
Clio for Clients, Clioʼs new secure client portal allows you to
streamline communication with your clients.
Text Notifications and Reminders
Use text notifications and reminders to avoid the costly
no-shows and unnecessary administrative overhead that comes
with organizing client meetings.
Visit clio.com/features/whats-new to learn more.
What’s New In Clio
Polls for Non-Clio and Clio Customers
Poll 1: For Non-Clio Customers
Would you like to learn more about Clio?
a. Yes, I would like to learn more
about Clioʼs Suite of products
b. No, Iʼm not interested
c. Clio Cloud conference
d. No, Iʼm already a Clio Customer
40
Poll 2: For Clio Customers
Would you like to learn more about:
a. Adding Clio Grow to
streamline client intake
b. Adding Clio Payments
c. Clio Cloud Conference
d. No, Iʼm not interested
or I already use Clio Grow
Additional Resources
41
● Free PDF from Grubb Legal Consulting: The Ultimate Guide to Building a Profitable
Solo/Small Firm Practice
○ If you’d like to learn more about Grubb Legal Consulting, please let us know in the follow
up survey
● Meetup: Tips for Optimizing Your Firm's Billing and Collections [Feb 17, 2022]
● CLE-eligible webinar: Disaster and Succession Planning for Law Firms [March 8, 2022]
● Clio Cloud Conference October 10-11, 2022: Get your pass for $399
42
Additional
Questions
43
Thank You
45
CONTACT INFORMATION
/amygrubb
amy@grubblaw.ca
https://grubblaw.ca/
Lawyer & Legal Consultant, Grubb Legal Consulting
Amy Grubb

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Budgeting Essentials to Set Your Firm Up for Success

  • 1. Budgeting Essentials to Set Your Firm Up for Success Building a Successful Law Firm: Session 3 February 15, 2022 Joshua Lenon
  • 2. Housekeeping ● Session length: 60 minutes ● Use to engage with fellow meetup attendees and select “everyone” in the dropdown ● Use to ask questions directly to panellists ● Please fill out the survey at the end of the session
  • 3. 3 Agenda ● Meet the panel ● Why you need a budget ● Setting up your budgets ● Clio’s offerings & polls ● Helpful resources ● Additional Q&A
  • 4. 4 Joshua Lenon Lawyer in Residence at Clio Joshua@clio.com Amy Grubb Legal Consultant at Grubb Legal Consulting Amy@grubblaw.ca Today’s Speakers Beau Atkins Founder at Evolve Family Law BeauAtkins@evolvelaw.ca
  • 6. Why you need a budget
  • 7. Why you need a budget ● A budget is a planning tool. It sets your expectations for cash flow and expenses throughout the year ● Set revenue benchmarks ● Seasonality ● Set aside funds to cover the larger lump-sum expenses most law firms encounter: ○ Annual bar dues ○ Malpractice premiums ○ Quarterly self-employment taxes ○ Research and software subscriptions
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  • 11. Initial Budget One-Time Expenses ● Licenses and permits ● Insurance ● Market research ● Website launch ● Equipment & office supplies ● Capital deposits ● Repairs and upgrades Monthly Expenses ● Payroll / benefits ● Utilities ● Communications ● Rent ● Operating supplies ● Business development
  • 12. Setting up your initial budget Revenue ● Best guess ● What is your magic number? ● Rates
  • 13. Setting up your initial budget Expenses ● Mandatory vs optional expenses ● What do you have on hand? ● Get creative! ● Consider ROI Real Example: Budget walkthrough
  • 14. Setting up your initial budget Now what? ● Review your numbers ● Hire bookkeeper ● Set up long term budget
  • 16. Setting up your long term budget ● Budget to keep your firm running – your annual budget based on growth goals ● How your budget changes during the the first 6 months and then 1-3 years
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  • 18. Four types of law firm expenses: 1. Real estate 2. Business Development 3. Salary 4. Technology
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  • 21. Law Firm Billing by Month
  • 22. Rule of Thumb Law firms should spend 2-5% of annual revenue on marketing & business development Source: Ed Poll, consultant and owner of LawBiz.com
  • 23. Yes, there’s math. Desired Annual Billings X 8% = Your Annual Marketing Budget. Source: Dustin Ruge, How Much Should My Law Firm Spend on Marketing? 2/19/15
  • 24. Return on Investment Formula (Yes, there’s math part 2) (Return – Investment) Investment
  • 25. Technology Spending ● 60% of all respondents spend between 1-3.99% of total firm revenue on technology ○ (44% of Small Firms, 39% of Medium firms and 17% of Large Firms). ● 24% of respondents spend between 4-5.99% of total firm revenue on technology. ● 22% of all respondents spend between $5,001-$8,000 per attorney on technology, followed by 20% who indicated spending $8,001-$11,000
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  • 31. Target Billing Rate Cost Rate = Overhead / Expected Billable Hours Internal Rate = Cost Rate / Expected Realization Rate Target Billing Rate = Internal Rate / (100% - Expected Profit Margin)
  • 32. Rates and Case Loads Immigration Insurance • $340 Rate • 78% Collection Rate • ~$320k revenue • 213 Cases • $186 Rate • 72% Collection Rate • ~$160k revenue • 38 Cases
  • 33. Putting in the Numbers Immigration ● ~$320k in overhead coverage ● 5% on Real Estate ○ $16k ● 8% on Business Development ○ $26k ● 6% on Tech ○ $19k ● $259k remaining for salary, etc. Insurance ● ~$160k in overhead coverage ● 5% on Real Estate ○ $8k ● 8% on Business Development ○ $13k ● 6% on Tech ○ $9k ● $130k remaining for salary, etc.
  • 35. Key Tech for Running a Firm ● The basics (ex. Internet, laptop, monitor, headphones, webcam, portable printer/scanner, e-filing, VPN, company website w/ contactform) ● Email (ex. Gmail, Office 365) ● Internal communication software (ex. Email, Slack, Microsoft Teams) ● Video conferencing software (ex. Zoom, GoToMeeting, Google Hangouts) ● VoIP phone provider (ex. Vonage, Corvum, Nextiva, Jive) ● Virtual receptionist services (ex. Ruby Receptionist, Smith.ai, Answer1, and others) ● Document management & E-Signatures, cloud-based (ex. Lawyaw Netdocs, WealthCounsel, DropBox, Docusign, HelloSign) ● Case management software, cloud-based (ex. Clio Manage) ● CRM & client Intake software, cloud-based (ex. Clio Grow) ● Secure client portal (ex. Clio Connect in Clio Manage) ● Online payment services (ex. Clio Payments) ● Accounting software (ex. Quickbooks, Xero) ● Legal research software (ex. Fastcase, Practical Law, Westlaw)
  • 36. An all-in-one solution for legal practice management and accounting Eliminate manual work and focus on your clients. ● Automatically sync transactions and stay on top of your firmʼs financials. ● Make trust accounting easier and less intimidating with journal entries and reports compliant with your bar association. ● Get more work done outside of the office with two cloud-based tools. Work on the go and keep your records up to date. Clio is a QuickBooks Solution Provider Get a 30% monthly discount off your QBO subscription for your first 12 months. Learn more about the QuickBooks Online integration at Clio.com/Quickbooks
  • 38. Clio Manage Legal practice management software Our most popular product—the industryʼs leading solution to help manage clients, organize cases, and automate tedious tasks and month-end billing. Clio Grow Client intake and legal CRM software Standardize the client intake process with online intake forms, email automation, and e-signatures to build strong relationships, and get powerful data insights to grow your firm. The Clio Suite Legal practice management, client intake and CRM software. Get unmatched performance with Clio Suite, the industryʼs only end-to-end software solution for your firm. Visit clio.com/pricing to learn more. Clio’s Offerings
  • 39. Clio Payments Clio Manageʼs new online payments platform makes it easy for your clients to pay online using a credit card, debit card, or eCheck—without the need for a third-party payment processor. Clio Drive Securely create, access, edit, store, and collaborate on documents without ever leaving your desktop. Clio for Clients Clio for Clients, Clioʼs new secure client portal allows you to streamline communication with your clients. Text Notifications and Reminders Use text notifications and reminders to avoid the costly no-shows and unnecessary administrative overhead that comes with organizing client meetings. Visit clio.com/features/whats-new to learn more. What’s New In Clio
  • 40. Polls for Non-Clio and Clio Customers Poll 1: For Non-Clio Customers Would you like to learn more about Clio? a. Yes, I would like to learn more about Clioʼs Suite of products b. No, Iʼm not interested c. Clio Cloud conference d. No, Iʼm already a Clio Customer 40 Poll 2: For Clio Customers Would you like to learn more about: a. Adding Clio Grow to streamline client intake b. Adding Clio Payments c. Clio Cloud Conference d. No, Iʼm not interested or I already use Clio Grow
  • 41. Additional Resources 41 ● Free PDF from Grubb Legal Consulting: The Ultimate Guide to Building a Profitable Solo/Small Firm Practice ○ If you’d like to learn more about Grubb Legal Consulting, please let us know in the follow up survey ● Meetup: Tips for Optimizing Your Firm's Billing and Collections [Feb 17, 2022] ● CLE-eligible webinar: Disaster and Succession Planning for Law Firms [March 8, 2022] ● Clio Cloud Conference October 10-11, 2022: Get your pass for $399
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  • 45. 45 CONTACT INFORMATION /amygrubb amy@grubblaw.ca https://grubblaw.ca/ Lawyer & Legal Consultant, Grubb Legal Consulting Amy Grubb