In my series on using intel to optimally price legal matters (Part 1, Part 2, Part 3) I mentioned that the calculation of profitability requires that a firm have the discipline to promptly close matters. I have since been asked how to accomplish this feat, seemingly impossible in certain firm cultures.

For some, it probably is impossible or at least close to it; but I have seen this technique work:

  1. Establish explicit measurable criteria for deciding when a matter will be closed. This might be a specified number of months during which no significant billings to the matter have occurred (e.g., haven’t billed $1000 within the past three months). These criteria may differ by type of matter (e.g., disputes vs. deals) but they must be fixed, measurable and automatically reportable by the firm’s accounting system.
  2. Whenever the criteria are met an e-mail is automatically sent to the billing attorney, the CFO and a committee responsible for overseeing this process. (I have seen this be the executive committee, which I do not recommend, and the committee responsible for approving discounts and write-offs.)
  3. The billing attorney then has a fixed time (usually a month) to appeal the closure of the matter to the committee.
  4. If the committee approves the exception, the clock resets to the first step above.
  5. If there is no exception, the matter is closed (and its profit calculated!) and an email is generated for the billing attorney to send to the client. The billing attorney may edit it as they see fit (or not send it at all), but the draft includes “thank you” language and a link to a post-matter satisfaction survey.

Of course, your firm culture may vary, but I have seen this general approach work several times.