A lot of my bookkeeping clients come to me for advice about software and services for their firm. “Can I afford it?” they ask me. “Is it worth the cost?” I’m always happy to help my bookkeeping clients figure this out, and happy to share my analysis and advice here, because you can take the same analysis and apply it to your firm, too. And it’s a pretty simple process:
- What’s one hour of your time worth? For most attorneys, this is your hourly rate. But, if you’re an overworked partner or solo, be sure to also factor in the value of getting home to your family an hour earlier each night; that may be worth even more than your hourly rate.
- What does the proposed software/service/tool cost? If there are different options for pricing plans, be sure to consider all of your options, and have the pricing plans and different features handy so you can compare.
- How much time would the proposed software/service/tool save you? How much time do you expect to save with this tool? How much *more* time would you save if you upgraded to the mid-tier, or top-tier, plan?
- If time > cost, then invest. Now, run the numbers. If the value of your time saved is greater than the cost of the software, that’s a good investment for your firm and your sanity. If the cost is greater than the time you could save, you should keep looking for other solutions.
With this simple analysis, you’ll be able to make informed decisions about all kinds of firm matters. Let’s put it into action by walking through an example.
Example: Is Clio Manage Worth It?
Let’s assume your solo law firm is evaluating Clio Manage. You’ve heard it’s a great tool for managing a busy caseload, and you’ve looked into some of the features and contacted Skepsis for a demo. But, you’re hesitant to add one more monthly expense, and even if you did, how would you know which plan is right for you? So you ask: Is Clio Manage worth it?
Step 1: What’s One Hour Of Your Time Worth? Let’s assume you typically bill $350/hour. Sure, some of that may be contingency fees, so it’s not an exact science, but even on con fees you hope to make at least $350/hour at the end of the case. So, one hour of your time is worth $350.
Step 2: What Does Clio Manage Cost? For your solo firm, the Starter plan will be $39/month. The Boutique plan is $59/month, and the Elite plan is $99/month. Each one has different features, with the Boutique plan adding integrations to Dropbox, your calendar, and your bookkeeping software, as well as contingency fee billing, trust accounting, and document automation. The Elite plan adds origination reports, court calendaring, and instant on-demand chat support.
Step 3 & 4: How Much Time Would Clio Manage Save You, And Does That Cost Exceed The Time Savings? I confess, I like to combine Steps 3 and 4 because it usually makes for an easier analysis. Here’s how to think about it:
In this case, we start by examining the Starter plan at $39/month. $39 divided by the value of your time – $350/hour – is 0.11 hours. Convert that to minutes (here’s a handy tool you can use), and you get 7 minutes. Will the Starter plan save you at least 7 minutes each month? I haven’t yet met an attorney who can honestly answer that question in the negative. Unless you’re a true technophobe (which I confess some attorneys are), and the learning curve of almost any software is just too steep for you, then the ease of tracking time and issuing bills alone will save well over 7 minutes.
But maybe we need the Boutique plan? Well, let’s take a look: Ad $59/month, that plan is an additional $20/month. $20 divided by $350/hour = .06 hours, or 4 minutes. So, do the additional features of the Boutique plan save you an extra 4 minutes each month? If you do con fees, then there’s no question you’ll reap the benefits of the Boutique plan, because you’ll get built-in contingent fee billing. If you like storing documents locally on your computer – in Dropbox, OneDrive, Google Drive, or the like, and you don’t want to have to download your documents each time you open them, then re-upload them when you’re done – then again, there’s pretty much no question that you’ll increase profits and free time by upgrading. Or, if the calendar integration will make schedule management a breeze for you, and save you more than 4 minutes each month, then definitely spring for the Boutique plan.
But what about the Elite plan? That’s an additional $50/month over the Boutique plan. $50 divided by $350/hour = .14 hours, or 8 minutes. Can we save 8 minutes/month with the Boutique plan? In our hypothetical, you’re a solo, so the origination reporting won’t save you 8 minutes each month, so it’s not worth it just for that. But, if you don’t enjoy learning new software, then that magic little “instant help chat” feature of the Elite plan really is likely to save you 8 minutes each month, so the Elite plan is great for you, and you can always downgrade after the first year, when you’ve learned the software. Or, maybe you don’t have a foolproof court calendaring system in place, and that auto-calendaring will save you 8 minutes in rules research and calendaring time each month. All you have to do to break even is free up 8 minutes each month! Any time beyond those 8 minutes – that’s 24 seconds per work day, by the way – that you’re able to free up is profit in your pocket. So, this solo chose the Elite plan.
Make Sound Financial Decisions For Your Firm.
This analysis is informative not only for solos, but for all kinds of small and medium firms; simply adjust the values accordingly. Maybe the decision is whether to hire a bookkeeper, and doing so would free up your assistant’s time; what’s that worth? Or maybe the decision is whether to hire another attorney, which would allow you to make it home by dinnertime each night. Whatever the decision, remember: your firm is a business. Approach your firm business decisions from a business perspective.