ALA CLM cheat sheet

Three organizational forms of law practice: sole proprietorship, general partnership, and professional corporation/LLC; liability exposure differs by form.

Span of control: the number of subordinates reporting to one supervisor; wide spans flatten hierarchy, narrow spans add management layers.

Chain of command establishes formal reporting lines; unity of command holds that each employee reports to exactly one supervisor.

Centralization concentrates decision authority at the top; decentralization pushes authority to practice-group or office level.

A functional organization groups staff by specialty (litigation, transactional); a matrix organization overlays function with client or matter teams.

Strategic planning sequence: mission and vision, environmental scan (SWOT), objectives, strategies, implementation, evaluation.

Authority differs from responsibility: authority may be delegated, but ultimate accountability for outcomes remains with the delegator.

A policy is a standing general guide to decision-making; a procedure is a step-by-step method for performing a specific task.

Net income = total revenue minus total expenses; revenue per lawyer = gross fees divided by number of full-time-equivalent lawyers.

Realization rate = fees collected (or billed) divided by standard or timekeeper value of hours worked; collection rate = cash collected divided by fees billed.

Utilization rate = billable hours worked divided by available hours; a common benchmark target is roughly 1,700–2,000 billable hours per lawyer annually.

Leverage = ratio of non-lawyer timekeepers (paralegals, associates) to partners; higher leverage can raise profit per partner if realization holds.

Profit per partner (PPP) = firm net profit divided by number of equity partners; it is the standard profitability benchmark in law firms.

Working capital = current assets minus current liabilities; it measures short-term liquidity available to cover operating obligations.

Unbilled time (work in process) and accounts receivable are the two largest working-capital drains in a law firm; aging beyond 90 days raises write-off risk.

A budget variance is favorable when actual revenue exceeds budget or actual expense is below budget; the sign convention must be stated explicitly.

Recruiting sequence: job analysis, job description, sourcing, screening, interviewing, selection, offer, onboarding.

Job analysis produces the job description (duties) and job specification (required knowledge, skills, abilities).

Behavioral or structured interviews use past-behavior questions and consistent scoring rubrics; they are more predictive and more legally defensible than unstructured interviews.

Total compensation = base salary plus benefits plus variable pay (bonus, origination or merit awards); compare against market survey data by position and geography.

Performance appraisal methods include graphic rating scales, behaviorally anchored rating scales (BARS), and management by objectives (MBO).

Progressive discipline steps typically run: verbal warning, written warning, suspension, termination; documentation is required at each step.

Protected-class discrimination claims arise under Title VII, ADA, ADEA, and similar statutes; consistent, documented, job-related criteria are the primary defense.

Turnover rate = separations during a period divided by average headcount for that period; voluntary and involuntary separations should be tracked separately.

The matter lifecycle: intake and conflict check, engagement letter, staffing, work execution, time capture, billing, collection, and file closing.

A conflict check must be completed before engagement; it screens new matters against existing and former client and adverse-party records.

The engagement letter defines scope, fee arrangement, billing frequency, and client responsibilities; it is the primary risk-management document.

Billable-hour targets convert to daily targets: 1,800 annual hours divided by roughly 230 working days equals about 7.8 billable hours per day.

Cycle time is total elapsed time from matter opening to closing; reducing non-value-added wait time improves throughput without adding staff.

Capacity planning compares forecast demand (matter volume by practice area) against available timekeeper hours to identify staffing gaps.

A standard operating procedure (SOP) documents the repeatable steps for a recurring task so quality does not depend on any one individual.

Records retention schedules set minimum retention periods by record type; destruction should be suspended when litigation hold or ethical duties apply.

Client lifetime value = average annual revenue per client multiplied by average retention years, minus acquisition and service cost.

Client satisfaction measurement tools include post-matter surveys, Net Promoter Score (NPS), and key-account interviews; NPS = percent promoters minus percent detractors.

The business development pipeline stages: lead generation, qualification, proposal or pitch, negotiation, engagement, and relationship expansion.

Cross-selling succeeds when practice groups share client intelligence; a client team or key-client program assigns accountability for the relationship.

Client segmentation (A, B, C tiers) allocates business development resources by revenue potential and strategic value rather than equally.

A request for proposal (RFP) response should address scope, staffing, pricing structure, and differentiators; pricing alternatives include hourly, fixed fee, capped fee, and blended rate.

Retention rate = clients retained at period end divided by clients at period start; pair it with revenue retention to detect downgrades among retained clients.

Referral and alumni networks are low-cost acquisition channels; tracking source-of-business data lets the firm invest where returns are highest.