RPE: Revenue Per Employee

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Are you a law firm owner who is looking for ways to increase the productivity of your staff? In this episode of the Maximum Lawyer podcast, Tyson delves into the concept of Revenue Per Employee (RPE) and offers strategies for optimizing this crucial metric. 

Tyson responds to a question of Revenue Per Employee that a listener submitted. Revenue Per Employee can be done through increasing revenues or reducing the number of employees, which can be used to make decisions for a firm. You are going to want to assess how each employee is performing and how much money they are generating for a firm. In this analysis, if you find they are not benefiting your firm, it might be time to let them go. Tyson also suggests that processes could be causing a roadblock for employee productivity leading to issues in performance and sales. If this is the case, you need to re-evaluate those processes.

Tyson provides some ways a firm can enhance employee performance and RPE. This can be done through investing in automation so work is easier for employees. Another thing to do is analyze who is managing your staff. Sometimes management can cause problems for your staff and can ultimately cause performance issues. If this is the case, it is essential to pivot and possibly re-hire.

Listen in to learn more!

Episode Highlights:

• 1:54 Discussion on how RPE varies by firm type and practice area
• 3:10 Strategies to enhance employee efficiency 
• 5:52 Enhancing employee performance and RPE
• 8:43 Reviewing and adjusting pricing strategies to enhance revenue

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Transcripts: RPE: Revenue Per Employee

Tyson Mutrux (00:00.924)
Welcome back to another Saturday episode of the Maximum Lawyer podcast. I'm Tyson Mutrix and today we're going to be talking about RPE, Revenue Per Employee. We're going to talk about it again, but we're talking about how to adjust that up and down. Okay. That's what we're going to talk about today before getting into the reasons why we're going to talk about that. I just want to remind you that this came up from a question we got or several questions we got, some of them through the text line.

So just as a reminder, text us if you have any questions. We will cover them like I'm doing now, like I've done in previous episodes. If we can, if it's something we can, we think is appropriate for the show or that is something that we can fit in, because we do have a lot of topics that we have that we're going to cover this year. But we'd love to hear from you. 314-501-9260. Save it to your phone. So if something comes up, you can, so you may not have something right now, but save it to your phone. 314-

501-926-0 and so save it if something comes up just boop shoot me a text and I'll try to cover it if I can and obviously if you just want questions if you have questions that you want me to address just shoot me a text I'm happy to take it back to you but so this came up I hinted at this a little bit this came up because we've gotten lots of questions since I've done that episode on revenue per employee

And I will also say, I've had several conversations with other attorneys about this, many of which I really respect their business acumen. The revenue per employee is not going to be the for every firm. It will be different. Some firms, they don't even consider it. It's not something to them. so if you're a high volume practice, it also depends. It just made, it depends on…

Your revenues depends on your your practice area, but I know it works well For us as an injury firm it it as a general rule it it's a good one to focus on because it can help you make decisions in the future and if I Talk about that all in the other episode about revenue employee. So check that out We'll put that in the show notes so that you can watch that if you've not Watch or listen to that one because you can either watch it on YouTube or you can listen to it if on any of the

Tyson Mutrux (02:23.516)
Podcast apps, especially if you're listening to it now, you know that but So if I'm really over simplifying this there's really only two ways big picture that you can adjust up your revenue per employee and that is increased revenues, which and we're talking about this stuff in a little bit, but Reduced number of employees. That's it. That's really how it is because but but

We're going to talk about how to increase revenues. That's how we're going to spend the majority of our work without you adjusting any of the employees. without having to lay anybody off, we're going to spend the most of the time about that. But in a nutshell, if you really think about it, it's really kind basic concept. You can either increase revenues or you can reduce the number of employees. But let's try to avoid you having to reduce any employees unless they're bad employees and go ahead and get rid of them.

So the number one reason or number one thing I want to talk about is employee efficiency and employee productivity. There's a lot of things you can do to enhance that and you might be a roadblock in many of that. So you're going to want to evaluate your processes and find out, are you the one that's in the way or are your processes in the way of your employees doing good work? Because you might be that roadblock. And so you're going to want to make sure you assess that.

Another one that you may not be thinking about, you might just, and it's, it's, for those of you with a really, really low revenue per employee, you might be thinking, okay, I've got to jump straight to laying people off. And you may not want to consider this next option, but an option might be in is investing in training and development. That is a way that you can really easily increase the revenue, especially on the, intake, the sales side of things.

If you invest in the training side of that, or you increase your conversions, then you're going to see an increase in revenues that is going to then raise your RPE. That's something to consider. giving them those new skills that they can then leverage to increase the revenues is a way that you can do it without that. don't think most people think about, because especially if you're thinking about it on the low end, you're like, okay, we got to find a way to cut.

Tyson Mutrux (04:49.82)
I don't really want to invest in more trading and development for these people. I understand that, but if you're in a situation where you can at least try this, it might be a really simple way that you can increase your revenues to the firm. Another one, and this is one we talked about quite a bit, so I'm not going to harp on it a lot, but a really easy way of doing this is just implementing technology that you probably already have access to. So investing or not investing, but implementing the automation.

that is already built into the softwares that you have, or going out and spending some money on some softwares. I'm not even going to mention any names because there's just so many of them out there right now that you could throw a dart and find 100 of them. But invest in some sort of automation. That way you are making your employees' lives easier, and in a way you could also then increase your revenues. But they have to be highly targeted.

workflows, this is going to have to be more on the marketing side of things. As time develops, you're in a crunch right now, then you're going to have to focus more on the marketing stuff. But for more long-term, to increase your revenue per employee long-term is definitely invest more in the automation because it'll require less time from your people, which will then ultimately require less people in your firm to run your firm. So that's an easy one.

And then another thing that you might not be thinking about is just like analyze who's managing your people because they might be a hindrance to you're going to want to make sure you're hiring effective people that can manage the people that are that are doing the work. OK. And that are responsible for making sure that you are having revenues coming in. So take a look and see if the people that are managing your people are

doing a good job and assess that to try to find out if they are enhancing, you're going to make sure that they're enhancing the work that your people are doing. And if they're not, if there are hindrance, then you need to make some sort of an adjustment. That's a really important part of this too. I saw some studies that a good manager can actually increase the revenue per employee by about 27%. That's how big of a deal it is. Don't overlook this part of it.

Tyson Mutrux (07:16.444)
because you might be really quick to overlook that one out of all the ones I talked about, but a 27 % adjustment in your RPE is massive. So don't neglect this part of it. It's one of the ones that I think between that one and investing in employee development, those two are going to be the most overlooked probably on this list. The next thing is…

Just making sure that you are setting that your team has clear goals and objectives because if they don't, if they don't know what the targets need to be every single month or every single quarter, we focus a lot on the quarter, but if they don't know what those targets are, they're not going to be reaching for those targets. And so that's going to greatly affect your revenue per employee. for example, we are, our, our rock a lot of time, usually, I mean, almost every single quarter.

There are some quarters where we don't have it, we're looking at fees brought in. Okay, that's what we're looking at is the amount of fees that we bring in every single quarter. That's one of our major rocks that we focus on. And every once in we'll mix in like a second rock where we're trying to focus on one other thing, but for the most part, that is like the number one rock that we focus on. If our team didn't know that, they weren't pushing for that, then that would greatly affect our RPE. Okay, so.

That's why that's a really important thing. And incentives could be too. If you incentivize your employees for selling cases or for signing cases, whatever it may be, that could also affect it. You might want look at your incentives as well. Another thing that you might want to look at is just optimizing your pricing strategies. So you might have to go through and revamp your pricing strategies.

because they might just be too low. This could be a really simple fix for you if you go through and you look at, right, here's what the market was five years ago. What was I charging? Okay. Now what's the market calling for? What am I charging? And if you've not adjusted your prices in the last five years, that's a really good sign that you probably need to raise your rates. That's a really simple one that you could do. You could also add a premium option. Okay. Alex Hormozzi talks about this.

Tyson Mutrux (09:37.984)
And it's something that I was talking to Paul Yocobitis and the Guild just yesterday about. And Hormozi recommends having some sort of premium option. So even if say 5 % of people take that premium option, and what you could do is just do all the same things that you're doing and for the premium options, and then take away a couple things for your current clients. And now you have a premium option. But if you've got 5 % that take that, you've already increased your revenues.

which then in turn increases your revenue per employee. So that's a really simple option that you could use to increase that number. That's really important. And then this is one where the last thing I'll talk about, and this is more on the bad side of things, okay? And that is you could, if you need to, you could get rid of a couple teammates and…

reduce that number. Another thing you could do is you consider outsourcing. Some people don't, they don't in that number, right? They don't use the any outsourced employees or virtual team members. We do. We don't we, we, and if you need to, a way of doing it is let's say you've got someone that works only 20 hours a week, you know, use 0.5 for that number, not one, right? That's a really simple way of doing it. But we, we certainly do use that because I think it's

I think that's fair to include that. need to include your team members in that revenue per employee. But either way, you could outsource, maybe you could outsource it, have less actual employees, use more virtual people, people that are outsourced, and you could use that as a way to.

reduce the number of NC people, which then would lower your costs. wouldn't necessarily, if you do include them in that number, it's not going to necessarily decrease your, or increase your revenue per employee. But what it might do is actually increase your revenue per, or a profit per employee. So that's, that's, is ultimately the most important part is profit. All You want to make sure you're getting profit and you want to get to something where you're actually making money. That's where you want to be. So that's what I have for you today.

Tyson Mutrux (11:57.68)
That's one of things like I could go into this a lot more, but I think just going kind of mid level with this, not going into too much detail and because without knowing each of your firms, it's kind of hard to go into too much detail with each of these, but I'm going to give you kind of the big picture bullet points that you could go into and find ways of increasing. If that is a number that you're focusing on, know, revenue per employee, then you can do some of these things. I would do one at a time. I wouldn't do a

of them but start one or two at a time and then see what works and then see how high you can drive that number up. So there you go. But that's all I have for you today. Hopefully you enjoyed this one. As a reminder just if you have any questions you want me to cover or any topics you want me to cover shoot me a text 314-501-9260. I always love hearing from people. I always love texting back and forth with people. It's always a lot of fun. I always like to learn about

people that are listening that I haven't met before. It's always a cool experience. But until next week, remember that consistent action is the blueprint that turns your goals into reality. Take care.