How many of you have hung out a shingle and started your own firm? Some right out of law school, right?
What was the first thing you did? (business cards, desk, computer, advertising) Did you think you had a law practice, a law firm or a law business?
When asked this question, some lawyers will tell you it is about billing and collections. Billing and collections is but a small part of managing the business of practicing law. If you had a business and you were selling widgets, billing and collections is not the only part of the business that you need to be concerned with.
The product that lawyers sell is their time, and as I like to refer to it, “their stock in trade”, Running the business part of a law firm is just as important as the practice of law.
So why is there so much attention being given to the business of law now? 20 years ago no one talked about the business of practicing law. Why now?
Recent changes in the economy have affected law firms like everyone else. This has brought attention to the phrase “managing the business of practicing law®”. Clients want accountability for fees, they ask questions, they shop around, they ask for discounts, they closely scrutinize their bills. When clients, even corporate clients, are keeping track of their legal fees, law firms need to pay more attention to the business of practicing law.
A few weeks ago, one of my attorneys needed a bill sent to a client because they needed to pay a replenishment - or at least the attorney thought so when he saw the prebill. I was unavailable that day so they finalized the bill and sent it to the client. A few minutes later, I received an email from the client asking if there was a reason that it took the paralegal 24.25 hours for receipt and review of an email. I jumped onto a computer, revised the bill and re-sent it with apologies explaining that the paralegal made a mistake, the attorney missed it and we were very sorry. Of course, when that error was corrected, he suddenly had a $4000 retainer remaining in trust. Corporate clients review bills like they never have.
As a result, law firms are more cognizant of billable hours, billing, collections, retainers and the costs of their overhead. They are also paying more attention to office space management, tax implications, alternative fee structures including payment plans, technology solutions including price, payroll and, client development and marketing. Fewer firms are looking at office space that is larger than what they need, thinking they can sub-let part of the space and get someone else to help pay the rent.
20 years ago, everyone was fighting for the 1st spot in the yellow pages. They came up with names for their law firms like “AAardvark Firm” to get the top spot. I don’t think a millennial has ever used a yellow pages although I’m pretty sure they at least know what it is. And the generation younger than that probably doesn’t even know what a yellow pages is.
I think we can all agree that there is more to a law firm than just practicing law - there is managing the business of practicing law®.
Unfortunately I do not think that law schools do enough to prepare lawyers for the business of practicing law. I speak at Cooley every semester to the law practice management class. This is an elective, not a required course. Yet, every lawyer I speak to, my clients, and the students I encounter tell me after I speak to them that the course should be required. With some of the things I have seen, I could not agree more. Even though lawyers obviously do not have time to do billing, collections, accounting, payroll, etc., they at least need to know that these are important pieces of administrative function in their law firm.
So now, I have a confession to make: I love filling in the gap between what attorneys learned in law school and what they need to now in the real world of running a law firm like a business. It doesn’t get more economical than having a law practice management consultant helping you run your office with 41 years experience for a fraction of the cost. It just doesn’t!!
Having worked in the Tampa Bay legal community for nearly 41 years, I know that there are lawyers who are great at practicing law. I have nothing but admiration for my clients and friends who are lawyers who do a great job of practicing law. As I work with many of them, or just in casual conversation, I realize that they are not as great at successfully managing the business of their own firm. Some of them will even admit it - but what is stopping them from taking the next step??
Managing the business of practicing law requires that you look beyond the day-to-day operations and administration that bogs down even the most successful and well-intentioned attorney. They are relegated to being fire-fighters, conflict avoiders and email in-box warriors.
When an attorney contacts me to help them with the administrative functions of the firm related to the business part of the practice, I ask what their goals are. Right now I can see the wheels turning as some of you are thinking that is a stupid question - of course my goals are to be a good lawyer, make lots of money, spend time with my family and go golfing every chance I get - or whatever your sport is.
Actually it is not a stupid question. I believe in writing down your goals and formulating a strategic business plan for your business. Pretend this strategic business plan is the GPS for your law firm. Where do you want to go? What is your vision for your law practice? Again, making money and going golfing are great plans - but what do you have to accomplish first to make that plan a reality?
In my consulting work with lawyers, this is one of the first questions I ask, and most of them don’t have an answer. Does that mean they don’t want to be successful? No - it means that they have never given it any thought. Their firm is open for business, they assume clients will come to them and they’ll make money and dare I say it again, go golfing.
You know, the “if you build it they will come mentality” is a thing of the past. And by that I don’t mean attorneys who hang out a shingle aren’t thinking that - they most definitely are. What I mean by a thing of the past is . . . it doesn’t work.
There are many things to consider specifically when working on managing business of practicing law(R).
Close your eyes and envision the perfect scenario for your law firm - one where the practice and the business align. Where will you take your business? What could it become - imagine all the possibilities. What area of law would you practice? Who is your target client audience? Where do you want your practice to be located?
Now think about the steps that you can take, one at a time to get your law firm to where you want to go. What kind of opportunities do you need to develop, what location do you want to be in, what practice areas do you need to add that would help you expand your practice and compliment your current practice that will help you retain clients.
Who do you need to help you reach your goals? Someone to help with administrative functions - billing, collections, accounting, client development, answering the phone and marketing. How about a virtual paralegal or legal assistant? Maybe you don’t need a full-time associate, but then a trial comes up and you need a second chair, or, you are in trial and need someone to cover a mediation. There are lawyers out there whose primary practice is doing coverage or contract work for other law firms. No law firms have the finances to pay someone to watch grass grow or paint dry. Those days are gone. You have to build your law firm in such a way that the firm is generating revenues and wasting less.
And now, how do you measure the success of your law business? Success may be happy clients who come back to you, but who also send you referrals. It may mean that you now have quality time to spend with your family.
Where is your law business in relation to your goals? It really doesn’t matter if you have been practicing for a week, a month, 10 or 20 years. Now is the time to plot out a strategic business plan for your firm - assuming of course that you are not retiring tomorrow. Your law firm will still benefit from a strategic plan that will allow your law practice and your law business to work in tandem, thus making your firm more successful than ever.
You will review your business plan and make changes depending on what is and is not working. You may come up with a new idea. That is how your law business will grow and flourish. It’s time to take your law business to the next level - and I’m prepared to help you take it there.
Call me, Liz Miller, at 813-340-9569 to schedule a free consultation.
Email me at: email@example.com.
Check out my website at: www.fromlawyertolawfirm.com.
I’m waiting for your call!!