Turning Crisis into Opportunity for Your Law Firm – A 6-Step Framework
The legal industry is known for being stodgy, stuffy and stuck in its ways – and unapologetically so. It doesn’t take a search party to find an example. Just look at the law firm business model, which has remained largely constant during a period where so many industries have undergone significant innovation. The reason is simple – we’ve become complacent as a profession.
For too many lawyers, running a law firm means practicing law instead of operating a business. Being a good lawyer does not equate to being a good businessperson. In fact, only 53% of attorneys say they’re confident in managing the business aspects of their practice (hey, at least we can admit it, right?).* I can’t imagine many business owners outside of the law responding the same way.
More importantly, about 85% of lawyers say that increasing revenue is their top priority – while 77% of those same lawyers think that hiring more staff is the most effective way to do it.* Starting to see the disconnect here?
Hiring more attorneys or staff does not (alone) create more revenue. Yet, I frequently still hear comments from attorneys along the lines of – “If I could just get to 10 associates, I’d feel like I had a successful firm.” Unfortunately, these comments aren’t based on facts or projections and instead based on some image in their mind.
It doesn’t take a leap of logic to identify the primary drivers of revenue – clients and billable work. As obvious as that may seem, only 34% of lawyers prioritized growing their client base to increase revenue and a paltry 23% prioritized billing more hours.* Or stated another way, less than 1 out of every 4 attorneys think billing more hours is the best way to increase revenue.
How have we, as a high-level profession, been able to survive this long despite such flawed logic?
Simply put, we’ve never really had to change. People always need lawyers and if we provide a service that is (relatively) always in demand, why fix what isn’t broken? Not only has this outdated mindset created complacency within our profession – it has concealed the weaknesses in our business model.
But now we’re being forced to change. This pandemic and resulting economic turbulence have pushed us well outside of our comfort zone – though in most cases, that’s the only way to bring about lasting change. If there can be a positive takeaway from this whole thing, maybe it will help us, as law firm owners, be more proactive, more strategic and less complacent. So, let’s think strategically…
If you could start your law firm over today, what would you do differently?
The landscape has changed, and you need to change with it. Here’s a six-step framework to help you reposition your practice and emerge from this crisis stronger than before.
1. Reframe Your Mindset
Your law firm is a business and you must approach every situation from that standpoint. Looking at your business with a new perspective won’t be easy, so get comfortable being uncomfortable.
2. Make a Plan
Start with reflection – what’s worked for you in the past? Look at your revenue, overhead, client volume, etc. for previous years. What activities generated the most business? What recurring challenges have you encountered?
Assess your productivity and staffing. How many employees do you have – how many do you need? To what extent has your firm’s productivity been impacted by this? Is your firm paperless? Do your employees have the ability to (effectively) work remotely?
Next, switch gears to look ahead. Establish goals, set projects and build an execution plan around them so you know what you’re shooting for. As you do this, consider how the current environment will impact your practice areas. More importantly, how will your clients be affected by this and what can you do to service them better? Identify these opportunities and seize them!
3. Create a Process
Too many firms operate with the mantra of “well this is the way we’ve always done it.” There are no concrete systems or processes for the work that gets done within the office. Eventually this approach breaks down, causing things fall through the cracks.
It’s time to get systematic with your approach. Create workflows by listing the tasks for each type of file your firm handles. Plot timelines for each workflow based on your file’s average life cycle. Use this systematic overview to identify what needs to be done and when. The added bonus is that new hires will require less training and oversight, all they have to do is follow the system.
4. Analyze your Time
This is critical. Analyze how your time is spent each day and identify where it needs to be spent to achieve your goals (see Step 2). The idea is for you to maximize your time spent on work that a) generates the most revenue or b) business development activities that will ultimately turn into revenue-generating work.
Apply this analysis to your employees, as well. What is their core function in your office and how can you maximize their time spent on that work?
5. Leverage your Resources
Once you’ve identified the areas that you need to focus on, you must now find a solution for managing the rest. You need to be delegating and/or outsourcing everything that doesn’t fit the criteria of Step 4. Also, now that you have the workflows established from Step 3, you can easily identify the work that you shouldn’t be doing.
Aside from the legal work, things like administrative tasks, managing your books and other ancillary tasks should be done by someone else – ideally someone who is better at those things than you.
6. Review & Refine
Remember – changing an outdated business model isn’t easy and it won’t happen overnight. Have patience and trust the process. As long as you consistently review and refine your efforts, you’ll be able to keep streamlining the system.
If you’re able to adhere to these (and other common sense) steps, the results will follow in lockstep. Your outlook will transition naturally from that of a lawyer to that of a business owner. You may even notice that this business-minded approach improves your skills as a lawyer because of your improved focus and time spent on work you actually enjoy!
* Clio 2019 Legal Trends Report