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Best practices for successful law firm management
Effective law office management is an elaborate affair. Just when you think you’ve got a handle on things, along comes a fresh wave of challenges. In recent times, the biggest of those challenges is dealing with a fast-changing market.
If the Covid-19 pandemic has taught us anything, it’s that so many of the amenities we enjoy today can abruptly halt, forcing business management to rethink its approach. For the legal industry, staying successful meant finding ways to remain relevant in the new normal. It was also necessary to switch to a mindset focused on flexibility and a willingness to break free of tradition should the need arise.
Like most good things, however, successful law practice management is easier said than done. Resources are limited, after all. For most solo and small law firms, the road to staying afloat in today’s legal marketplace is basically uncharted territory.
This article will attempt to break down the primary components of a successful law firm management system and bring them together to formulate cohesive strategies. It can also help you hone your practice management skills as a legal professional and business manager.
What is law firm management?
Law firm management covers everything that is needed to run the business side of a law practice properly. Many solo and small law firms spend the bulk of their time on the client side since this is what keeps the lights on. But the simple fact is that the law firm won’t run itself.
That’s why law firm managers must be strategic about how they create and implement these systems. They need to be able to establish the firm’s long-term direction and be flexible enough to adapt to short-term changes in the legal industry.
A complete law office management system should include everything needed to succeed in any business setting. These include client relations, marketing, finances, hiring, staff management, payroll, inventory management, and the rest. When these departments operate in tandem with one another and lead to the achievement of your goals, then we say you have successful law firm management.
Having a sound legal practice management system in place is also important when you want to take your business to the next level. Scaling a law firm can come with its own share of uncertainties, and a solid management plan is the only way to come out victorious on the other end.
3 main law firm management areas where lawyers struggle
There are three critical areas in business process management where lawyers most often struggle: finances, staff management, and case management. Let’s look at each in turn, so you have an idea why and what to do about it.
For most startups and small businesses, financial management usually involves an income and expenditure sheet. The only data being tracked is how much is coming in versus how much is going out. Other important financial records, revenue projections, cash flow statements, and other relevant documents are hardly ever existent. Some businesses don’t even have a budgeting system.
It’s not that these business owners don’t understand the importance of proper financial management. Most of the time, it’s because the intricacies of setting one up are beyond their expertise. So they need to either outsource the task to an expert or use law practice management systems to automate various aspects of the process and generate relevant reports. Whichever option you choose, the primary goal should be to have actionable data about your finances that can aid decision-making.
One important area to focus on is optimizing the firm’s accounts receivables. Invoicing and payment processing should be operating like clockwork. The faster you are bringing in revenue, the better equipped your law firm will be in tackling current and potential issues.
There’s an art to staff management. Productivity, high morale, motivation, smart work, and other recipes for success depend on how well you can manage your staff members. There’s always so much to do, especially at the startup stage. You want to make sure you surround yourself with people you can trust to get the job done. Even seemingly simple things like team meetings can be optimized to return on every billable hour spent.
One of the biggest challenges in this department is working out how to assign the appropriate amount of work to individual employees. Many law firm managers inevitably face the problem of — how much of my operations can be replaced by legal technology solutions and how much should be managed manually? In other words, is this something I can automate, or do I need to hire a person to do it?
Staff management is not just about hiring and firing. Managers must also be able to groom individuals to be fit for business leadership. Investing in continuing legal education (CLE) is a great way to do this. This way, there’s continuity, and you don’t have to hire externally to fill critical roles in the law firm.
Cases are the lifeblood of any law firm, and managing them right is paramount. Understandably, this is hard in the beginning because at that stage, you’re probably willing to take on any case to get the revenue flowing.
Over time, however, you start to have some retainers, so the process of assigning and managing cases tends to change. You want to be able to maintain the quality of your legal services to regulars while also being able to attract new clients. It’s never an easy job. And that’s why many people struggle to accomplish an optimal case management process.
Another challenge is finding ways to streamline filing and process management systems. The legal profession is the leading user of paper. Fuelled by the need to accommodate remote work as a norm, a number of tools are springing up to replace manual filing and document management. This even includes confidential documents like contracts and non-disclosures.
Switching to these legal technology tools can improve end-to-end efficiency on the whole case management process.
Best practices for successfully managing your law firm
Your particular style of managing your law firm will depend on a number of factors, such as the location of your law office, the size of the practice, the kind of legal services offered, and the staff capacity. Bearing all this in mind, there’s simply no one-size-fits-all law firm management system. That said, there are best practices that you can follow to improve your chances of success. These steps apply whether you’re a solo practitioner or manage a big law firm.
Create a law firm business plan
For new businesses, always start with a well-defined law firm business plan. If you want to grow your law firm to be successful, you must first lay out the roadmap to success. Your business plan should outline your goals, financial projections, what sets your practice apart, how you plan to market that difference, and so on.
You need to be able to put in the required amount of legal research to be able to produce a data-backed business plan. If you need to get outside help from a business management expert, do so. It’s better to get it right from the very start.
Create a manual for procedures in your law office
With a manual, you can document and clearly communicate to staff members how things should be done at your law firm. This helps maintain consistency in approach while also striving to achieve set goals. It also means a more predictable workday for everyone in the firm — managing partners, associates, paralegals, legal assistants, and even office administrators. For example, there should be a manual for the client intake process and time tracking, workflows, and billing.
Process manuals can also streamline the new hire onboarding process. It can cut down on the time needed to bring new hires up to speed on how things operate at that law firm.
Two things to keep in mind at this point. First, it’s always a good idea to get these processes mapped out and documented by those with relevant experience. For instance, let your accounting team build out the collections processes while your sales team creates the manual for lead generation.
Second, remember to review these procedures manuals from time to time. You may want to adopt a new and improved process, and it will need to be documented. Perhaps your staff may come up with a better way to get things done, or maybe the legal industry is experiencing sweeping changes, and you need to revise your management approach.
Always find ways to improve client services
Client service is one of the most important metrics that firm leaders must track. Regardless of the practice area, a good law office manager must always be on the lookout for ways to improve the overall client experience. In fact, many law firms were able to ride out the effects of the pandemic on the legal industry thanks to the strength of their client relationships.
Today’s prospects have much higher expectations when dealing with brands. As such, quality client service needs to be a priority in business development. The best way to do this is to be aware of the user journey — their entire experience with your law firm. When you understand this journey, you can better anticipate their needs and have a solution standing by and ready to bring in more revenue for your law firm.
Avoid making assumptions. Your clients are humans too. Talk to them, ask lots of questions, be clear on their pain points.
Outsource your law firm marketing and branding
If you’re running a big law firm with a deeper budget, you can afford to have your own in-house marketing team. But for solo and small law firms, you’re better off having a marketing professional do it for you.
Marketing and branding are complex and often time-consuming. And yet, without them, you cannot expect to succeed in business management. Your time is already limited as is, and there’s not much sense spending it on something that you can instead pay someone else to do.
Yes, resources must be managed, but saving time is the more valuable goal between time and money. With marketing off your plate, you can spend your workday on actually practicing law and working to improve your law firm’s profitability.
Blogging, SEO, social media, webinars, podcasts, and paid advertising are great marketing channels that you can utilize to attract new clients and keep your sales pipeline full.
Utilize legal technology tools
Law practice management software and standalone automation tools have helped law firms grow exponentially and remain competitive during and after the pandemic. These systems help improve operations efficiency and save valuable time. Even simple tools like Microsoft Office and Zoom have been indispensable.
Aim to automate as many processes as you can. The more time you can dedicate towards providing quality legal services to your client, the more successful your law firm will be. These tools can also help save money. For example, with the introduction of remote work, you can save on certain overheads that would normally accrue if everyone had to be physically present at the office all the time.
Document management, online scheduling, video conferencing, invoicing, payroll, and reporting are examples of areas that can benefit from automation.
Conduct regular reviews
Peter Drucker, the father of management, once said, “What gets measured gets managed.” It’s important to keep a constant eye on your law firm’s health. Sound management means being able to detect potential issues and address them before they become crippling problems.
This requires knowing what key performance indicators (KPIs) to track and using the data to guide decision-making. Some prominent focus areas that you should keep an eye on are profitability, client satisfaction, billable hours, collection and realization rates, new cases, overhead costs, trust account balances, and transactions, and many more.
Decide on the key metrics for your law firm and review them at regular intervals, so there is always accountability. There’s no need to go overboard. You could start small with two or three key items and then expand the list as you scale the business.
These best practices can help make your law firm management more successful and better equipped to handle the legal industry’s evolving challenges. It is also important to have the right mindset, one that is growth-driven and resilient in the face of short and long-term changes.
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