6 Law Firm Management Fails You Need to Avoid

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You may have become interested in the law as a noble profession, but to break the seven-figure barrier, you must run your law firm like a business. As a solo practitioner or the owner of a small law firm, your primary focus – after gaining competency as an attorney – is to understand and apply the key principles of business development, operations, management and law firm marketing every single day. You need to become a master of law firm management.

No one starts out in business to fail, but fail you will if you don’t recognize that while you may practice law, you run a business. To avoid running it into the ground, there are six law firm management “fails” you need to avoid.


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1 Failing to plan.

To start and run any business, you need to focus on the big picture, but you can’t let that blind you to the importance of detailing the steps you need to take to make your firm a success – especially when it comes to marketing. A marketing plan will accomplish the following for your law firm:

  • Increases your chances of survival over the long haul. A solid, well-planned guide keeps you from making serious mistakes that can quickly sink your business.
  • Provides structure. Creating a solid business plan provides structure and a context for everyday activities, while helping to fit daily activities into the context of a larger, more strategic plan of how you are going to grow your business.
  • Keeps you on track. Staying on track amidst the day-to-day distractions and assessing opportunities to see if they fit with your long-term goals is another way that a comprehensive marketing plan can help you stay on track.
  • Helps you tally the cost of creating before you start building. By knowing your financial costs and risks ahead of time, you can more effectively plot your growth strategy and manage your budget.
  • Helps you create a vision for the future. In the end, your business will be driven by your vision – and the process of developing that vision is critical to your business success.
  • Helps you evaluate your success. It is crucial to set up measurable objectives in advance so you are able to compare your results against those objectives to learn where you succeeded and where you fell short. If you don’t know where you are going, how will you know when you get there?
  • Demonstrates you are committed to your business. Being committed to growing your business starts with laying a good foundation for that future growth, with clearly delineated steps for those in the organization to follow so they can contribute to your success.

2 Failing to create a team.

You know the law, but they didn’t teach you how to run a business in law school. You need to create a team that will make your business successful, bringing the best people onboard in the different disciplines you need for financial management, marketing, sales, etc., and ensuring they succeed by investing in the latest technologies to support their efforts.

3 Failing to take care of business first.

Very few attorneys went to school to become a bookkeeper or an accountant, but to manage a growing business you must know how to manage your money. You need to know the basics of finances for small business, from reading a profit and loss statement to analyzing your cash flow. Being an owner means other people are depending on you to manage the money wisely.


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Too many times lawyers focus solely on their clients without focusing on the bottom line. The result is devastating – not sending out invoices on time, not raising your rates for years, not actively cross-promoting other services your firm offers, and not staying connected with former clients. Be sure to put processes in place for each of these important disciplines so nothing falls through the cracks.

Here is a list of the essential things you need to do to run your law firm like what it is … a business:

Never forget you are running a business. This means you need to keep your finger on the pulse of your practice’s financials. If you do not have a good financial background and don’t know a spreadsheet from a bedsheet, then take a financial management course at your local community college.

Have a business plan. The discipline of actually writing a business plan forces you to put some serious thought into how you will grow your firm for the future. You need to outline your practice area geographically, define your target audience, detail the competitive landscape and calculate your expenses.

Develop a good banking relationship. Most of us do our banking online today, but there will come a day when you need the help and/or advice of a banker and you need to develop a personal relationship with the management of the branch where you bank so you have someone to call on for help and guidance. This can help tremendously when you need to establish a line of credit.


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Hire an accountant. Even if you are just starting out as a solo practitioner, set some money aside to hire an accountant to set up your books and counsel you on taxes and other financial issues. This is especially important in the beginning, when you have no idea as to your cash flow for your practice.

Build without debt. This is easier said than done, but try to avoid debt as much as possible. You can only do this if you have a good handle on your monthly expenses and a tracking system that will alert you early to potential problems. You also need to have good invoicing practices in order to keep your cash flow positive. And you need to have systems in place that automate as much of your business processes as possible to keep your team lean and mean.

Sign all your checks yourself. When you’re starting out, signing every check is a good discipline to make a habit of so you can monitor your monthly expenses. I did this for my business until last year, when we grew too large and my travels became too frequent to efficiently handle the paperwork. However, I still review every transaction so I know where the money is going.

Safeguard your IOLTA Account. Being rigorous about protecting your IOLTA account is vital to maintaining a good business and a good standing with the bar. Be sure you keep separate trust and operating accounts for your law firm. Keep a strict accounting of client deposits as well as client funds from settlements, real estate or other transactions. Balance your accounts every month. Never, ever use trust account funds for operating purposes or personal expenses.

Be selective when choosing clients. Yes, it is tempting to take any business that comes your way – especially when you’re just starting out – but you have to discipline yourself to take on clients who are willing and able to pay you at a profit. Defining your ideal target client will help you cull the tire-kickers and price-checkers who will waste your time and deplete your resources.

4 Failing to hire the right people.

Superstars are the currency of the new economy. If your intake person sucks, your lead conversion rate suffers. If your paralegals suck, your work product suffers. If your attorneys suck, your clients will leave you.

You have a limited number of positions to fill in your firm and you can only afford to retain superstars in every position. If you find a position filled with someone who is “good enough,” either eliminate the person or eliminate the position. You set the standard. You raise the bar. Excellence is the only attitude you should allow.

5 Failing to invest in technology.

Can you imagine practicing law without a computer or the internet? In 15 years, you will be saying the same about financial management and marketing technology. For the 21st century law firm, you must take advantage of advanced technologies that make you more efficient and effective.

The competitive edge that small firms have is the ability to give clients more personalized attention, yet you are unable to do this unless your firm is truly efficient. And there is a simple solution – putting practice management systems in place to improve efficiency and reduce time spent on administrative tasks. You’ll cut costs as well.

6 Failing to track the ROI of your marketing programs.

With the increased competition and level of sophistication in the legal marketing industry, to get ahead you must be faster, smarter, and more effective than your competitors. Your ability to leverage digital and social media marketing and automate your marketing system will allow you to dominate larger firms with bigger budgets; however, every dollar must be accounted for and every effort must be measured for ROI. Stephen Fairley 

Stephen Fairley

Two-time international bestselling author, Stephen Fairley is CEO of The Rainmaker Institute LLC, the nation’s largest law firm marketing company for small to medium law firms. Over 18,000 attorneys nationwide have benefited from learning and implementing the Rainmaker Marketing System. Over the last 16 years, he has become a nationally recognized legal marketing expert and been named America’s Top Marketing Coach. He has spoken numerous times for over 35 of the nation’s state and local bar associations and has a large virtual footprint with his legal marketing blog and more than 200,000 followers on Facebook, Twitter and LinkedIn. For more information, call (888) 588-5891 or visit www.TheRainmakerInstitute.com.

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