As the hosts of a free weekly interview program called Law Business Podcast, we have the privilege of talking to many successful solo and small law firm owners. We ask them about their secret to thriving in a world of challenging legal and economic climates. They share their journeys of going solo, their failures and successes.
When is a solo or small law firm successful? We believe it happens when it serves the needs of its owner on three different but connected levels: • Financial, as business and life runs on money. • Professional, as there is no point in making money if you hate what you do. • Personal, as there is no point in having your own firm if you can’t ever get away from it, so your health, relationships and lifestyle suffers.
People often ask us about the No. 1 secret of successful law firm owners. How are they able to pull it all together? Are they special? What is their secret? Are they real or is it just a myth that solo practitioners can build a law business grossing a million dollars or more per year? Do you really have to struggle and pay your dues for multiple years before you get to be successful?
After interviewing and regularly coaching dozens of solo attorneys, we believe the most important factor in becoming and staying successful is treating your law firm as a business and yourself as its CEO.
None of us took a course in law school about how to manage a small law firm. There was no requirement to have an MBA before hanging out the shingle. Our peers for sure did not warn us about the pitfalls of running our own show. We set out to become great lawyers and not great business people! It didn’t occur to us that the venture we started is indeed an enterprise, and in it we’re entrepreneurs selling legal services.
The No. 1 secret of successful law firm owners is that they realize and accept the fact that they are running a business. They are able to switch their mindset from being a great attorney to also becoming a great CEO.
Successful owners of small law businesses recognize that a job of a CEO is multifold: • Vision and Strategy: Set the strategic direction by choosing a niche and defining what differentiates you from other law firms. • Rainmaking: Cultivate relationships, become a networking and marketing expert to attract new clients. • Operations: Manage the office and the employees, set the policies and procedures to be followed. • Financial management: Just as a CEO does, utilize your financial data to make informed business decisions. Implement a system to track and project cash flow, as this has the biggest effect on the day-to-day operations and represents the biggest problem small law firms struggle with. Choose a CPA, who has experience with law firms and can advise you about the appropriate accounting systems, internal controls and tax strategies. Collaborate with your CPA to develop financial goals, spending plans and to help you better understand what your key financial metrics mean.
What is your excuse for not acting like a CEO of your law business? Do you feel that doing the substantive legal work eats up all your time and energy? Do you complain of being swamped with work and under multiple deadlines and want to postpone building your business to when things calm down and you can focus? Most of the attorneys we work with have previously used these and similar excuses, but there was a point in time when they realized that excuses do not build successful law firms and they started acting like a real business owner.
Managing partners of big law firms have the advantage of working with various dedicated professionals. The good news is that owners of solo and small law firms also have myriad resources when it comes to building their own successful businesses: various practice management books and coaches; part-time or outsourced CFO services; great technology tools available on a low subscription basis; and, virtual administrative professionals, just to name a few.
Just like big company CEOs have their board of directors, the CEO of a small business can and should put together a board of advisors consisting of a practice management coach, business attorney, CFO, CPA, investment advisor, banker and insurance agent. These professionals should be specialized on small law firms and be your biggest cheerleaders! Do you think your business would benefit by regularly getting these people around a virtual or actual round table?
If you want to build a successful law business that serves your financial, professional and lifestyle goals, do yourself a favor and promote yourself to CEO starting today!