Run Your Practice Like a Business, and Succeed

Law Practice as a Business? Yes, and Here’s Why.

I consult with a vast number of attorneys on how to start a law practice. I don’t think I’ve ever once consulted or presented on this topic without at least some mention of the foundational principle that a law practice must run like a business to succeed. Regardless of your type of practice, even if it is nonprofit legal services, business fundamentals will help you to provide competent representation, good client service, and continuity of operations. But, “I went to law school to become an attorney and I didn’t learn any of that business stuff!” says my client. Fortunately, law schools are starting to provide more real-life practice courses, particularly in practice management, which will apply whether you start your own practice or work for someone else. Plus, you can read on to boost your business acumen. Understanding key concepts of business management will allow you to make more informed and effective contributions to your organization, thus helping both you and your organization to be successful in practice.

It means designing a system to manage all aspects of your practice. It means not only doing the legal work, but devoting significant time to your operations. This requires development and management of operational systems, including workflow processes and procedures, finances, staffing, client service, and more. Service businesses cannot operate without these essential pieces. Keen attention to these systems provides the framework for a well-oiled organization. While many of these systems can and should be implemented through technology in order to be the most effective and efficient in their work, they still require people – yes humans are still part of the equation (for now) – to develop, implement, and oversee these systems.

All staff make a contribution to the success of the law firm. Office staff and associates may help develop systems, help run the day to day operations, and collect essential data to ensure proper oversight. In that sense, every staff member is responsible for some element of overseeing the firm and makes a contribution to the success (or failure) thereof. For example, office staff responsible for client intake will be in the best position to think through client intake procedures. Is there a way to make intake more efficient? What type of data is collected on client intake? Do you ask how the client was referred? Do you take information down on the phone and then later transfer it into a case management program? Is there a way to eliminate double-entry? How about client service? Office staff are typically on the front lines of communication with clients. Do clients typically have better experiences in certain practice areas? With certain attorneys? When provided certain information about their matter? By implementing these systems and serving on the front lines, office staff are key to providing insights to inform firm oversight and decisionmaking.

Staff attorneys and associates also play a role in firm oversight. Sometimes closest to the details of the case, these attorneys should have a good understanding of case details and processes, how much time has been spent on matters, and workload. By using technology to manage all the case information, these attorneys can document and report their insights to management to help improve case management and processes and ensure proper delegation and workload.

Whereas office staff and staff attorneys or associates may be responsible for overseeing individual system components, firm managers are tasked with overseeing the entire pie. Office staff and attorneys provide key information to managers about the day to day operations. A good mix of anecdotal information and data can best help management to analyze the information and then use it to inform their decision making. Managers should aim for regular meetings with office staff and attorneys to collect and discuss their insights. Without a constant stream of communication, management cannot determine whether clients are generally content, cases are on track, and performance is adequate.

In addition to information from staff and attorneys, managers can also rely on analysis of data from case management systems to monitor attorney productivity and profitability, accounts receivable, practice area profitability, case performance and deadlines, and much more.

Unfortunately, in my practice advisor capacity, I’ve seen firms fail. There are many factors that lead to the success or failure of a firm. But, in my experience, firms that run their practices as a business by setting up systems, collecting necessary data, and using that data to inform decision making will have a better chance at success. A firm that merely does the work, even if it does it well, might succeed for a period of time, but it won’t last. Consider these examples: How can a firm make a decision as to whether to renew a lease without information about their financial position? How can a firm determine whether their workload requires and can sustain a new staff member without tracking case status and profitability? How can a firm decide whether to drop a certain practice area or add a new one without data on the profitability of different practice areas? How can managers decide whether to increase pay or give bonuses without data on productivity and case flow? Finally, how can managers prevent ethical issues such as IOLTA mismanagement or missed deadlines without active oversight of all systems? Remember, law practice is a business and as such it should be treated like one!