5 ways law firms can be successful businesses

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5 Ways Law Firms Can Be Successful Businesses Summary: The sooner law firms realize they are in fact businesses, the longer they will survive.

Do you want to make certain your law firm grows and survives as a business?

Then you better think beyond the simple representation of clients.

And instead focus on bringing in and developing business that goes far beyond court cases and depositions.

The practice of law is not usually thought of as a business, but it is. Heads of law firms or solo practitioners must attract and keep clients, monitor cash flow, and apply good business practices. While aspiring attorneys enter the field for various reasons, some of them may not have thought of themselves as businessmen or businesswomen, but as they progress in their careers, business skills determine whether or not they stay working.

“The practice of law is considered by most lawyers first and foremost to be a profession. That is to say, most believe it to be an aspirational vocation primarily focused on an attorney helping those in need navigate difficult legal processes and achieve something that improves their life or reduces conflict. But even Illinois’ favorite son, Abraham Lincoln, knew it to be a business as well as a profession, and spoke often about the practicalities of running his law firm,” Mitchell Sexner, founding partner of Sexner & Associates, LLC told LawCrossing.

“In order to do good for the community and to help those in need of legal services, a lawyer, therefore, needs to keep the doors of his or her law firm open. Appreciation and goodwill are unfortunately just not enough to “keep the lights on” and to pay the employees of a law firm. As such, attorneys must charge fees which are adequate to cover what often are high costs for doing business,” Sexner added.

For attorneys who want to be successful and go the distance in their careers, what business practices should they implement at their law firms or look at when joining a law firm? Experts have pinpointed a few key actions, and they’re listed below:

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1. Determine a management structure that works best.

Law firms or sole practitioners have multiple options on how to structure themselves, but there are some choices that are more popular than others in the legal world.

For instance, most law firms are partnerships, where partners have individual practices that are like their own businesses and they coexist in one firm that shares resources. Associates work underneath these partners, and they are supported by staff. Partners bring in business, and that money is used to pay salaries and expenses. Any profit left over is divided amongst the partners.

Law firm partners tend to appoint one managing partner to lead the group. In the past, this was more of a benevolent dictator situation, where the MP did little but exists in name, but nowadays, MPs tend to act like CEOs who devote more of their time to leadership than practicing the law. Some law firms also have an executive committee that the MP either reports to or is a part of, and occasionally, law firms also have other internal leadership underneath the MP such as a Chief Operating Officer.

Most law firms use the structure of LLP, which is a limited liability partnership and is a hybrid of a partnership and company. Other structures include sole proprietorships, which work for attorneys who practice by themselves, and LLCs, which are limited liability corporations. LLCs allow its members to have the protections of a corporation but can be taxed like a partnership. Structuring a law firm as a corporation is another possibility, but this is rare.

When it comes to decision making, law firms either make choices collectively amongst the partners or the MP leads the way a CEO at a company would. When it comes to management structures, it is all about what works for the law firm and its members.

2. Hire a business development team.

The term business development refers to tasks that can grow opportunities with and between companies. This can apply to partnership building, marketing, sales, and creating other forms of long-term value. While it is common for corporations to employ business development people, law firms are also now joining in.

“Whereas once, it was sufficient to print business cards, hand them out and tell your neighbors, those days are long gone.

For a law firm to survive in today’s business climate, proactive steps must be taken. Otherwise, a modern-day firm may as well close its doors,” Sexner said. “Our law firm, Sexner & Associates LLC, therefore employs business development personnel for this reason. Other attorneys, whether solo practitioners or large multi-state practices, should strongly consider doing so as well. It is not simply a matter of increasing revenues. It is a simple reality of the modern legal landscape. If a firm wishes to do good for the community, it must exist, and in order to exist, whatever is legal, ethically and morally available to achieve this end should be pursued.”

Attorneys can develop their own business by reaching out to people and strengthening their relationships, but sometimes hiring a person or team for this specific reason can take their law firm to another level. The term business development is broad, but in essence, it is about the components that build relationships. And relationship building is a lot of work and something a law firm should consider investing in hiring a professional.

3. Brand the law firm to stand out from the crowd.

Clients now have a myriad of lawyers and law firms to choose from, so how can lawyers and law firms stand out to get business? One way that law firms can do this is to figure out their brand, which is who they are, what they stand for, and how others view them. Then, they must stay consistent with their branding, according to the American Bar Association.

“The importance of [brand] consistency should not be ignored,” The American Bar Association stated. “It is the lead marketer’s role in a firm to own the brand and do his or her best to protect it. That includes everything from consistency in colors, logos, imagery, messaging and promotional language to discussions relating to where the firm name appears and how the wrong place might send a message that is off-brand. Sometimes bringing in the wrong lateral or adding the wrong office or practice group designation is damaging. It is the brand that you are selling and people are buying. While the concept might seem foreign to some attorneys, the truth is that it is at the core of everything you do. We’ve all got brands. Make sure you are protecting yours.”

Experts agree that the best way to distinguish yourself is to specialize. While giant firms have had decades to build name recognition, smaller law firms or solo practitioners can stand out from the crowd by finding a niche and sticking with it.

For instance, attorney Jason Kurland has made a name for himself as “The Lottery Lawyer.” His specializes in representing lottery winners, and he has numerous clients such as the 2011 Connecticut Powerball winner. www.lawcrossing.com

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“Lawyers looking to distinguish themselves need to recognize when an opportunity may arise which would enable them to distinguish themselves. Once that door has opened, create a brand if possible, and then tirelessly work to enhance it.

This takes patience, but will pay off in the end,” Kurland told LawCrossing.

Kurland became The Lottery Lawyer after he was hired by the 2011 Connecticut Powerball winner. He was already a partner at Certilman Balin Adler & Hyman, LLP in New York when the Connecticut Powerball winner was referred to him because of his expertise in trusts and estates. Six months later, another lottery winner had hired him because of his work with the Connecticut winner. Kurland saw a special opportunity, and he began to design his brand. Since then, he has represented dozens of lottery winners who find him exclusively online.

4. Determine how your law firm will get paid.

Law firm partners typically split profits, and associates are usually paid with a salary and options for bonuses. Law firms exchange services for money, and the most popular way of collecting fees is to charge by the hour.

Law firms using the billable hours structure is a long tradition in the legal world but has pros and cons. The pros are that clients are familiar with this pay structure and allow lawyers to be fairly compensated for their time. The cons, however, are that some lawyers either work slower to collect more billable hours or they engage in other questionable practices such as inflating their time worked or double billing.

Clients are also getting fed up paying high fees for low-level work such as research that can either be performed by artificial intelligence or support staff, and some big companies are rebelling against law firms’ expensive billable-hours structure and are either hiring in-house counsel or demanding flat fees.

Some law firms are adapting flat fees to attract clients. These flat fees can either be a percentage of a settlement or a prenegotiated rate for the hired task.

Whether or not law firms choose billable hours or flat rates, one of their great issues is collecting. One way to help with this is to do due diligence beforehand. Lawyers should weed out problematic clients before signing on for the case, and they should make clients sign payment agreements beforehand that set up expectations. If clients end up wanting to skip out on the bill, attorneys may have to hire collection agencies or file their own lawsuits against their clients. While this is an exhausting practice, it happens more often than it should.

5. Implement best customer service practices.

Lawyers who want to thrive can do so by building positive relationships with clients who will either come back again or make referrals. While providing great legal services is important, providing excellent customer service is equally as important.

When clients hire lawyers, they want to be treated as if they are a priority. That means they want someone who explains their case to them clearly, gives them regular updates without prompting, and responds quickly to their calls or emails.

According to Aye Moah, cofounder of productivity software Boomerang, people are all glued to their phones, and they know their attorneys also have their phones on them. Moah told Fast Company that because of this, there is an expectation to reply right away in today’s culture.

For attorneys, it is sometimes difficult to sift through their hundreds of emails, but it is important to either develop a system to respond rapidly or to set response time expectations up front. Some attorneys mistakenly believe that clients only care about end results, but in actuality, clients want someone who wins and tends to their needs throughout the case.

After all, clients may not know what you do for them on a day-to-day basis, but they will remember how you made them feel.

Conclusion The idea of a law firm being a business has its naysayers, but ultimately, most attorneys agree that this is a truth in the legal world. Law firms that have longevity realize that earning money is the only way to keep the operation going.

“For generations, our profession's leaders have been lamenting the trend of law firms toward a business model,” the American Bar stated on their website. “However, the profession's negative notions about business no longer hold up to scrutiny. The vast majority of flourishing businesses today are successful because their leaders engage in sound, ethical business practices. Indeed, embracing outmoded ideas about what business is really about can actually hinder a lawyer's professional development.”

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Attorneys who acknowledge that client relationships and collecting fees is vital to their practices will ultimately be the ones who will have the longest careers. Lawyers should look at their practices as a profession and a business, and those without business skills should look into building them. “You might as well know that the most important thing you can do as an attorney for your career is to develop a lot of business. Your life and happiness in your career will largely depend on this,� Harrison Barnes of BCG Attorney Search said.

See the following articles for more information: The Working World and How Law Firms Lag Behind It How Artificial Intelligence Is Disrupting the Legal Industry Anti-Social Media Business

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