Earlier this month we proposed 5 Small Law New Year’s Resolutions for Happy Lawyers. The resolutions are based on a white paper titled Nine Proven Strategies to Help Earn What You Deserve at Your Law Firm.
Today, we offer the cliff note version of the white paper in an infographic format. It’s this week’s Friday Share.
9 Ways to Run a Law Firm as a Business
Both the paper and infographic propose nine proven techniques for running a law firm as a business. It brings together research, best practices and ideas from Ann Guinn, a practice management consultant. Ms. Guinn has published a book – a solo and small lawyer’s guide to running a profitable law practice.
These nine strategies are:
1. Create a vision for your practice. This a mental exercise for envisioning your law firm in the future and mapping out a plan for making it happen.
- Also see: 10 Timeless Tips for the Law Firm Startup.
2. Bill what you deserve. There’s plenty of debate about the billable hours model, but clients indeed are willing to pay for good counsel that leads to value and desirable outcomes. There’s a simple formula (see infographic) and research on billable hours to serve as a benchmark for determining rates.
3. Know your finances. The paper and infographic recommended four key metrics: a) realization rate, b) effective rate’ c) overhead as a percentage of revenue d) actual vs. budgeted expenses. There is ample sage CPA advice for small law firms on these pages and the infographic also points to research noting upwards of 70% of small law firms experience past due accounts. Here are also some ideas on solving collections challenges.
4. Maximize profit centers and create new ones. This ideas center on forecasting where the market is headed and modeling your practice to meet those needs profitably. It also recognizes that efficiencies can be gained by training staff with revenue producing skills.
5. Leverage technology. The promise of technology is straight forward: use automation to reduce the time spent on administrative tasks to either reduce overhead costs or bill more time.
6. Grow your law firm strategically. Whether adding services or developing partnerships with other firms or attorneys, strategic growth boils down to using data and experience to make smart business decisions.
7. Lose underearning habits. Survey research indicated 40% of billable time is lost due to inefficient tracking. The habits that lead to this outcome are both active and passive.
8. Invest in your business. The investment challenge for law firms is similar to any other business: how to apply finite resources for maximum benefit. It’s a balancing investment among several categories: marketing, technology, headcount, advisors, and training among others.
9. Develop a culture of thinking and working strategically. Culture takes time, a plan and the willingness to execute on that plan. This includes delegating appropriately and habitually doing something towards achieving goals every day.
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Note: The complete white paper is freely available for download with registration: Nine Proven Strategies to Help Earn What You Deserve at Your Law Firm.
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