10 Business Tips. For Effectively Developing and Managing a Small Law Firm. Toni Halleen, SchaeferHalleen LLC. August 2014

Transcription

1 10 Business Tips For Effectively Developing and Managing a Small Law Firm Toni Halleen, SchaeferHalleen LLC August 2014 A. Introduction Is managing a small law firm is different from any other kind of business? Yes and no. The good news is that once we know who we are and what we want our small firm to be, then we can benefit from good business practices, scaled to our size, and modified to our practice, to reach great success. Below are some tips and suggestions that small law firms can consider (and scale/change to fit) to enhance effectiveness and reach firm goals. B. Tips and Suggestions for Small Law Firms 1. Maximize People People truly are the greatest resource for any size firm. To maximize the power of people, we must understand our strengths and talents, weaknesses and gaps, as well as identify the best match for each job, function, or task. In order to work effectively as a team, it is important to make clear our expectations of people and make sure that our employees understand their roles. This can be accomplished with updated job descriptions and candid, contemporaneous communication about roles and responsibilities, including timely feedback (whether formal or informal). When tensions or performance problems arise, it is critical to address and resolve them right away. Unaddressed performance or employee relations issues may destroy productivity and negatively impact client service. To enhance employee satisfaction and achieve alignment with the business, it is important to take time for annual employee goal-setting and professional developmental planning. We should work with employees to set individual business and development objectives for the year that align with business objectives. Goals should be SMART (specific, measurable, achievable, relevant, and time-bound). To help bridge gaps and for continuous learning, it is ideal to invest in professional development, skills training, and adult education. This can take many forms and range in cost from free to expensive. Look for ways to maximize learning and minimize cost. Grow staff cautiously & consider alternatives such as independent contractors, outside consultants, part time arrangements, sharing services, etc. 1

2 Lead by example in creating culture and professional behavior. In a small firm, it is more important to set boundaries and be a role model for appropriate workplace interaction. Pay attention to mentoring and ensure that it is happening at the desired level. Mentoring can be formal or informal, and a mentoring approach can change and grow with the organizations. Use skills development, social events, regular meetings, or other avenues for building a team. Communication should occur regularly and in many forms. If we give others a chance to lead in meetings, for example, we may discover/build new skills in the process. 2. Be Smart About Money We are often tempted to start with spending money. However, it s wise to NOT buy things we don t need. Read up on wise money matters in small firms. A good book for entrepreneurs is The Start Up Garden by Tom Ehrenfeld. We should understand the current state of finances, the capacity for reporting, the way items are coded and entered into the ledger, and the habits for generating regular reports, such as a balance sheet. Setting an annual (or quarterly) budget is key to managing finances. Finance consultants can assist with budgeting, setting goals, and tracking progress against goals. It s also important to monitor expenses on a more frequent basis (monthly or weekly) and to manage (negotiate, adjust, etc.) with vendors and suppliers. Salaries, benefits and perks are usually one of the highest categories of expenses. This is an area that can be difficult to benchmark and can also be a source of great tension. It s important to get professional assistance in this area and monitor changes as necessary. Setting the fee structure, and adjusting it, is another important area of focus. The includes bill rates, fee arrangements, case costs, etc. We need to have a strategy and a system/protocol for handling these items. We must also have a system for managing revenue and loans, obviously complying with applicable rules, including rules for handling client funds and trust accounts, as applicable. Many small firms operate with lines of credit and loans. We should be cautious about lenders and seek professional advice about the blend of credit and the rate for paying back loans. We should regularly review insurance and risk management strategies, as well as conduct an internal audit on compliance. Tax planning is a part of financial planning, and it is critical to have a good accountant and tax advisor. Keeping in touch with your accountant and making sound adjustments as the year progresses can minimize tax surprises in April. 3. Assess and Focus Some attorneys bristle at the sound of this corporate speak, but it is good to think about (and even write down) the firm s mission, vision, goals and objectives. Who are we? What do we do? Why do we do it? Where are we going? How will we get there? 2

3 What are our goals for the upcoming year? The next two years? These are important business planning questions that steer the activities of the firm. We may also articulate our particular firm values or operating principles as a way to further clarify our mission and our way of doing business. This process can be very powerful and can identify strengths, motivators, and also distractions or counter-productive forces that need to be addressed. Obviously, we should identify our firm s areas of practice, and the specific areas within that we wish to focus on. We should also review past success where we enjoyed working on particular matters or with particular clients, and try to identify what made it successful or enjoyable. This review can be used to generate criteria for ideal future matters or ideal clients we seek to attract. We can assess and set goals for the types of cases we have handled/wish to handle, the balance or mix of cases, the length of time or amount of hours we would ideally spend on certain types of cases. We can identify our use of forms and models, or approach to cases of a certain type, and our ability to analyze success. This work will help us articulate when/how we should say no to representation and why to say yes. When we turn down representation, do we have a process (a no rep letter) and do we have an option for referring out? Who are we referring to? Who are we receiving referrals from? Are we receiving the types of referrals we desire? Are we adjusting to change in the types of cases we seek, and improving our approach to reach our goals? 4. Seek and Use Advisors Who advises you? Whether we know it or not, we are influenced by others. We may read articles or get advice from friends at lunch, all of which is fine. However, it s best to seek out the influence of sound advisors and ask the right questions about our business, from the right people, at the right time, and on purpose. Before we can ask for help, we should at least try to identify what we think we need, and then keep identifying it (because it changes). To find sound advisors, ask around for referrals and recommendations, interview candidates, consider whether they are trying to sell something or have an objective view. We can use advisors on an ad hoc basis and/or schedule regular meetings (like a board of directors, or an advisory council). Using advisors, we can conduct strategic planning on an annual basis. Set goals for the business each year and analyze strengths, weaknesses, opportunities and threats (SWOT). 3

4 5. Do Marketing Marketing is a vast topic with many pieces, but it doesn t have to be expensive. The simplest form of marketing is networking. We build our network through communication and interaction. It is important to recognize that, although we are different, we all have gifts to offer, and when we do, we create a network. We should track our intake of clients, our communication in and out, and watch where things are coming from and where they are going. This tracking can help us ascertain needed adjustments in our networking and marketing in general. It s important to have an effective website and to maximize search engine optimization (SEO), whether it s organic and/or paid, and most consultants recommend a mix. We hear a lot about social media, such as LinkedIn, Facebook, and Twitter. We can also benefit from communicating with campaigns, and it is critical to maintain an effective database of contacts including clients, colleagues, friends, and referral sources. Marketing and communication can also occur in print form, and it s good to have a strategy for use of print and/or digital materials. When we invest in advertising, website development, social media, etc., it is important to capture the results of those investments, so that we can analyze how we are doing. Some firms use client satisfaction surveys and maximize communication with clients in all forms, from retainer agreements to invoices. Marketing is an area that should be included in the annual goal setting & planning process. 6. Give Back Giving back can take many forms, ranging from adjusting the mix of cases or clients served, to volunteering in the community, to doing service projects, doing pro bono legal work, and/or making cash donations, as well as other ways of giving. It is important to have a strategy for giving back and for community involvement. This may also appear in the types of associations we join or support, and the areas or topics we wish to impact. 7. Be Wise on Space & Technology Before signing a lease on a big office and buying a brand new copier, it s best to assess our needs and explore options. Many firms operate out of the owner s home office, or share space with other solo practitioners. What are the needs and work habits of the attorneys and staff? Do we need conference rooms? Can we share equipment and administrative services? Do we like working alone vs. with others? In terms of technology, there are many things to consider, and this is an ongoing proess. Here are some of the items on the list: Hardware: laptops vs. desktops 4

5 Software, malware, virtual other-ware Handheld devices, phone systems Legal research & case management AV systems & video conferencing Cloud, backups, disaster recovery IT service professionals; help desk For most of us, this is a critical area, and it is one where we rely heavily on the expertise of outside consultants. 8. Build Routines and Systems We may be so busy that we don t have time for meetings and s, and we don t think about routines or systems. We just do what needs to be done. However, we benefit when we can build in some good habits for communication, collaboration, and review. Regular team meetings and regular check-ins or information sharing by are great habits to build. Additional areas for systems include: Litigation procedures Intake screening Billing and invoicing Filing and document management Protocols and service standards Hiring and firing Purchasing and financial reporting Meetings, communication systems, and practice protocols should be sustainable and explainable. 9. Be Open to New Ideas & Fun The one guarantee is that things change. We do well to be open to change and to consider new ways of doing things, improvement and evolution. There will always be trends about what s fun at work. Currently, some of the trends for small firms include: Wellness programs, nutrition information, gym memberships Lounge area, ping-pong, foosball tables Naps, flexible schedules, time off Chocolate, healthy snacks, filtered water Book club, sports, other hobbies Pets at work, casual dress codes We should keep an eye on what we can learn from the trends, consider what fits for us, and be open to ways that we can have fun and create satisfaction. (regardless of trends). 5

6 10. Ask Others for Help We learn from each other. We do best when we help each other. Some of us have trouble asking for help, but it is valuable to ask others: How do you do it? What are we missing? What has worked well? What have you learned? What advice would you give? Are there any great new ideas out there? Why does it work? And sometimes we learn the most by asking: What are we not talking about? C. Conclusion Managing a small firm can be challenging and requires many hats. We should remember that solutions are scalable and changeable, and it s critical for us to try not to do everything by ourselves, and to ask for help. When we build an infrastructure that is based on sound advice, fits our needs, and scales to change, we can truly start to reap rewards and enjoy the work even more! 6