Why your practice needs a formal law firm business plan

Solo law practice and small law firm owners frequently see themselves as engaging in a noble profession that offers services no one else can. The skills and training lawyers obtain to provide effective legal representation make them see the law as set apart from any other profession. And, in many ways, it is.

But, if you’re a solo or small firm owner, a law firm is like any other consultancy or small business. If your law practice is not structured properly, you will operate your law business poorly. Enterprises that aren’t well run, regardless of their offerings, struggle and frequently fail. For many attorneys, that can feel like a personal failure to serve your life purpose—to help others overcome legal obstacles that hinder their self-actualization.

In the case of most struggling law firms, all owners have done is create a stressful job that doesn’t provide fulfilling work, let alone a sustainable, profitable enterprise. Worse, the American Bar Association statistics show that 54% of ethics complaints are rooted in law firm mismanagement, not a defective legal strategy.

Faulty business processes make the firm’s work inefficient and unreliable. Also, poor financial controls leave solos and small firms scrambling for business and unable to prioritize clients over short-term financial needs. These issues lead to client dissatisfaction and potential ethics challenges for attorneys.

Marketing alone will not fix a broken law practice

Many lawyers believe that more marketing is the cure for a financially ailing legal practice. And, of course, marketing is critical to business development. However, the ABA also states that wrongly-constructed marketing and sales plans lead to mismatches between law firms and clients. That’s true even when you employ expert strategies or hire someone to create your plan. Many attorneys blame the marketing strategies they tried or the consultants they’ve hired for those negative outcomes.

Most of the time, it’s not the skills of the marketing consultant that are lacking. The real issues are the law firm owner’s weak understanding of whom they serve and what they’re in business to achieve. If you can’t convey that clearly to your marketing expert, they can’t construct an effective marketing plan.

Then, your firm attracts the wrong clients, and they are likely to be as dissatisfied with your practice as you are serving them. It may be those clients who will file complaints with the local bar.

Law firm prosperity starts with a law practice business plan

How does a law firm end the repeated cycle of management and marketing failures that keep firms in survival mode? They start with a small law firm business plan. Specifically, designed for law firms, this plan puts a structure around each aspect of your small law firm business. There are seven key aspects of this plan according to Chris Anderson, President & COO of How to Manage a Small Law Firm.

“While marketing is the aspect many business owners identify as most essential, attorneys included, it’s not,” he explains. Anderson, a 1994 graduate of the University of Georgia School of Law School, launched and ran a Georgia law practice for eight years. He says the last step is most important, but each builds on the other. So implementing them all is fundamental to properly structure a new firm or turn around an ailing one.”

Starting with the one most businesses consider first, here’s a brief overview of each aspect of the law practice business plan:

  • Marketing. By creating awareness of your business, “Its role is to attract the right clients who are the people you can and should help and are ready to buy your services,” says Anderson. You must attract your ideal client to the right place in the right quantity at the right time with the right expectations who are the right frame of mind to hire you. “But effective marketing also should keep those you don’t want as clients away,” he continues.
  • Sales. Once you’ve attracted the right prospective clients, your law practice needs a process for converting them to paying clients. Anderson says your sales process should answer, “How will we have a conversation with them and what is the content of that conversation?” Selling is something you do for your clients, not to them, so it is rewarding to you both, he explains.
  • Service. Once clients retain your firm, you must have a plan for what Anderson calls “the production line or factory.” That addresses how the work moves through the law practice. Your service process also should identify what services you sell and in what combination. Anderson gives divorces as an example. “Do we sell just divorces or divorces with children or without? Divorces with high or low assets? How are services structured?”
  • People. “It’s impossible to have an effective production line if you don’t have people to move the work through the practice,” says Anderson. Even if it’s just you, he explains, determine how many hours you’ll devote to client work versus law firm management. You should ask “How will I repeatedly attract good quality work then recruit, retain and train exceptional people to do the work instead of me?” You need a strategy for how you’ll develop quality people to serve clients while you expand the practice.
  • Physical plan. Have a plan for where your people will do the work and identify the tools they’ll use to operate the factory,” Anderson explains. That’s not just your location but furnishings, equipment, and supplies. It’s also the policies, procedures, and systems your people use to replicate client work continually at the high standards you set.
  • Money and the metrics. Financial controls are a key element in law firm management, and you’ll need to implement them correctly. It’s important to determine what you’ll spend on the aspects of your law firm business plan identified above as well as determine your revenue and margins. Anderson says the six to eight key metrics you must consider for your law firm include how many cases you’re opening and closing, what your Net Promoter Score is, what feedback you’re getting from clients and even your happiness level each day.
  • You—the small firm business owner. As stated at the beginning, you are the most important aspect of your law firm business plan. Anderson says, “The rest of this doesn’t if the business doesn’t serve the owner and the owner doesn’t serve the business.” Before beginning marketing, you—the owner—decide what the business will do for you and how much revenue it will generate for you annually. You determine how much time you’ll spend working in versus on the business. You decide what professional satisfaction and accomplishments you want to achieve through the business. “Only an owner who understands themselves can do this,” says Anderson. “So, any true business growth is proceeded by personal growth.”

These are only the fundamentals of a law firm business plan. You must implement a robust one customized for your legal practice to begin to see success. If you’ve been struggling in your practice, Anderson assures you, “It’s never too late to get started right.”

These are not difficult concepts to learn on your own. But, to ensure law firm prosperity, you should work with someone who’s achieved the goals you have for your practice. “Get a lawyer coach or consultant who can help you with both your personal growth and business development,” says Anderson. They can help you with each aspect of this specialize law firm business plan, he says.

That way, you’ll finally build the law firm—and the life—that will keep you practicing law happily for many years.