Would you like fries with your custody agreement?

On the face of it, the restaurant business couldn’t be more different from the practice of law. From the hot, sweaty work that happens in the back of the house to the chipper servers with all their pieces of flair a la Office Space, it isn’t an industry a lawyer would think to emulate.

But the restaurant industry can provide key insights and help you make money, too. Here are a few tips from an article on the restaurant profitability on Restaurants.com.

1. Reality check: profitability in year one

The financial reality of starting a new restaurant is that owners shoot for breakeven in the first year. Profitability is a long-term proposition given labor, cost of goods, overhead and start-up costs. This is a great lens for lawyers, too. Covering your costs includes labor, including paying yourself if you’re a solo practitioner. While there may be times that you don’t pay yourself – effectively robbing Peter to pay Paul – consistently failing to pay yourself, or worse, not even accounting for your salary in a business projection is bad business. The lawyer occupies an important and central part in a law practice, particularly a solo one, and should be compensated just like any other part of the practice, including administrative work, technology, and office space.

2. Think in margins

Restaurants make a lot of profit on drinks. A cup of soda costs a restaurant 20 cents. A cup of tea is five to seven cents per serving. Consequently, the markup on a drink can be between 200-300%. That’s why restaurants have little problem offering bottomless drinks, creating a real sense of value in the consumer, while allowing the restaurant to maintain a healthy profit margin.

What is the law firm’s equivalent of the bottomless beverage? Perhaps it’s simply an auto-respond email that acknowledges the receipt of a document and briefly describes next steps. Maybe it’s a list of best practices for any given situation that the firm long ago created and is used over and over. The marginal cost of providing the information to the client is minimal but the perceived value to the client could be significant.

3. Product mix helps restaurants break even

Restaurants talk a lot about product mix when they talk about margins, as not every product has a great margin like beverages. What is a lawyer’s product mix? First of all, let’s address the fact that attorneys can’t think of fees in terms of “mark-ups.” Their fees must be reasonable to pass ethics muster. That said, most lawyers are pretty uncreative when it comes to how they charge that reasonable fee. Flat-fee services are one way to introduce product mix into the equation. While nearly all jurisdictions formally allow lawyers to deliver flat-fee unbundled services, with many jurisdictions actually having issued ethics opinions that establish clearer parameters around how to do it, most lawyers still opt for the old revenue standby, “the billable hour.”

One successful family law firm is currently taking a large volume of uncontested or lightly contested divorce cases for a reasonable flat fee that offers them a healthier profit margin than billing by the hour. This helps the firm stay afloat when their uncontested divorce goes sideways and they have to engage expensive litigation.

Another example of fixed fee, limited scope services is our own Avvo Legal Services. You can learn more about how you can add it to your product mix here.

4. Burgers or caviar?

Fancy restaurants generally make less profit than lower-brow ones. They have linen to wash and silverware to clean, among other things. Lawyers may find thinking about their practices like McDonalds distasteful (no pun intended). That’s fine. High-end restaurants make money too.

The key for a law firm is understanding which kind of firm you are – higher-end or lower-end –  and then making sure to design marketing and business operations to attract the right kind of clients and to service them according to that model. A high volume family law practice with high profitability numbers (like the one described above) shouldn’t be providing clients with the legal equivalent of cloth napkins and tablecloths – in law firm land, maybe that’s lots of attorney facetime and unlimited phone calls. Similarly, a white-glove firm with lower volume but better heeled clients can afford to give clients better “service,” engaging directly with clients and handling intricate legal issues more often. But that firm should not necessarily expect the higher profitability numbers that come with a high volume practice.

Foodservice may be an unglamorous industry, especially to those who went to law school with dreams of the ivory tower, or the wood-paneled skyscraper. However, well-run restaurants can have much in common financially with well-run law firms – from start-up mode to freebies to branding and operations. The takeaway for lawyers seeking to grow their practice? Try thinking like a restaurateur.

Adapted from an article written by Dan Lear for Law Practice Day.