Stell: Business Basics for Busy Lawyers
Practicing law is a time-honored profession. Many lawyers would also say it is a calling. However, in today’s world we can’t escape the fact that it is a business as well.
Here are a few tips to help you design a practice that will allow you to evolve and thrive.
A Business Plan
Starting your practice with a business plan is important. At the outset it’s often hard to know exactly what services you will sell to exactly what clients, but the better job you can do in pinpointing these decisions, the better positioned your practice will be.
Your business plan will serve as your North Star for building your firm. Be specific about your purpose, your goals, and the clients you want to serve.
Creating the business plan will also remind you to work “on” your business and not just “in” the business providing legal services. Working “on” your business includes marketing, business development, strategic planning, and goal setting.
Once the plan is complete, don’t put it on a shelf out of sight. Rather, every quarter, build a planning day into your schedule where you review your goals and the tasks that will get you there. Measure the data by looking at your client list and reviewing your revenue and expenses to see if you are on target. Many lawyers create a dashboard to see daily results which can be scary at first, but will give you detailed data and insight into your firm that many long-time practitioners have never had about their own firms.
Keep in mind that your business plan should be evergreen, a living plan that is constantly updated and flexible if you need to pivot your practice.
Brick-and-Mortar or Virtual
In many ways, starting a law firm has never been cheaper. With a laptop and a mobile phone, DIY website, bank accounts, and a few subscription services, you can be accepting clients the day your law license arrives.
However, take the time to think through your options of whether to go virtual or brick-and-mortar. Practicing, especially as a solo, can be lonely and isolating. If there is an available shared office space or co-working office space that may include other professionals or businesses, you may want to take advantage of brick-and-mortar for the company, the mentorship, and the networking. On the other hand, having a virtual office is a great way to keep expenses in check, especially at the beginning, and your clients may never expect to see the inside of your office.
As a result of the pandemic, there are plenty of opportunities for leasing, and as the real estate market ebbs and flows, buying your own space may be a great investment for you and your firm that will pay off down the road.
Fees, Billing, and Collections
Setting fees. Determining how to set fees is tough. You want to make sure your fees are competitive.
One tactic to determine fees is the most common research tool today – a Google search. My search “how much does a divorce lawyer cost?” provided a variety of information. I did the search specifically for my state and the first result was from a survey which provided an average hourly rate for divorce lawyers. This search revealed other frequently asked questions (and answers) such as average retainer fee and average cost of a divorce. The search resulted in ads for law firms which provide insight about how other family lawyers are promoting their firms and services.
The Clio Legal Trends Report is an excellent resource which shows fees across the US reported by state or region of the country. Recruiting firms often publish online salary guides that sometimes include regional billing rates. You can also find billing rates on salary websites such as Glassdoor or Salary.com.
Getting direct feedback is valuable. You can talk with trusted clients and referral sources about what they feel are reasonable fees. Mystery shopper programs are where law firms call other firms to inquire about rates. Most firms don’t quote prices over the phone, but you can find out whether other firms provide free or paid consults if nothing else. And finally, look at fee affidavits that have been filed in your jurisdiction.
Client billing. The most important note about billing is to make it a priority. Firms often bill at the end of the month for all the work done that month. While that may work in larger firms, timely billing results in greater collection rates. When the bill arrives while the results are fresh in your clients’ mind, the value of work seems higher. Put processes in place to make sure you are adequately capturing your time and document your billing process in order to improve your billing workflow.
Collections. From the moment you open your law firm doors, you should offer online payment options and accept credit cards.
A recent study conducted by Total System Services (TSYS) showed that as many as 75% of customers today prefer to pay with a credit or debit card. In addition to the convenience, customers enjoy credit card rewards, cash back and other perks of using their cards.
Studies show that 85% of electronic invoices are paid the same week they are sent, and 57% are paid the same day the client receives the invoice.
Taking credit cards means you get paid faster and the money is deposited in your account sooner. Also, integration between your credit card processor and your time and billing / accounting system reduces duplication of payment and client information.
While there are many online payment platforms available, LawPay is often an affinity partner of many bar associations. LawPay was designed specifically for attorneys and is designed to prevent commingling of earned and unearned funds, protects your trust account from third-party debiting, and ensures IOLTA compliance for credit card, debit card, and eCheck transactions.
Other legal specific credit card payment processors include ClientPay, Headnote, LexCharge, and MyCase Payments.
There are many resources to guide you through the process of choosing your technology and your bar associations are a great first stop. You may be able to save money by taking advantage of the affinity partnerships your bar associations have with various technology providers such as Clio and Fastcase.
Most bar associations have Practice Management Advisors or Practice Management Centers which typically offer free technology consults.
In terms of what kind of tech you need, you should focus on tech that makes you more efficient and provides a good client experience. Tools that are often listed as “must have” for your tech toolkit include:
- Scheduling automation – I use Calendly
- Virtual meetings – I use Microsoft Teams and Zoom
- Project lists and “to do” task lists – I use Trello
- Marketing automation – I use Canva to create and MeetEdgar to automate
- Website – I use WordPress
- Document automation – this will vary by practice area
- Accounting / Trust Accounting – Trustbooks is designed for solo and small firms and is compatible with state bar trust accounting rules
As you move through your career, never lose sight of professionalism and the art of practicing law, but neglect the business side at your own risk.
Camille Stell is the President of Lawyers Mutual Consulting & Services and the co-author of the newly published book, RESPECT – An Insight to Attorney Compensation Plans available from Amazon. Continue this conversation by contacting Camille at firstname.lastname@example.org or 800.662.8843.