I regularly hear lawyers tell me that law school taught them how to practice law, mostly, but never taught them how to run a business. And yet, 90% of the legal industry has produced law firms of 20 or fewer lawyers, leaving many JDs in an entrepreneurial role without an MBA or real business experience.
Running a business and practicing law is very different than just practicing law exclusively. Many Managing Partners find themselves constantly distracted and burdened by producing revenue as a billable resource, growing the business through business development efforts, and actually managing their day-to-day business that will produce a short and long-term positive result.
Legal Back Office has proven experience now serving multiple firms being lead by forward-thinking Managing Partners that are contemplating if what they have built is healthy and positioned for future success. Those in the small to mid-size law firm world can attest to the fact that obtaining data from small firms is a big challenge.
Understanding how to benchmark your firm against trustworthy data is an even bigger challenge. And finding a law firm consultant that’s advice isn’t a decade, or two?, outdated can leave many law firm owners over-spending for consulting deliverables that under deliver. Here are three areas to consider when assessing the health of your law firm, and how we can help you with each one.
A Financial Assessment Can Provide Additional Insight On Financial Performance To Help You Reach Your Firm Goals
Benchmarking in the legal industry does exist but is troubled in a number of ways in terms of credibility, thoroughness and objectivity. Clio’s Legal Industry Report has done one of the better jobs in this regard and has provided a lot of guidance and analysis not previously existing in the legal industry.
It’s still a troubled source of data as it’s pulling from their client base which will naturally be more tech-forward given that they are using a case management and billing platform that is decently advanced. There are still many law firms in our industry barely using technology and when their data is incorporated with the Clio users, I think the benchmarking would be much skewed.
Legal Back Office has built a benchmarking tool and assessment process that shows law firms how their financial performance aligns with a range of best-case scenarios including a substantive analysis process that pulls from our years of experience in the legal industry. We show law firms where they are strong and where they can improve, as well as provide recommendations that are prioritized in alignment with your firm’s goals. If you want this benchmarking tool, feel free to download it yourself here and input your firm’s financial data.
An Operational Assessment Can Uncover Areas For Process Improvement
In addition to incorporating your financial data into our benchmarking tool, we implement a 1:1 survey process of employees, partners and key personnel, to produce our recommendations around what needs to be improved in your operations. We collect a list of your current software being used, general processes, and we can also tell through an in-depth review of your financials if you are as efficient in your operations as you can possibly be.
Often times, law firms are being run by well-intentioned and brilliant legal assistants that were never trained as accountants, marketers or HR professionals. There is also typically an emphasis on frugality that puts the organization at risk from being able to scale, as the internal infrastructure can’t support the growth if it doesn’t have the proper technical structure and software to support the growth.
The presentation and final report from Legal Back Office will include recommendations on how to improve your internal operations in a way that will help your law firm to grow, and ensure you will not waiver in times that your operations start to be heavily utilized.
One common area of operational concern is the legal billing process. We often find an internal employee managing this process and not questioning authority when software or processes might be deficient. We are always talking to firms that are 20+ lawyers that are still printing invoices and physically mailing to clients, as well as not accepting electronic payments.
These two choices are creating inefficiencies and lost dollars every day for law firms. Our operational recommendations in these scenarios would include an overhaul of the billing process to improve your time to getting bills out to clients, as well as improve overall collections substantially.
A Cultural Assessment Can Give You Employee Perspective About Your Firm
In our 1:1 calls with employees, clients and partners, we are also able to assess the current culture and whether or not the talent within the firm will create a solid foundation for future growth. It’s not uncommon for equity partners and senior leaders to become disconnected from the day to day and lose sight of how employees “feel” about working for the firm. Our confidential conversations often bring to light how clients really view the firm from outside the organization, and how the employees see the future based on the firm’s current state.
In a serviced-based organization like a law firm, we are nothing without our people. And if our people are starting to lose faith in the future, we would be wise to understand the current culture and how we might need to adjust to support our strategic plans. It’s amazing how the input of clients can also shape the view partners have of their firm and how the approach to client communications and service might change based on that feedback. Don’t get so buried in the legal work that you forget the importance of looking at your business from a strategic and high-level perspective.
Wherever you might be in your journey of law firm ownership, rest assured you aren’t alone. There are more resources today than ever to help lawyers build successful law firms. Don’t underestimate the importance of assessing the health of your firm on a regular cadence, and if you aren’t sure how to begin, contact a law firm consultant like Legal Back Office to figure out the best place to start.