How to Run a Law firm – The 101 Version - Basic Blocking and Tackling

If you’ve been following along, this is the second part of our blog series where I’m trying to help you answer the question that I asked myself for years in building a firm: What are all of the areas of the business that I should be touching regularly (daily/weekly/monthly) to give myself the best chance of building a successful firm? We’re still building a business framework at this point in the series, so this blog will outline the basic blocking and tackling.  

What does that mean?  Well, it all starts with the fact that a law firm is a business, and just like any other business, to be successful, you have build-out Operations, Finance, Practice Management, Marketing, IT, Recruiting and Benefits.  Once you do that, you have to tie them all together into a set of marching orders for you and your team – aka, a strategic plan.  

In the next posts in this series, I’m going to delve into each of those business areas that I listed above, but today, I want to focus on strategic planning. If you find this blog TLDR (I get it), no offence taken here.  The upshot:  Strategic planning is the most important tool I have to run the law firm.

I recall a day, about 8 years ago, when I thought strategic planning was a giant waste of my time.  At that point in building a firm, I was still solely focused on the almighty billable hour.  On one hand, rightly so, that’s how we make money, and I was billing more hours than any other attorney at the firm.  On the other hand, a mentor of mine sat me down one day and helped me understand that one hour of my business development efforts (when done optimally by connecting with centers of influence) often led to tens of thousands of dollars in revenue for the firm.  In the moment, it became crystal clear – I could bill time for a couple hundred dollars an hour, or I could run the business and generate new business for the firm for tens of thousands of dollars an hour.  Guess where I spend my time now?  That said, I still bill time and do legal work, but I have billed the lowest number of hours on the team each year since then.  

Making that jump does not happen overnight.  You need to have business and organize processes, build and mentor a team you can trust to tactically do the work, etc, and all of that takes time.  My first step in that process was to finally agree to run a strategic planning session.  

That first strategic planning process changed the trajectory of the law firm. On the previous path, we would have topped out at 3-5 attorneys, and now we have unlimited growth.  How did this happen?  The strategic planning process aligned the team on who we were, what we cared about, our value proposition and/or competitive differentiators, our operational goals (with deadlines and accountability), hiring goals, and a reliable budget and projections.

What does a strategic plan look like?  Well, it varies, but in going through a typical planning session, I think it’s important to start with your mission, vision and values (MVV).  

• MVV – MVV answers who you are, what you stand for and where you are going in building this firm.  Once established, your MVV become the taproot of the organization.  We use our MVV to orient the team, to remind each other how we interact with clients, we run our marketing materials through that lens, and we keep those things in mind as we build out our growth plans.  I really like this explanation:  https://open.lib.umn.edu/principlesmanagement/chapter/4-3-the-roles-of-mission-vision-and-values/

• Value Proposition – Next, we dig into what is your unique value proposition.  A value proposition (aka a competitive differentiator) identifies what your firm does better/differently than any other firm out there.  To learn more about a value proposition, check out:  https://online.hbs.edu/blog/post/creating-a-value-proposition  

• Operational Goals – This is where the magic is in growing the day to day blocking and tackling of running a law firm (and can include hiring goals).  Outside consultation is often involved, because let’s face it, you don’t know what you don’t know.  Once you know the steps needed to move forward, then you can outline them in digestible chunks by month/quarter.  Eat the elephant one bite at a time.  In addition to that, you need accountability – who is taking full responsibility for each action item, and what’s the deadline.  That becomes the plan you review with the leadership team monthly to ensure you are on track.

• Budget and Projections – This tool allows you to wrap your arms around your historical expenses, and then build a budget that is less than your revenue projections for the next year.  I like to build it out month to month so that I can run a budget to actual comparison.  A revenue projection looks at how you bill out your attorneys and their hourly commitments, and then projects total revenue for the year.  It’s often a great time to talk about how you compensate your attorneys, what are their financial incentives, and how you pay out on new business origination.

There’s a lot more that goes into the is process, but the above bullets are a high level overview.  Additionally, there’s a lot of value in brining in a great facilitator to help you think through options that just not top of mind for you if you’ve never been through this process.  At the end of the day, if you fail to plan, you plan to fail.  Once you have this plan, it alleviates a lot of the stress and anxiety involved in running a business, and it starts to become fun to iterate your plan around the curveballs that will invariably show up!