Small law firm lawyers do a tremendous job of running their practice but may be reluctant business owners who don't see the importance of strategic planning
Despite being generally grouped together, small law firms are of such a diverse nature and character that it is difficult to paint them with a broad brush. There is essentially no uniformity in terms of how they choose to structure their practices, what practice areas they decide to enter, the clients they choose to serve, or how they run their businesses. But this last category does start to show some signs of commonality that is worthy of deeper discussion.
Generally, small law firm lawyers do a tremendous job of developing and running their practice. After all, this is why you went to law school, to be a practicing lawyer who helps clients solve their legal problems.
But it’s almost equally universal that small law lawyers are reluctant business owners. A great many of us don’t have business backgrounds, and very few of us went to law school with the intent of starting our own small business. We went to law school to build a law practice to help other people lead their businesses and support their entrepreneurial spirit and enterprise. That’s what we’re good at.
But small law lawyers are increasingly coming to the realization that they are, indeed, business owners, and that they need to improve their business management skillset. And growing, disruptive technologies and ever-evolving dynamics in business are reinforcing the importance of that need by the day.
Small law lawyers are increasingly coming to the realization that they are, indeed, business owners, and that they need to improve their business management skillset.
That is why we are launching a long-term effort to help small law firms grow their business acumen, improve their business planning skills, and identify and improve core competencies that are essential to securing their practice’s future. This post represents the first in a series that will highlight important skills for leaders of small law firms, and how those skills can be incorporated into plans for a prosperous practice.
The first step towards building a future is making a plan for that future. While they won’t often admit it openly, many lawyers will agree that they struggle when it comes to developing and implementing a strategic plan for their law firms. Larger law firms have the luxury of some economies of scale which allow them to hire business professionals for the express purpose of running the firm. This trend in operating teams is not new, with larger firms conducting their business this way for nearly two decades.
Small law firms, on the other hand, generally do not have the infrastructure or resources to hire an MBA whose sole job is to watch out for the firm’s business operations. This job falls on the “owner-operators” of the firm.
It is essential that these owners recognize that a solid business plan is central to the overall health of the firm and is necessary to sustained business growth. And unless that approach is truly well-planned, it will not create a healthy and profitable business over the long term.
There are capabilities and core competencies that are necessary levers to creating sustained financial health for small law firms. For the purposes of beginning this conversation, there are essentially three categories of core competencies that I would like to highlight:
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- Strategic management of firm resources, both capital and human;
- Effective client relationship management; and
- Business development with a clear return-on-investment (ROI).
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Each of these categories deserves their own in-depth discussion and will be the subjects of additional posts in the coming weeks and months.
Regardless of which core competency your firm wants to focus on, however, you must do things with a reasonable amount of effectiveness. This is the foundation of strategic planning.
First, you must set goals and allocate resources toward accomplishing them. Your goals should be phased. Ask yourself: What do I need to accomplish in the next 90 days? By the end of the year? Next year? And what lies beyond that?
Second, within each phase, ask what it will take to achieve these goals. What will it cost? And what are the dependencies? That is, what do we have to achieve first for our next goal to be successful?
Regardless of which core competency your firm wants to focus on, however, you must do things with a reasonable amount of effectiveness. This is the foundation of strategic planning.
You must be realistic with what you’re trying to achieve. The corporate world loves to talk about SMART goals. These are goals that are Specific, Measurable, Attainable, Relevant, and Timely. These could be great “watch words” for lawyers as well.
Many lawyers may contend that they simply don’t have time to implement a strategic plan. To that I would offer the following: Practicing with passion can be an essential part of a fulfilling law practice, but to make the practice that you’re passionate about a sustainable part of your future, you must practice passionately in a profitable way.
Your practice needs to be structured in a way that will last for the long term. And that kind of structure requires forward thinking. To face the long-term realities of running a business, dealing with change, and confronting competition, you need to have a plan.
Follow this series in the coming weeks and months as we discuss in greater detail what skills and competencies you should consider including in your strategic plan, as well as advice around how to bring those plans into measurable action within your own firm.
For a look into some of the topics we’ll be discussing, download a copy of the most recent State of U.S. Small Law firms report.
