Whether you are starting your own law firm fresh out of law school or you have decided to leave your old firm behind, there are crucial decisions you need to make at the outset to put your fledgling legal practice on the path to success.
There are many things to consider, from selecting a practice area to insurance protection to choosing whether to operate a “virtual office” or lease office space, to name just a few. One of the biggest choices you’ll face is deciding on the technology tools that will help you manage the business side of your legal practice to free you up to spend more of your time doing actual client work and building your clientele.
Understanding your own comfort level and abilities with respect to technology is critical to this process, whether you are starting up or starting over. The good news is you have a tremendous opportunity to save yourself years of agony and frustration by making some good choices at the outset.
And, the stakes are higher than you might think.
The ABA Standing Committee on Professional Liability publishes a report every three to four years containing a summary of legal malpractice claims from professional liability insurers. The bad news is legal malpractice claims are on the rise and no firm, lawyer, or practice area is immune from the risk. However, one of the most eye-opening findings from their September 2012 report was that nearly half of malpractice claims reported are caused by administrative errors such as missing a deadline or failing to file a document. Rather than lack of experience being the culprit, statistics show that smaller firms, those with 2–5 attorneys, account for a disproportionate share of malpractice lawsuits. Many insurers will not even cover you for legal malpractice unless you have good systems for docket control and conflict of interest.
All too often, unfortunately, I’ll talk with law firms that have been trying to manage these issues with a hodgepodge of lists, sticky notes, some elaborate filing system, or spreadsheets. Some have developed their own home-grown tickler systems that look like recipe boxes. While most new law firms are launched on a shoestring budget, there are many practice management tools designed and priced for small law firms that can actually provide you with a competitive edge and help you minimize risks.
Below are four checklists that can guide you in your selection of practice management tools and technology to get your new law firm started out on the right foot.
Client, Case, and Matter Management Needs
If you are starting a brand new law firm and don’t have any clients, your needs will be very different from a lawyer who might be starting over with a book of clients. Your ability to have accurate record keeping is critical for communicating with your clients on the status of pending matters and to protect yourself by recording all communications to include email, notes, phone conversations, and so forth. There are a number of questions to ask when evaluating which practice management technology is right to help you keep track of client, case, and matter information:
- Does the vendor offer a professional service to bring your data in to help minimize the time it takes to get your law firm up and running? How much of this data is electronic vs. hard copy?
- How much of the data that you track for a client and matter can be tracked electronically? Tip: If you have a client intake form, how much of that information can you store in the practice management system?
- Does the practice management system integrate or work with your email and calendaring client (e.g. Outlook)?
- Does the practice management system integrate or work with other third-party software important to your practice, e.g. Microsoft Word or Adobe Acrobat?
- Is there a robust search mechanism to help with conflicts of interest or retrieving information?
Billing and Accounting Requirements
Depending on your practice area, you may or may not have the luxury of determining how to bill your clients. You might also have clients who need to pay you with a credit card and others who have a trust account. Following are a list of variables you may need your billing and accounting system to manage:
- Does the system help you meet your client’s billing requirements? Hourly, flat rate, contingency, retainer billing, electronic vs. printed, etc.?
- Can the bills be personalized for the firm and easily formatted? Can they be emailed?
- Does the billing system include trust accounting with security to help you control who gets access to what data?
- Does the system offer controls to help you stay in compliance with accounting nuances and trust accounting rules?
- Can you get meaningful information from reports to help you make better business decisions about your law firm?
Technology Tolerance and Personality
Knowing how you or others that will be part of your law firm feel about technology is probably one of the most important pieces of information you can use to inform your selection of the IT tools and systems that will serve as the backbone of your legal practice.
- How much of your working day is spent in an office, and how much is spent on-the-go with smartphones and other electronic devices?
- How often do you switch between devices?
- What is your approach to new software? Do you seek out training to learn as much as you can up front, or jump in and learn as you go? Or do you shy away from learning new types of software altogether?
- Do you generally look for the most sophisticated software package, or do you prefer simplicity?
- Are you willing to invest time up-front to learn legal-specific software such as practice management if it can increase your productivity later?
- Do you prefer to use consultants to get everything up and running or doing it yourself?
Which one of these statements best describe why you are starting your law firm and what you expect from it?
- I am starting my own law firm and I have ambitious goals for expanding the business and growing revenue.
- I am starting my own law firm because I enjoy the law and want to be my own boss but freedom and quality of life are more important to me than high revenue growth and expansion.
- I am starting my own law firm to pay the bills but not certain I really want to run my own law firm for years and years.
Firms with really ambitious growth objectives tend to be earlier technology adopters and typically seek to leverage more cutting-edge technology as part of a strategy to differentiate themselves and to compete more effectively against other law firms in their area. If you find yourself in this category, you may want to consider more premium software solutions that offer a more comprehensive set of tools and options. If you have more modest goals—and a more modest budget, you may want to buy a less expensive system that delivers most if not all of the basic practice management functionality you’re looking for. If keeping overhead costs at a bare minimum is one of your overriding goals, you may want to consider adopting a low-cost cloud-based matter management system that delivers basic functionality with no up-front costs and a reasonable monthly subscription fee.
Regardless of your circumstance, do not rely on home-grown systems or basic office software to perform functions for which they were never designed but that are critical to the viability of your legal practice.
There are many reasons why you might be starting your own law firm, and spending a little bit of time up front to help you assess your goals and technology needs can help minimize headaches further down the road. Take this opportunity to make good choices that will give you the best chance for success and that can help you avoid malpractice claims and other nightmares resulting from sloppy management of your legal practice.