In the previous issue, we began a two-part discussion on seven essential actions for launching a successful practice—although all of these actions, to be clear, can help any law practice deliver better service and stay healthier. The first three actions, as we previously covered, are planning, leading and communicating. In this installment, the final in our Law Practice Profitability series, we will leave you with some ideas on the other four essential actions for a successful practice: implementing, monitoring, following up and, lastly, renewing and learning.
The need for planning and goal setting extends across nearly every area of a law practice. If you want those plans to become realities, however, you are the one who must make it happen. In other words, you have to get proactive about implementing each plan. You do this by undertaking the following:
Leading the process also requires creating the kind of cohesive team environment that carries everyone over the finish line.
Your business plan is the best example of a statement of your firm’s goals, but there are many other examples. Your personal or firm marketing plan, your office technology plan and your office policies and procedures manual are all planning documents that should be implemented for the benefit of the firm.
Another example of a planning document increasingly implemented by firms is a case action plan developed jointly with the client. These plans describe the client’s goals in pursuing the matter (i.e., how the client defines success) and also establish a budget and allocate resources (staff usage, expense outlays and the like) across a set timeline. Case action plans demonstrate that the lawyer understands the client’s needs, is thoughtful about how the work required will be implemented, and is ready to lead the case toward agreed-on goals. They help make the intangible work of the lawyer real to the client and communicate the value the lawyer is bringing to the matter.
In the course of implementing a case plan, keeping the client updated on the status of the matter is an ethical necessity. However, it’s also important to use this process to send consistent messages to the client. But many lawyers trip over this by making unrealistic promises—often out of a desire to please the client or avoid having the matter taken elsewhere. Examples are unrealistic timelines for how quickly a matter can be completed; unrealistic budgeting of probable costs; unrealistic expectations for what results can be obtained; and unrealistic promises about how often the lawyer will communicate with the client. Sending inconsistent messages creates dissonance in the relationship and gives clients a sense that the lawyer fails to “walk the walk.”
When implementing any plan, you should set realistic expectations at the outset. For client engagements, confirm them in the written fee agreement and follow through in all subsequent communications and dealings. If unanticipated or bad things happen—and they will from time to time—share the news with the client immediately. Again, don’t cloud the message with unrealistic promises. Be ready with a new plan to deal with the unexpected development and let the client know how you will implement it. Being on top shows leadership. Let your work speak the loudest—show that you can deliver solutions even in the face of change. In other words, overdeliver on your promises.
A big part of implementing any plan successfully is having a system of monitoring reports, or “feedback loops,” that indicate how well you are doing. By monitoring your firm’s critical success factors, you can see where problems are looming and take corrective action as needed. Or, as we’ve heard it put, “Pain is only valuable once you know that you’ve learned from it.”
The monitoring system for your practice should include both financial and non-financial indicators, such as these:
And then there are more probing feedback loops, which are partly financial and partly not, such as average amount of fee bills (where you divide the total of all fee bills by the number of bills rendered). When you compare this to a prior period (month or year), what has changed and why? Likewise with unbilled work-in-process (WIP). Steadily increasing WIP can be an indicator of future cash flow problems, or it could be an early sign of a lawyer falling behind in work owing to a personal crisis or other problems.
This type of comprehensive monitoring system will provide the data that tells you whether you are moving toward your goals. Absent such information, your practice will be flying blind.
Armed with your monitoring data, you are in a position to lead a dialogue with all stakeholders on how goals and strategies should be modified in your next steps—meaning how you will follow up using what you have learned so far. It’s not what you know, after all—it’s what you do with what you know that matters. Effective follow-up is part of what makes the difference between a firm that gets to its destination and one that just gets by.
For example, some firms have little or nothing in the way of A/R, while others have huge A/R balances. What is the difference? The firms with low A/R have learned from their past mistakes ( leadership) and put into place stricter client selection processes ( planning) as a result; then they communicate the firm’s policies on payment of retainers and invoices and regularly monitor the A/R balances so they can follow up with clients who start to have an A/R problem before it gets worse. It is not enough to know what your A/R balances are—in this, as in other areas of your business—you must take essential actions to produce change.
Renew and Learn
Last but not least, succeeding in the practice of law requires that you keep your skill sets current and sharp. This means dedicating the time that is needed to stay current not only on your particular area of the law, but also the skills necessary for the effective running of your practice. Learn about new developments and refresh your understanding of time-honored practice principles. As Henri Frederic Amiel once said, “So long as a person is capable of self-renewal, they are a living being.”
As you grow your practice phase by phase, remember that you are not only a professional in your legal work. You are also running a professional services organization and that task is equally important. Accordingly, you should regularly gain exposure to innovative thinking in management and look for creative ways to leverage your time, knowledge, staff and technology.
We hope you’ve learned some useful ideas from our series of Profitability columns, and we wish you success in growing your practice for years to come.