December 01, 2015

The Business Guide to Law

Kerry M. Lavelle

I was inspired to write The Business Guide to Law: Creating and Operating a Successful Law Firm, because I could not find one great business book in the market that analogized law firms to successful businesses. I started to take a complete business approach to running our office by analyzing the best B-school lecturers, professors, and authors. Only then did I realize that a law firm must be run like a business for it to be sustainable and successful. It is with this approach that all employees and clients benefit from the core purpose and foundations on which the firm is built.

Two keys factors make this book unique. The first is that this is a book that deals with the business side of a law practice rather than simply the technical aspects of practicing law. I draw on leading business principles generally used in other commercial efforts and apply them to a law practice.

The book’s other unique element is that it is divided into three specific sections dealing respectively with (1) starting a practice, (2) growing that practice into a successful entity, and (3) ultimately developing an intelligent succession plan to transition the firm to new owners on the founder’s retirement. Although there are other quality publications on starting a practice, there is an absence in the market of meaningful content on the second two phases of the life cycle.

Section 1, “The Start Up,” provides guidance on establishing a private practice. With the goal of writing a book that can be used as a text book in law schools, this section begins with advice for law school students on doing research, finding mentors, and building a body of written work. It then covers some of the basic premises for creating the proper corporate structure and gives guidance on how to find and establish office space. The business focus of the book is established and reinforced as I explain the approach of working on your law firm versus working in your law firm. Moreover, Section 1 also introduces the concept of a “Five Tool Attorney,” a career development designation that is brought full circle in Sections 2 and 3.

The book covers in great detail the elements of a law practice that, if not handled properly, ultimately lead to the demise of the firm: proper billing and collection techniques, marketing, and identifying the firm’s value-add to the client. Section 1 also introduces the concept of developing a best practices depository, which exhibits much greater value later in the book when growing the firm is discussed.

Another pre-cursor to what follows later in the book is a chapter on networking. I describe in detail not only how and why to network but also the importance of networking to the long-term intrinsic value of the firm.

Although other books have covered some of the functional concepts of Section 1, none uses them as groundwork for developing an internal culture that becomes the firm’s bedrock for growing and ultimately achieving a legacy that is more than just financial success.

The first steps covered in Section 2, “Growing a Law Practice,” focus on the process and priorities of hiring staff and additional attorneys. The book provides clear direction on overcoming some of the standard obstacles that a firm looking to grow will encounter. It is also very direct in explaining that simply hiring good people is not enough, reiterating instead the need to train them and indoctrinate them into the established culture of the firm. This is done not for short-term gain but to build a winning firm in which the best employees and attorneys are not only successful but also committed to remaining with the firm and ultimately taking on equity roles as described in Section 3.

As the solo practitioner takes the first steps to increase the size of the firm, the importance and process of creating one-, five-, and ten-year plans is described. The process for establishing key goals, some of them seemingly unattainable, is used to explain how a firm can go from just having several attorneys to becoming a powerhouse in the marketplace.

Chapters in Section 2 deal with compensation, both salaries and incentives, and the ways in which all personnel should be evaluated. The dissemination of work between various support staff members is covered with guidance on how to hire and train for the right skill sets, and the manner in which work should be entrusted to support staff. A strong position is taken that attorneys are the revenue drivers in a law firm and to be successful, all other staff must be aligned in supporting the attorneys’ efforts to efficiently serve clients.

After the introduction of networking and marketing concepts in Section 1, the book dives much more deeply into the development and execution of a marketing, or lead generation, system for a successful law office. Numerous marketing tactics are described and evaluated with a sharp focus on securing and retaining new, quality business. In addition, as the firm is in expansion mode, a strategy for extracting additional work from existing clients is explained as an efficient model for growth.

A central concept in the book is not just the value of being involved in the community, but the responsibility to do so. The book consistently reinforces the importance of charitable work, leadership in civic events and organizations, and the need for attorneys to take an active role in service to their profession and their communities.

Throughout Section 2, the concept of the culture of the firm is addressed. This book describes how developing a winning culture, and doing so in a way that all staff can embrace and act on, creates the foundation for explosive growth. While that culture sprouts from an ideology, a purpose, and ethical behavior, it becomes the ultimate source for direction of the firm. Once in place, the founder can begin to relinquish some management responsibilities and entrust them to both support staff and attorneys, giving each responsibility for certain elements of the practice such as marketing or technology.

This work cites as authority the preeminent management guru, Peter F. Drucker, on his timeless principles for successful corporations, as well as his contemporaries such as James C. Collins, Jerry I. Porras, Michael E. Gerber, Patrick Lencioni, and Verne Harnish.  Also included are thought-provoking observations on human behavior by Malcolm Gladwell, all of which are applied with clear, real world examples to the practice of law and the building of a successful business that happens to be a law firm.

Much of what is written in the first two sections serves as a lead-in to the Section 3 payoff. This section, unique to law practice books, provides a study on how to transition the firm to a new set of owners. Here, the business book focus is very evident as is the value of developing a successful culture. The point of Section 3 is not simply to sell the firm for a profit, but on the contrary, it demonstrates how a hard-working attorney, who conducts an ethical career and provides great leadership will leave a legacy—a firm that will live on well beyond his or her career and continue to grow into the next generation of owners.

In keeping with the comprehensive nature of the book, Section 3 not only deals with strategies (again, very much business centric) for welcoming equity partners but also addresses in great detail the potential for merging two firms together. Here a series of financial examples and calculations are provided to demonstrate how to not only create a financially sound merger but also how to do so in a way that allows the new firm to be successful by again looking at how work is distributed, how the culture is created, and how clients are best handled.

Section 3 brings into focus those elements first introduced in the early chapters of the book, including the “Five Tool Attorney,” the importance of networking, and the distribution of work across all members of the firm. It clearly demonstrates how the division of time between working on the firm and working in the firm has led to the firm reaching this stage.

The end of the book includes a comprehensive set of documents that can be used by a new attorney to build a valuable library of checklists and forms to create efficiency and accuracy in his or her work.

The book, The Business Guide to Law, Creating and Operating a Successful Law Firm, is available at the ABA Web Store.

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Kerry M. Lavelle

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Kerry M. Lavelle began his own practice, Lavelle Legal Services, in 1989, focusing primarily on matters of tax law. Today, the firm known as Lavelle Law, Ltd. has grown to include 22 attorneys with practice groups in tax, business law, commercial real estate, estate planning, criminal law, home health care, small business, gaming law, bankruptcy, corporate formation, family law, litigation, grocery law, employment law, residential real estate, securities, and LGBT law. He is the author of The Business Guide to Law: Creating and Operating a Successful Law Firm, published by the Division.