Ten Things a Small Firm Owner Should Never Do

Vol. 31 No. 1


Frank T. Lockwood (flockwood@me.com) is the author of Run Your Firm Like a Business: An Operations Guide for the Solo Practitioner and Small Law Firm (ABA, 2013). He practiced law for 30 years and retired at age 57. His business systems are revolutionizing the way small law firms operate.

Attorneys are all too familiar with the daily “To Do List.” Unfortunately, what frequently happens is that matters not on the list sneak in and end up re-ordering these important tasks. To combat this insidious, unconscious behavior, here is a “To Don’t List” for you to follow.

1. Don’t Answer the Phone

The fastest way to lose control of your schedule, or never make it to number two on your to do list, is to answer the phone every time it rings. Some lawyers believe that answering the phone avoids stacking up the callbacks that you’ll have to do anyway. This is simply not true.

All calls into the firm fall into one of three categories, and how each call is handled depends on which category the call falls into:

  • Calls regarding current cases;
  • Calls from prospective clients;
  • Miscellaneous calls, such as sales people or friends.

Most calls regarding a current case are status calls and can be handled by an administrative assistant or paralegal who is probably more prepared to answer the call than you are. If the subject of the call is beyond the capability of the paralegal, he or she can take a message or refer the call to your voice mail and assure the caller you will return the call as soon as you can. The voice mail feature allows the caller to convey what he or she wants to convey without feeling frustrated at not reaching you.

Calls from prospective clients can be of indeterminate length and may drag you into the abyss of free legal advice (see No. 2, below) or into being too abrupt to satisfy the caller. The better approach is to have a trained assistant answer all calls and be prepared to ask the new caller a few key questions, the answers to which will either qualify or disqualify the caller from consideration as a potential client. These questions should be designed to determine if the case fits into your firm’s work profile, and if so, may be followed up by setting an appointment to see an attorney.

Miscellaneous calls can be handled by an administrative assistant. Personal calls from your friends or spouse or a prospective date from Match.com can go to the smartphone number you provided. These calls can be screened by you on the spot by simply seeing who is calling and deciding to accept or reject the call.

2. Don’t Give Free Legal Advice

This is my favorite of all categories to discuss with attorneys. It is the bane of most small firm owners and sole practitioners. For more than two centuries, American lawyers have been teetering on the tightrope between giving too much advice (either over the phone or in person) and wooing prospective clients. It places them in an untenable position from which there is no escape.

Having a trained employee answer all calls from prospective clients addresses the telephone problem, but what about the “free consultation” so often seen in those TV ads? How does one compete with that? The answer is simple: Those TV ads are mostly offered by personal injury attorneys who don’t charge for their time anyway.

The attorney should always charge for the first consultation and communicate to the prospective client, in advance, exactly how much the charge will be. Acceptance of the consultation fee “qualifies” the client to move one step closer to becoming a firm client. A client who fails to recognize the value of an attorney’s services, or who can’t afford to pay for the initial appointment, has just disqualified himself from being a client of your firm. This little extra step before you rush into an attorney-client relationship may save you a great deal of time and money dissolving an unproductive relationship later on. Conversely, the client who recognizes that good attorney service has value and is willing to pay that value is the type of client you want for your firm.

3. Don’t Call Clients to Collect Money

The attorney or firm owner should be the last person to call the client to try to collect fees. If you’re an attorney who cares about your clients (hopefully, you do), then you will too easily empathize with their financial woes and accept (almost) any excuse for not keeping their account current. You are too close to the clients and unable to exercise any objectivity in attempting to simply support the clients in keeping their agreements.

An employee skilled in talking to clients should be scheduled to discuss balances owed beyond the due date, at various times each month. This should be as organized and consistent as sending out the monthly invoices. In fact, it should be a task irrevocably attached to the billing and collection system of the firm. If the firm has no billing and collection system, ignore this paragraph and read chapter 4 of my book, if you’re still in business. Suffice it to say that “collection calls” should be consciously made at pre-designated stages of a client’s delinquency. The caller should be prepared to assist the client in answering the client’s concerns, whether financial or case specific, before any decisions or feedback from the attorney is needed.

4. Don’t Have an Outside Bookkeeper

Using accounting software such as QuickBooks (quickbooks.intuit.com) makes it easy for an office manager who is moderately trained in bookkeeping to save you time and money by producing a monthly profit and loss statement, a balance sheet, and valuable cash flow projections.

If you have a firm of, say, three to five attorneys, a few legal assistants, and various administrative staff, and you are sending your accounting functions to an outside bookkeeping firm, you are wasting your money and placing another layer of administration between that information and yourself. You are also waiting much too long to find out the status of your cash flow (as well as profit), and it will be difficult to get that up-to-the-minute information regarding your firm’s numbers.

Your money is much better spent on training a staff member to keep track of the books and having these books reviewed by your outside accountant, who can make adjustments periodically to ensure accuracy and maximize your deductions. In fact, QuickBooks will allow you to tap into the server where the firm’s financial files are kept (in password-protected files) and produce up-to-the-minute reports at 11:00 pm from home, if you can’t sleep. The reports you want can be preformatted ahead of time by your accountant so that all you need to do is set date parameters and push a button.

In QuickBooks you can instantly “go behind” any number on any of these statements by simply double-clicking on the individual expense in the report (for example), and up will pop a detailed report showing every transaction that comprises this expense. You cannot do this if your only interaction with your financial statements is holding a piece of paper in your hand produced by an outside bookkeeping service.

5. Don’t Be Surprised at Cash Flow Challenges at the End of the Month

At various times throughout the month, you will have scheduled interactions with your office manager or administrative assistant in charge of bookkeeping, timekeeping, billing, and collections. As indicated in No. 4, above, you will always have access to the books, even when your employees are long gone or in dreamland. From review of the previous month’s profit and loss statement, to the trust account transfer as a result of your monthly billing, to the calls by staff to clients who have not paid their invoices on time, you have set up a system to gauge your cash flow as and when it happens throughout the month.

Despite each of these “checkpoints” that occur throughout the month, you will also have a line of credit with your local bank just in case a cash flow crunch occurs because of a large case that took a lot of time the previous month and for which you knew payment would be delayed, or because you have just expanded and invested money into a new employee or office equipment that has yet to begin paying for him/her/itself. Cash flow challenges should never be a surprise and should never cause you stress. If they do surprise or stress you, you are missing a critical link in the way you track your billings or collections.

6. Don’t Wonder If Your Employees Are Logging Their Time

Although I argue against requiring attorneys to bill eight hours per day, I always required all billing personnel to have their time logged by 10:00 am the following day. No exceptions. I had administrative staff responsible for collecting this time from tardy attorneys or paralegals and hounding them until the time sheets were turned in or input into the timekeeping program. Once collected, the information was summarized and given to me every Monday morning from the week before. I always knew exactly where we were in the timekeeping process. This arrangement is part of a larger (but not very complicated) system of timekeeping, billing, and collection work done in the firm. It requires consistency, cooperation among staff, and clear duties and time schedules. Once it’s set up, you’ll never have to wonder how everyone is doing. (For those of you with very small firms and stretched administrative employees, you can do this yourself with a good, networked timekeeping and billing system.)

7. Don’t Pay Your Bills Late

This should be the simplest of all matters to discuss. Your office manager or administrative assistant should have these scheduled on the calendar and automatically repeated every month just as you have done with your business management tasks. But what about cash flow? What if you don’t have the funds to pay a bill? Can’t you just put off payment for a few weeks or a month or two? After all, they know you’re a lawyer and they’re not going to sue you!

Over the years, I found that paying bills on time gave me a great deal of leverage in my dealings with vendors (such as process servers or copy machine lessors), landlords, or anyone else I paid on a regular basis. At times when I needed extraordinary service or favors, I usually found myself on the top of their priority list of other clients or customers. Why? Because I was usually the only one who consistently paid them on time. Without fail. I showed them the respect they deserved by doing this, and they were happy to return the favor when I needed it.

What about the cash flow issue? There is none, remember? (See No. 5, above.)

8. Don’t Be Too Accessible

In most areas of our lives, those of us with controlling natures wonder whether (and when) we need to back off and “let nature take its course.” In areas of love, child rearing, and family activities, we can’t always (and don’t want to) be in charge of every aspect of these relationships. But what about our employees? Shouldn’t we be accessible to our beloved, hardworking staff? Well, yes, but not always. Much like the college professor who has office hours, the small firm owner should do everything possible to exert control over his or her schedule. Letting the staff know that you are not to be disturbed when working on a case is critical to efficient workflow and billing. Closing your office door is a good start. Emergencies notwithstanding, you should communicate when you are available for walk-in communication and when you are not. If you don’t control your schedule, it (or others) will control you.

9. Don’t Try to Remember Anything

With today’s technology at your fingertips, you should never need to or even try to remember a date, a task, or an anniversary. My iPhone is with me 24/7. (Yes, it’s even at my bedside, where the bell tower gently awakens me as if I were in Zurich.) I can tell the court if I have a conflict in a trial setting, I can set a lunch date rather than promise “I’ll call you.” Most importantly, I can set repeating dates that schedule me to keep an eye on my business and prevent future conflicts.

Repeating scheduled dates include reviewing the draft bills, reviewing my bank balance once the trust account transfers have been made, and meeting with my office manager (or A/R department person) 14 days after the bills have gone out to find the results of telephone conversations with clients who have not paid their bills or replenished their trust account per their retainer agreement. These business review tasks should occur like clockwork every month, hence, there is no reason for not scheduling them years in advance.

Your calendar app (on your smartphone) should inform you of any potential conflicts before commitments are made and should also allow you to invite all interested parties to an event and should sync with the office server calendar to make everyone in your office aware of each new appointment.

If you’re driving, you can ask Siri to remind you of something later without taking your eyes off the road or your hands off the wheel, or you can just dictate ideas or random thoughts on case preparation or the meaning of life right through your Bluetooth.

No notes, no little slips of paper in your pocket or lost in a folder. No remembering anything important to be recalled later. Deposit information into your smartphone and leave space in your brain for reasoning and being in the present.

10. Don’t Be Your Own Lawyer

You’re brilliant and smart and have demonstrated this fact to friends, family, judges, and opposing counsel over the years. However, lack of humility in areas about which you are not an expert will usually get you into trouble. Areas in which you just don’t practice often cause the knottiest problems. These might include human resources, landlord-tenant issues (especially where you’re the tenant), collection matters, and, of course, ethical concerns or defense. If you don’t specialize in these areas, you have no business being your own lawyer (or should I say “fool”?).

Attorneys on the opposing sides of these issues will be experts, and you will be like a fish in a barrel to them. Follow your own advice to your clients and hire an expert to help in these areas. It will free you up (both emotionally and hourly) to do what you do best. Some counsel may even comp or drastically discount your fees as a professional courtesy. Even if they charge, don’t be foolish. Get a lawyer! Or have an attorney on call to consult with before talking to that troublesome employee or writing that snarky letter to your landlord or disciplinary counsel.


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