April 23, 2013

Practice Management Advice: Future-Proofing Your Law Firm

Law Practice Magazine | May/June 2013 | The Professional Development IssueTHE FUTURE OF PRIVATE LAW PRACTICE has been a subject of much speculation the last several years. While some law firm partners behave as if they believe things will go back to business as usual, most of those who are paying attention believe we are headed to a “new normal” in our future. Among the factors cited to support this proposition are business clients more engaged in negotiating legal fees, an overexpansion of law schools that has led to more attorneys entering an already packed job market, the continuing impact of technological advances on law firms and the proliferation of legal services offered online by people or entities that are not lawyers.

So, it’s a basic fact: Planning is critical for lawyers and law firms. But it remains far too easy for firms to get mired in important short-term planning issues such as budgeting and managing large projects at the expense of investment in the firm.

As that great philosopher Yogi Berra noted about the future, “If you don’t know where you are going, you might wind up someplace else.” So here are some areas to think about for your future.

    For a lawyer to have a practice, he or she must have paying clients. We are in a service profession. But it is often easy to focus on the quality of legal services provided at the expense of customer service. Yet your clients pay as much attention to how they are treated as to the work product. (In fact, they may pay more attention to that.) Thus, we must build systems where clients receive timely updates on the status of their matters without having to ask for them or being charged extra for them. Discuss the expectations of clients for each new matter. Set reasonable, appropriate deadlines for projects and then meet them.

    Remember that clients pay attention to both your communications and work product. Failing to return a phone call, allowing a typographical error in a document or completing projects later than promised all contribute to the client’s overall view of the law firm’s competency and service.

    Information technology is becoming more interwoven into our lives and business operations every day. A few years ago it might have been appropriate to have a simple feature phone and not a smartphone. But today, not being able to set an appointment on your smartphone does not inspire confidence about your legal ability. Technology purchases and training are and will remain a critical part of law firm operations for long into the future. Out-of-date technology slows down business. It is increasingly dangerous to use an antiquated billing system or to not have a good document management system.

    Simply put, you cannot take 10 or 15 minutes to do something that other lawyers can do in a minute, whether you bill that time or not.

    We all like predictable costs. Anytime you can quote a potential client a fixed fee, you increase the chance that a client will hire your firm. But even where a range of total fees and costs is based on many factors, you should be able to outline those factors and show how they impact cost.

    The billable hour hangs on, despite many calls for its demise. But its hold slips more each year. There will be more discussions with your clients about fixed fees and attorney fee caps in your future. Be prepared for them with your firm’s historical information.

    Love your word processor. Lawyers are wordsmiths. We draft lots of correspondence and contracts and pleadings and memoranda. Every law firm should have regular, short training sessions highlighting word processing tips and techniques. Everyone should be forced to attend. The lawyer who does not want to attend because he already knows it all should be assigned to teach a class.

    While it may be a good business model for legal assistants to format a federal court brief for filing, all lawyers should also know what to do. Today’s lawyer should understand word processing tools such as Microsoft Word Quick Parts, macros and templates. If needed, ask your staff for some training help.

    The traditional lawyer met with a client, took the client’s relevant information in handwritten form on a legal pad and then used that information. Most law firms are now past the point where basic client information, such as the mailing address, is typed multiple times to open a file and set up billing. Now law firms need to learn to enter all client information into a system where it can generate documents as the need arises. We live in the age of data. Getting the client’s data input into your system so it can be easily reused is key for today’s law firm. There are a wide range of document assembly tools available now. Is your firm using document assembly well?

    We live in a world of rapid-fire change. Lawyers have always grumbled about changes in laws or regulations, but now business practices and tools are evolving rapidly. Read publications such as Law Practice magazine, Law Practice Today, the Law Practice Management Section blog (lawtechnologytoday.org) and the New Normal column in the ABA Journal to stay on top of our changing environment.

    Management guru Peter F. Drucker’s often-quoted statement on this topic is: “Efficiency is doing the thing right. Effectiveness is doing the right thing.”

    Recently, Ron Baker of the VeraSage Institute posted on LinkedIn an essay titled “Big Idea 2013: Stop Worrying About Efficiency.” This was supplemented by a follow-up piece with numerous comments from a diverse group. Both are recommended reading.

    Baker’s primary point is that improving efficiency today in business is often too focused on cost cutting. He quotes from Drucker’s People and Performance: “Effectiveness focuses on opportunities to produce revenue, to create markets, and to change the economic characteristics of existing products and markets. It asks not, How do we do this or that better? It asks, Which of the products really produce extraordinary economic results or are capable of producing them?”

    Setting up new tools to capture every stray tenth of an hour so that it can be billed may be efficient, but it is not very effective if the client is already pressuring the firm to reduce the fees it pays.

    One thing that appears to be certain is that the legal profession cannot look to continued growth to solve its systemic issues. Yes, we can all look back on several decades of impressive growth in law firm revenues. Yet there is little evidence today that the future will look like the past where revenues are concerned. Bruce MacEwen recently completed a 12-part series entitled “Growth Is Dead” on his blog (adamsmithesq.com) and has also compiled all of the posts into an $8.49 Kindle e-book you can purchase from Amazon. This is more required reading—at least for the law firm management team.

    Your future success is based on the number of people who believe your advice and services are valuable commodities—something worth paying for. While referrals are still the very best way to obtain new business, an increasing number of people learn about their potential lawyer from information garnered online. Every law firm—even a solo practice—needs a website with biographical information and a photograph of each lawyer. Your email address should reflect your website domain. Writing for publications that publish articles online is a good way to demonstrate your expertise.

    Your best marketing tool remains what it always has been. Do great work for clients and build a reputation that causes others to refer your legal work.

    We do not know everything the future holds, nor can we guarantee future success. “Future-proofing” your law firm is really an exercise in improving your business practices and determining your priorities. That is something every professional practice should be doing for today and for tomorrow.