It is not enough to be a great lawyer to build a profitable and sizable law firm. One must become a CEO of their law firm, a business role rather than that of a law practitioner.
And to be a good business person you need to develop certain skills.
Listed below are 10 fundamentals that every capable CEO must learn and implement to build a successful law firm.
1. Your business will grow as large as you grow as a leader
You're the boss, and your skills will determine how your firm will grow and develop. You must work on them, making the transition from attorney to CEO.
You should study two things in particular:
Business acumen
Cultivate it. Take classes in business basics. Read business books. Find a mentor.
And visit the Grow Law Firm Academy often, learn, and put it all into practice.
Leadership
Every strong company has a strong leader at the top. That’s no accident.
Leadership is both a natural talent and something that can be developed. Again, find a course in leadership. Read books on the subject. Step outside your comfort zone and challenge yourself to be a business leader, not a lawyer.
Take our Grow Law Firm Academy lessons to heart.
If you find that leadership is not one of your strengths, you can hire a CEO and remain the principal of the business. You’ll still reap the profits and make the decisions, the CEO will handle day-to-day operations.
2. Business is a Sport - The Best Team with the Best Balance Sheet Wins
Business is competitive. Like a good coach, you need to recruit the best players, motivate them, and give them the tools and freedom to outperform others in your field.
In the sport of business, you measure success with your balance sheet and business valuation.
The more equity you accumulate in your business and the more operating excellence you develop in your business, the more valuable it becomes.
I suggest you get a valuation report from a mergers and acquisitions specialist annually to see how you’re performing as a CEO (company valuation is your performance assessment).
Strive to be the best of the best.
3. Focus on the Big Picture
As the leader of your firm, you can’t get bogged down in all the details. Handling details is what staff are for.
You need to pay attention to the high-level trends and indicators. Which means monitoring the key success factors for every department at the firm.
You should focus on how well marketing does attract new prospective clients. How well sales convert those prospects into paying clients. How operations handle the cases of the firm. How well your HR department performs its crucial duties of recruiting, hiring, training, and tracking the standards of staff.
4. Managing not Doing
This fundamental covers similar terrain to the previous one. You’ll find that many of the skills of business overlap and intertwine.
A good manager manages and lets others handle the doing.
If you want to create a thriving business that creates passive income for you, the ower, giving you the financial freedom you deserve, you need to delegate, delegate, delegate. This will allow you to eventually step away and simply enjoy the profits.
Leave micromanaging to your competition. You focus on the goals, plans, implementation of the plans, reports, and plans to improve performance. You do not do anything else unless these things are done with excellence.
Yes, it will take time to transition from being a lawyer to becoming an effective CEO, but the payoff is going to be much, much larger.
5. Build the Best Team
As in sports, you want the best players you can get. Hire talent, train them to your standards, and motivate them.
Then let them perform.
A good coach knows to let his team solve problems in the field. He or she doesn’t step in at every moment to point out what they should be doing.
A good coach recruits the best and lets them be the best.
You’ll know when they are not up to standard because you’ll have reports with metrics that will indicate departmental and individual performance.
6. Demand Concrete, Accurate Data
How do you measure success?
You need measurable metrics. Your staff should submit reports that are backed up by data.
You need verifiable information.
And you should get it on a timely basis. It’s easy to skip a week or a month or a quarter.
Don’t.
To make good decisions, you have to have solid intel. This is absolutely vital.
7. Analyze
A CEO should always be thinking analytically about all aspects of the business. What areas can you improve? What efficiencies can you implement?
Weekly, focus on your goals and the progress made toward them. Are you on track? Why or why not?
Have the plans been implemented? How is success measured? Who and what can be done to move faster toward the goals?
Finally, look at the results of those actions. Are you getting the outcomes you want?
If you spend a lot of time going over these areas, you’ll notice trends.
Once you understand trends, you can make better decisions. Then you’ll watch all your key success factors improve.
8. Understand the Four Financial Statements
What makes up the quartet of financial statements that rules your business? You should not only know these numbers, you should review them on a regular basis.
Profit and loss. These are the revenue and expenses your company takes in and puts out. And the net profit at the bottom.
Balance sheet. This shows your assets and liabilities, and equity, which is the financial value accumulated in the company (but not what you can sell the firm for). For most law firms, the assets are the cash you have in the business. Desks and computers aren’t really worth much. Liabilities are things like revolving debt, loans, and payroll taxes you’ve collected but haven’t yet paid to the IRS.
Statement of cash flows. Your cash flow shows you what monies you took in and where they went. Cash flow is different than profit and loss statement and they are unlikely to perfectly match up. Want to understand the difference between these two? Here is a Harvard Business article that explains it.
Accounts receivable aging statement. This reveals how much you are owed and by whom, how long since the issue of invoices, and the average time it takes to collect payments . You should set standards such that you get paid by clients as quickly as possible.
Collect this data and go over it every month. Compare month to month, quarter to quarter, and year to year, to get a deep understanding of the financial footing of your business. Then you’ll know whether your business is improving, stagnating, or worse, declining, and will be able to make informed decisions.
9. Study What You Must be Good At
There are two things at which every CEO must excel:
Management
People
You have to actively work on developing your acumen in these two key areas. Notice I didn’t say law. As the CEO of a law firm, you don’t need to be good at law. You need to be good at business, and these are two of the most crucial aspects of a business.
It’s vital that you put time into working on yourself. Study leadership and how to work with others.
Find a good teacher. Read. Attend webinars. Watch and read insights here at the Grow Law Firm Academy.
The better you understand management and people, the bigger and more successful your company will be.
10. Study Core Areas to Outsource
As a CEO you don’t have to be good at everything. You need to know how to lead, how to make decisions, and how to delegate.
Many aspects of business should be outsourced. Things like marketing.
Most businesses can’t execute marketing well internally as it requires a sizable team of experts. For example, an SEO team has 5-8 experts who specialize in various facets of SEO for law firms. Marketing companies like mine - because we specialize and have the expertise - can deliver better results, faster, and will end up being free to you as we more than pay for ourselves.
Other areas to consider outsourcing are accounting and recruiting for key positions. You should not spend your time and resources on these aspects, but you should understand them in order to select the right vendors to perform these tasks and report results to you.
When you learn and understand all of these fundamentals, you’ll be able to create a bigger, more profitable business.
And one that gives you the freedom and the lifestyle you deserve.
Contact us to get Grow Law Firm experts' consultation!
