Effective law firm management is ever-evolving. Whether you run a small or large firm, many of the tools and necessities are the same. The right mindset is also critical, and it can help put a law firm in a more favorable position.
The journey toward successfully managing law firms often comes with challenges and bumps in the road. However, effective management is always achievable. The most successful law firms understand how to prioritize client needs and follow effective internal processes that lead to growth.
What Is Law Firm Management?
Law firm management is a blanket phrase that encompasses everything needed to oversee a law firm. Law firms are businesses like any other, and the running of a firm requires management skills like financial acumen, client relations, marketing, and staff oversight.
Managing a law firm comes with numerous challenges, but having the right tools and an effective strategy makes it easier.
Understanding Law Firm Management Through Law Firm Structure
The first step to understanding legal firm management is becoming familiar with how law firms are structured. Successful law firms have a clear structure. The following is an overview of law firm partnership structures in legal practices and what each role entails:
- Managing Partners: Managing partners are at the top of the pyramid; they usually own part or all of the firm, and they ensure the legal business is run effectively and successfully
- Partners: Also known as shareholders, partners sit just below managing partners; they are experienced attorneys and own shares of the firm
- Associates: Associates are below partners and do not own any shares of the firm; new lawyers start as associates with the opportunity to work their way up
- Of Counsel: Of counsel attorneys do not work with a law firm full time but instead come in to help a firm's lawyers with specific cases
- Law Clerks: Law clerks are either still in law school or recent graduates gaining experience; they assist attorneys with their workloads and often shadow lawyers to learn
- Paralegals: Paralegals have extensive legal knowledge and assist attorneys with tasks such as conducting legal research and drafting legal documents
- Legal Secretaries: Legal secretaries keep attorneys organized and regularly manage lawyers' schedules; they also assist paralegals and lawyers with administrative tasks
- Office Managers: Many law firms hire legal practice managers to help with the day-to-day tasks of the business; managers do not have legal roles but rather solely focus on the business aspects
- Marketing Managers: Marketing professionals within a law firm help with branding and marketing to build a positive image for the firm and bring in new clients
Having a hierarchy allows employees to understand who sits above them or below them, and this, in turn, can significantly help with law firm management.
How to Manage a Law Firm: Effective Tips and Tricks
Managing a law firm is not a one-size-fits-all job. The best style of law firm management highly depends on the legal practice type, firm size, and staff members. However, there are some law firm management basics that apply to firms of any size or practice area.
Start with a Law Firm Business Plan
Business plans are the key to many types of businesses, law firms included. Having a law firm business plan helps you lay out specifics, including goals, financial plans, and details on legal services, among other things.
If the law firm comprises many attorneys, including managing partners, partners, and associates, it is particularly beneficial to include information regarding pay structures for every role. This helps everyone understand how the firm works. But even if you're a solo practitioner, it's helpful to incorporate financial details so that you'll know when and how much to pay yourself.
Having a solid business plan is crucial. Important parties like managing partners and partners should come together to create the plan. When in doubt, do not be afraid to get outside help.
Leverage the Power of Marketing
Nowadays, marketing is a powerful tool for law firms. In addition to a business plan, you should also have a law firm marketing plan.
Your marketing plan should include a website, search engine optimization (SEO), and pay-per-click (PPC) ads. Law firm websites let potential clients learn about the firm and lawyers. SEO management for law firms is critical, as it helps law firms rank higher on search engines, allowing prospective clients to find the business. And finally, PPC services for lawyers are also vital, as they help the firm target the right clients and generate business.
Creatively branding your law firm and making an effort to effectively market your law practice can set you apart from the competition. Legal marketing is an investment, but it helps bring in potential clients and establish your firm.
Educate Your Team
Nobody can run a successful law office entirely on their own. Kind, helpful, and professional staff members help lawyers and the firm grow and thrive.
When hiring legal professionals and other staff, pay attention to their attitudes and willingness to learn. Teaching and training employees is helpful not only for them but also for the firm. When you invest in your staff by providing them with professional development opportunities, you can substantially benefit the firm as a whole.
Professional development takes on many forms, but it often includes sending employees to conferences, providing courses for your staff to take, and having one-on-one meetings with staff and lawyers to discuss their career paths.
Burnout is real in the legal industry, so law firm owners should also take into account mental health and overall well-being. Stressing the importance of your employees' health will have positive results for them and their happiness, and it also produces higher-functioning and more productive employees. Small details, like letting lawyers and staff work from home some days or funding health retreats, can have a positive impact on your employees and the firm itself.
Educate your lawyers and staff on professional matters and health-related matters, and see what this does for both business and morale.
Incorporate Legal Software and Document Automation
Software plays an important role in the best law firm management practices. While the legal profession used to be associated with reams of paper, modern technology has now taken over.
There are dozens of options for legal practice management software. This law practice software can do everything from simplifying the client intake process to tracking lawyers' billable hours.
Legal software also regularly includes document automation tools, allowing firms to digitize paperwork and efficiently create and store their documents.
Develop Your Law Firm Manager Acumen
You should become familiar with the skills you will need to successfully manage your particular law firm.
Law firm leaders do best when employing the following skills:
- Planning for the future
Everything starts with the leader. When you manage your firm well, you will inspire and motivate your lawyers and staff to act in the same way.
Establish a Client-Centered Culture
How far could your law firm go without clients? Not very far. Clients are what keep a firm going and growing.
Client service is critical to a legal business. From the moment a potential client contacts your firm, you want to make them feel heard and understood.
For example, when a client consults with a personal injury lawyer, it likely means the client or a loved one has suffered harm or passed away. You want to show the client that you are putting them and their needs first. When they feel like they are a priority, most clients will be loyal to your firm.
A client-centered law firm treats clients with care and compassion, gets to know clients and their needs, and provides exceptional, high-quality legal services.
Establishing strong relationships with clients accomplishes many things. It motivates clients to come back to your firm should they need legal assistance in the future and to refer friends and family to your law practice. It also helps build a positive reputation for your business and lawyers.
Always Track Your Results
You should always have a goal of improving your practice. This requires tracking results to determine where your firm is doing well and succeeding — and where your firm needs some improvement.
To track results, you can look at several details, including caseload, revenue, and billable hours. When you have strong law firm management software, reviewing these key performance indicators (KPIs) is much easier, as the information is readily available.
While you don't have to look at your KPIs every day, it's helpful to review your firm's progress at least every few weeks. Keeping track of your law firm's progress and determining how your practice can improve allows you to implement necessary changes and quickly correct any issues.
The following are the two most important types of key performance indicators:
Client performance indicators look at several details regarding your firm's clients, including:
- Number of Clients: Look at the current number of active clients and the number of clients you've gained and lost within a certain period of time
- Client Satisfaction: Client satisfaction is measured through surveys and reviews
- Client Retention: Client retention is seen through how long clients remain with your firm or how often they come back for other legal matters
- Client Lifetime Value (CLV): CLV looks at the value your legal practice gets from long-standing client relationships
- Client Acquisition Cost (CAC): To get your CAC, divide your acquisition costs by the number of new customers within the period of time you're examining
Tracking these KPIs is critical for retaining clients, obtaining new clients, and determining the value your clients and cases bring in to your firm.
To determine your productivity key performance indicators, look at the following:
- Lawyers' billable hours
- Number of tasks completed within a given time
- Number of new cases your firm has opened during the examination period
- Monthly expenses
- Operation rate (billable hours divided by total hours in a workday)
- Collection rate (hours collected versus hours invoiced)
- Realization cost (billable hours invoiced divided by billable hours worked)
Productivity KPIs can tell you how your firm is doing and how productive your lawyers and staff members are. The more productive your employees and the more revenue and cases brought in, the more successful your legal practice is.
What Makes Law Firm Management Effective?
Effective law firm management can mean many things. Managing a law firm involves numerous details and aspects coming together to make you a great leader and respected professional.
While the legal industry continues to change and evolve, many of the practices that make the management of a law firm effective remain the same. The following qualities are essential for managing a law firm successfully.
You don't want a "jack of all trades, master of none" law firm. To set yourself and your law practice up for success, start by having a clear focus. Determine what areas of law your business will focus on and what types of legal services you want to provide.
Clients tend to prefer firms and lawyers that focus on certain areas of law over firms with no clear direction. It is important to have a focus, and it's also important to communicate that focus to your prospective clients.
This is not to say you cannot have a firm that offers legal assistance in multiple areas of law. However, if your firm does have several areas of practice, make the delineations clear and help clients understand the lawyers and staff handling their particular case are highly experienced in that area.
Ability to Adapt to Change
Adaptability is crucial in the legal industry, as things are always changing.
For example, when COVID-19 first appeared, many professionals changed their working habits. The pandemic substantially affected businesses and the way law firms handled their cases and clients. Most lawyers were forced to work from home and get used to managing their matters remotely.
Confidently adapt to changes. Change can be uncomfortable, but it is necessary to keep law firms running smoothly and keep business flowing in a positive direction.
Without clear leadership, law firms would not be as successful. Being in a leadership position can be intimidating at times, but it gives you the power to keep your legal business on the right path.
As the leader of a law firm, communicate with lawyers and staff regularly and clearly define their roles. Employees often work best when they know where they stand and feel their role is critical to the success of the firm.
Also, set clear goals for everyone in the firm to work toward. Working toward goals collectively brings employees together and helps the law firm flourish.
Control Over Your Finances
Keeping track of finances is essential for any business, including law firms. Legal practices have monthly expenses and payroll, and they constantly have money flowing in and out of trust accounts.
Knowing and understanding how much your firm is making will help you gauge the health of your firm. Try to maintain a firm grasp of what is going on with the firm financially at all times and make sound financial decisions for the business.
Standardization in Legal Operations
One of the biggest secrets to keeping a law firm organized and on track is to develop and maintain standard operating procedures (SOPs). You must also ensure your team fully comprehends and follows these procedures at all times.
Standard operating procedures are tailored to your firm, depending on the size of your firm, area of practice, and so on. Many firms have established SOPs for the following tasks:
- Tracking billable hours
- Client intake
- Client onboarding
- Client communication
- Document drafting, review, and approval
- Appointment scheduling
- Client case management
- Court and trial preparation
- Archiving client files at the conclusion of a matter
- Storing client files after a certain number of years
Developing SOPs involves sitting down and detailing what's most important to the firm and the success of the business. This step may involve discussions with lawyers and administrative staff.
Once you've created your operating procedures, make them accessible to all staff. Instead of having hard copies, consider making the procedures digital and searchable on every computer. This way, should any staff member have a doubt, they can always refer back to their SOPs.
Make sure to update your standard operating procedures as needed, as your firm is constantly changing and growing.
Law Firm Management Tools
These days, the variety of tools available for effective legal firm management is endless. Especially in the digital age, the tools you use matter. They can help keep your employees organized and make communication between team members easier.
The tools your law firm needs are unique to your business and area of practice. Some of the basic types of tools include the following:
- Law Practice Management Software: Lawyer practice management software is arguably the most important tool in your arsenal; it can accomplish several tasks, from matter management to client communication
- Client Intake Software: Legal client onboarding is much simpler with software made specifically for client intake
- Legal Accounting Software: Law firms need accounting software to stay abreast of financial matters
- An Email Provider: Email is everything in the legal world nowadays — most firms rely on Microsoft Outlook or Gmail
- A Word Processor: The legal field is all about documents, so having a strong word processor is critical; many firms opt for the Microsoft Office suite, which includes Microsoft Word
Some platforms provide integrated solutions to cover all of your needs. Although these software costs can add up, having the right tools is priceless to a law firm. It can make management much easier and streamline many of the firm's essential processes.
Upcoming Challenges in Law Firm Management Automation
Automating law firm management is incredibly helpful for most, but this does not mean it does not come with its challenges. Unfortunately, automation is not perfect.
Law firm management automation is a relatively new concept, and it is one some might find difficult to get behind. When you automate your law firm management, you might feel you are losing some control over the management processes. More experienced or older attorneys and staff might find it especially difficult to let go and trust the automated process.
Finding the right tools is the best way to get the entire staff on board. There are endless options for legal automation nowadays, and it can be challenging to choose the right software and tools. They all have pros and cons, so which is best for your firm? Answering that question may require some help and plenty of patience.
You might struggle with law firm automation, but you should know that you are not alone. If you are new to this type of software, look for a platform that offers plentiful training resources for you and your staff. Even with its difficulties, you'll likely find automation to be your best friend. When you find what works best for you and your firm, you'll be happy you didn't give up on the idea.
Running a law firm is hard work; finding the proper tools and automating your law firm management can ease many of the stresses and burdens.
Things to Keep in Mind When Choosing Law Firm Management Tools
When choosing law firm management tools, you should take your time and research your options. For example, many providers specialize in supporting small law firms, while other platforms may be more suitable for large firms.
While you're narrowing down your options, get your team involved. The last thing you want to do is keep your employees in the dark. Get their ideas and opinions on tools, software, and other resources necessary for law firm management.
Tailor your law firm management tools to your specific practice. Just because something works for one firm doesn't necessarily mean it'll work for yours. Take notice of your firm's unique needs to best determine what type of legal office management software would be best.
Finally, think of the future of your law practice. Consider the growth of your firm and the direction in which you'll take your business to choose the right law firm management tools.
Law Firm Management Books and Courses
Books and courses regarding managing a law firm can be excellent teachers.
There are several resources available to improve your management skills and knowledge. Some of the most recommended books on the topic include the following:
- How to Start & Build a Law Practice by Jay Foonberg
- The Client-Centered Law Firm: How to Succeed in an Experience-Driven World by Jack Newton
- Smart Collaboration: How Professionals and Their Firms Succeed by Breaking Down Silos by Heidi K. Gardner
Along with these books, you can consider courses. Every state bar association has CLEs available for law firms pertaining to running and managing a legal business. Certain legal businesses and software companies also host webinars and provide other learning opportunities for lawyers and staff.
There are many resources available to lawyers and law firm leaders who wish to expand their knowledge on the topics of lawyer management and practice management.
The Right Tools and Mindset Make Managing a Law Firm Possible
While managing a law firm might seem daunting, it doesn't have to be. You can lean on many available resources to build a strong team and lead your law firm on the path to greater success.
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