When you start a law firm, part of the firm’s success will be based on brand awareness and matching your services and pricing to your market, which can take several years. Those entrepreneurs who stick it out through tough times in the beginning can end up with profitable small businesses.
Once your business is up and running, it can be challenging to grow your law firm. You may be too busy or in desperate need of help. The prospect of suddenly having to ramp up your expenses, without any promise of increased revenue is daunting. Busy lawyers want to grow their law firms comfortably. There are three significant components of law firm growth that lawyers who want to expand should focus on.
Lawyers can run solo practices with minimal overhead and can even build a small law firm on a low budget. However, overhead dramatically increases when hiring additional staff. Salaries are the most considerable cost for any business. Increasing the size of your team also increases the costs of benefits, office space, hardware, and software.
Use cloud software for law firms to eliminate unnecessary hardware, eliminate costly hardware support costs, and reduce your IT burden. Use software to build out workflows, so that everybody is on the same page about how to handle case types and administrative matters. The simple operation of adding a second monitor to a workstation can save your employee a few minutes a day, which adds up to days per year. When you are free from administrative work, you’re able to spend more time on billable work.
Solo lawyers wear a lot of hats. You are an office manager, paralegal, receptionist, and bookkeeper. Think about removing portions of your responsibilities and delegating them to individual employees. Ultimately, you want to leave yourself with just two obligations: rainmaking and high-level substantive work.
Small business owners who are growing need to determine how much revenue each new hire will generate. To establish an associate’s value to the law firm, consider how much he can bill out per year on low-level work, and how much more money you can make billing the high-level work he allows you to do. You can perform a similar analysis of any employee, even administrative employees, to determine how effectively your support staff makes the high rates that senior lawyers charge possible. By automatically generating daily, weekly, or monthly reports with practice management software, you can monitor each employee’s productivity to ensure that they are making you money.
Law firm managers tend to set broad goals. However, having specific and identifiable revenue goals increases your chances of achieving them.
In a quarterly revenue review, you can look for trends, including those specific to practice areas, and project revenue based on past performance. Evaluating your revenue is easy to do with practice management software and allows you to pivot faster, making the necessary adjustments to improve your cash flow and grow your law firm.
Law firm growth is never guaranteed but success is likely with a data-driven approach.