Original Post By Micky Deming, Kahuna Accounting

One of the most difficult and stressful callings in life is to be a lawyer.

One of the most difficult and stressful callings in life is to be an entrepreneur.

And there are men and women out there, we’ll call them small firm lawyers, who are crazy enough to combine these two undertakings together into one bold calling.

jimgaffigan

I wonder how Jim Gaffigan would describe life as a small firm lawyer.

At Kahuna Accounting, we’ve been fortunate enough to work with hundreds of these small firm lawyers. And in doing so, have observed patterns of behavior that set apart those who are able to make it work.

This post is not meant to be a simple, how-to guide, but more of a collection of best practices. Everything listed takes a lot of time to master, but are certainly attainable.

In addition to our own experience working with small law firms, we also sought out the insight from experts in the industry to flesh out our thoughts. This article is the collection of insight pulled from our experience with small firm lawyers, and a series of interviews. The following all contributed heavily to this content and we are very thankful for their insight:

  • David Frees
  • Rachel Rodgers
  • Jared Correia
  • Lee Rosen
  • Joshua Lenon
  • Josh Brown
  • Cat Moon
  • Michael Downey

This article focuses mostly on the business management of running a small law firm. The number one priority in succeeding as a small law firm, is that you serve your clients well as a lawyer. We’re not here to tell you how to do that.

However, everything listed below will help you have more time to do that and more clarity to serve those clients well. And when you combine that great service with air tight business practices, you’re headed for success.

Unfortunately, many small law firms fail because of mistakes made on the business side. This guide should help avoid it. The following are what successful small firm lawyers do to build great practices.

1. Successful Small Firm Lawyers Manage their time Relentlessly

We already talked about it, but when you are working to be the best lawyer you can possibly be and at the same time trying to operate a small business you have to be absolutely relentless about time management.
One way to do this is to assign value to all of your tasks. Track this for a week and see how your time was allocated. Many times, when you do this, you’ll find that much of your time is spent on tasks that can be automated or outsourced for $40/hour or less.

Josh Brown learned this lesson from franchises in his work as a franchise attorney: “In the world of franchising you learn to do what is simple, repeatable and profitable,” he says. In contrast, when he looked at his law practice, he saw complexity and anxiety, unpredictability and a constant chasing after the dollar. (Read More: https://www.attorneyatwork.com/overworked-first-steps-delegating/)

Once you’ve identified where you are wasting time and committed to better time management, you have to come up with a plan of what you want.

2. Successful Small Firm Lawyers Create a Game Plan to Prioritize What Matters

michael-downey

The only possible way to make better use of your time is to do the hard work of defining exactly who you want to be as a lawyer and what you want for your practice.

Michael Downey, who has advised lawyers for many years says law firms waste a ton of time chasing bad clients because they don’t define who they want to be.

“The key to time management is to see the big picture.” Downey says, “And the way to do that is to plan your day and what you want to accomplish. Then you have to figure out what you want your practice to be. Being able to figure out what’s an opportunity and what’s not an opportunity. Being willing to turn away work that doesn’t fit with what you do, which is really hard for a lot of lawyers.”

3. Successful Small Firm Lawyers Master the Psychology of Narrow Marketing

dave-frees

Being selective with who you serve sounds nice, but it’s also terrifying. What if no opportunities come through the door?

Dave Frees says the entire key to success in a law firm is defining a very specific narrow focus and learning exactly what they want. For him, it’s a trust/estates practice in Pennsylvania where he is serving men and women between the ages of 52-67 with a net worth of $3-$30 million.

This narrow focus allows several things:

  • More profitable clients because you have an expertise and can charge more
  • Easier to find clients because your marketing is focused
  • Easier to deliver services because you are doing the same thing each time
  • Easier to get referrals because your clients will talk to their friends

But as we learned in point #2, small firm lawyers can easily get sucked in to taking every opportunity that comes their way. Here’s what Dave Frees says about the psychology of a narrow focus:

“This is definitely a mindset issue for lawyers because counterintuitively, narrow almost always outperforms broader. And when you are broad, you are dooming yourself to the lowest, least profitable work.” (Read more from the interview with Dave Frees: http://kahunaaccounting.com/niche-marketing-for-small-and-solo-law-firms/)

4. Successful Small Firm Lawyers Generate Their Own Momentum

lee-rosen

Arguably the biggest challenge in a small law firm is finding momentum. You have nobody there to get the clients for you or to deliver the service for them.

If we’re agreeing that a consistent pipeline of opportunities is a huge relief for time management issues, the next question is how to generate this momentum.
Rosen says the magic is in taking action.

“And the thing that people need to be doing is the hard stuff like cold calling prospective clients or referral sources. It’s scary because you put yourself out there and take a risk.
But that’s where growth happens and that’s what you need to be doing.

The easy stuff won’t help you grow. So there is a need for less thinking and more doing – especially doing activity that makes a real difference.” (See more from the interview with Lee Rosen: http://kahunaaccounting.com/the-only-action-that-really-makes-a-difference/)

5. Successful Small Firm Lawyers Develop the Systems to Scale

As you grow, new complexities will come. You are in demand, you have employees to manage and the business side of things only grows more complex.

Rachel Rodgers had this problem as her firm started to gain traction. Unfortunately, there is no easy answer for this beyond discipline and effort.

“I almost had a breakdown, then I hired a company and we took 6 months to document everything in the firm and begin to systematize.”

Now Rodgers has a virtual team all over the country and multiple products she sells that allows her to be paid without trading time for money.

It all started with building systems. She took an overall assessment of the firm and documented the process so she could hire other attorneys to deliver and outsourced everything else. (Full interview with Rachel Rodgers:http://www.trepxgroup.com/trepx-podcast-rachel-rodgers/)

6. Successful Small Firm Lawyers Delegate Everything They Can

time-img

As stated above, for a small firm lawyer, time is the most precious resource. When you have broken down all the tasks you need to do in a day, you realize how many of them have to be done, but aren’t worth your time.

Fortunately, almost anything can be outsourced today. This is a much preferred option, according to Lee Rosen, to hiring an employee to take care of these tasks.

He uses as an example bookkeeping services.

“So many law firms have a bookkeeper, who is of course not managed, because we don’t do that, and so the bookkeeper does whatever the bookkeeper is going to do on whatever schedule the bookkeeper is going to do it.
If you hire a professional bookkeeper like Kahuna, who owns their own business, and packages up this service and clearly defines they’re deliverable, and you go buy that deliverable. Now you don’t have to manage that employee, they have to manage their employees.”

This applies not only to bookkeeping, but marketing, social media and many other tasks that need to be done. Another way of putting this is that there are a multitude of hats that need to be worn by someone. Instead of wearing them all, think about how you can wear as few hats as possible, while still accomplishing all the essentials. For more on this concept, check out this valuable article by Tom Lambotte at Global Mac IT: “The Hidden Cost of Wearing the IT Hat.”

When you run into a road block or finding yourself wasting time, ask the question, “Can this be outsourced?”

7. Successful Small Firm Lawyers Speak the Language of Business – Accounting

For a law firm to succeed as a business, you have to know your numbers. Numbers are the lifeblood and the scorecard in a business.

We have seen again and again, lawyers who are on the brink of collapse because they aren’t capturing the profits they should.

This comes from expenses leaking out for no reason, a failure to collect all that’s owed and just an overall lack of financial insight.

If you hope to get a handle on the business side of things, you need to at a minimum have financial reports every month and a basic understanding of what those financial reports mean.

A great place to start is with your Profit and Loss (http://kahunaaccounting.com/your-business-financial-reports-what-to-look-for-accounting-clarity-for-entrepreneurs-series-2/) and Balance Sheet (http://kahunaaccounting.com/what-to-look-for-on-xero-balance-sheets-accounting-clarity-for-entrepreneurs-series-3/).

And as Lee Rosen said, if you can’t get those reports, outsource your bookkeeping!

8. Successful Small Firm Lawyers Cultivate the Entrepreneurs’ Mindset

As a small firm lawyer, you are an entrepreneur whether you identify with that term or not. And as an entrepreneur, one of the critical components is being able to function well in uncertainty.

Jared Correia says lawyers get stressed and overwhelmed at uncertainty and it can cause you to be reactive instead of proactive. He recommends creating a plan and goals to help keep your eyes on the big picture.

I think the reason looking ahead is stressful is because it is uncertain. You’re never going to be able to apply exact certainty to the future.

What I like to suggest is a business plan where you set up goals and create a mission statement.

It should talk about what your firm is and what it means to you.

If you know what your mission statement is, you can follow through on it.

If you have 5 goals to work on, you can achieve them or make progress toward them. (Read more from the interview with Jared Correia here: http://kahunaaccounting.com/jared-correia-part-2-seeing-a-bigger-picture/)

Once you have a plan and mission in place, you can be clear on what you want to accomplish and you’ll be way ahead of the game in being a small firm lawyer. And most of all, as you cultivate the entrepreneurs’ mindset, you need to remember it’s not about you.

“The key thing about an entrepreneur is, they’re outward looking,” Dave Frees says. “They’re trying to figure out who’s my market? Where’s their pain? How do I eliminate that? how do I then give them pleasure on top of that or some level of happiness that they didn’t have before? And if I do that for them, what would that group be willing to pay me, and is it enough? Can I make a profit doing it, so that I could deliver that relief of pain and happiness and still keep money for myself, build a team, and keep myself happy doing these things?”

And figuring out the answers to those questions is how you can be successful as a lawyer and an entrepreneur.

Want more insight?

You may want to check out our free guide on how successful law firms are supercharging their back office to save time and gain greater insight. (http://kahunaaccounting.com/small-firm-bookkeeping-back-office-report-1/)

Original Post: http://kahunaaccounting.com/how-to-manage-the-business-of-a-small-law-firm/

mickydemingAbout the Author: Micky Deming is the Director of Business Development at Kahuna Accounting. Kahuna serves hundreds of law firms all over the country taking care of their bookkeeping so it’s simple and insightful. Kahuna was recently recognized by Xero as their Accounting Partner of the Year for 2016 for leading the way in virtual accounting services.