How to Develop and Grow Your Law Firm as a Business
June 13, 2023
When people ask what you do for a living, your first response is likely, “I’m a lawyer,” or “a partner at my law firm.” But how often do you answer, “I’m a business owner?”
Most of your job training revolved around taking the LSAT, going through law school, passing the bar exam, joining a firm, and staying current in your area of expertise. And as important as all that legal training is, the truth is that as you climb the ranks and rise to the top, your title as “business leader” is just as important as your title as “lawyer.”
As law firms compete for new clients, seek greater profitability, reach for growth, and strive to be more productive, having strong business acumen is paramount. But those skills aren’t always a focus in law school, so we put together this article.
In this guide, you’ll find a complete checklist of to-dos if you’re looking to expand your law firm, bring in more money, and run your practice like a well-oiled business.
Analyze Your Current Metrics to Know Where Your Law Firm Stands
Before you can define a path to where you’re going, you need to know where your firm stands today. As a first step, collect key data that will help you understand how your law firm is currently performing and where there might be room for improvement.
Determine your overhead cost
- Staff salaries
- Office space and equipment
- Software fees
- Professional associations
- Taxes and licenses
- Professional services like accounting and payroll
Track all hours spent working on cases, regardless of how you bill
- Billable hours, categorized by billable rate
- Flat fees
- Contingency cases
Analyze profitability by case
- Which practice areas collect the most profit?
- Which types of cases take up too much time with little payout?
- Which clients pay their bills quickly, and which invoices are still open?
Measure staff performance
- Who at your firm tracks the most billable hours? The least?
- Which partners bring in the most new business?
- Where are there gaps in productivity?
Gleaning Insight from Your Legal Software
Smokeball’s Law Firm Insights offer powerful learnings that help you understand your firm’s cost of doing business, profitability, and team performance in one streamlined platform. By directly pulling data from Smokeball’s automatic time-tracking, legal billing and legal workflow software, Law Firm Insights makes your law firm’s data readily available and easy to understand.
Take Inventory of Your Current Legal Clients
A law firm is nothing without its clients. As you think about how to expand your business, it’s important to consider which clients have been the best fit in the past, and how to bring in new prospects. Some of this identification is subjective, but the objective qualification will help your entire legal teamwork smarter.
Define your ideal clients
- Who is your ideal client? What are their identifying traits?
- Which practice areas are the most successful at your firm?
- Which case types are most successful at your firm?
Nurture existing clients
- How do you currently communicate with clients, and are there opportunities to streamline and improve?
- Do you have clients that have the potential to be repeat customers? How can you maintain long-term relationships with them?
Review your lead intake practices
- How do you find new clients today?
- Are you accurately targeting your “ideal” client in your marketing and referral tactics, or are you casting a wide net?
- How do you communicate with prospective clients? Are there opportunities to keep them better informed throughout the onboarding process?
- Are there opportunities to expand your firm’s practice areas?
Streamline your lead management and client intake with legal software
Smokeball’s firm insights show you which areas of law and cases are the most profitable for your firm to help you identify your ideal clients for better marketing and targeting.
Once you’ve brought new potential business in the door, Smokeball’s legal lead management and client intake software organizes and tracks your potential clients or leads, so you never miss an opportunity. And when you’re ready, onboard prospects easily, providing a smooth experience they’ll remember and want to share with friends.
- How Legal Client Intake Software Benefits Different Areas of Law
- Legal Intake: What to Know and How to Improve with Legal Tech
Create SMART Goals for Your Legal Team
Now that you know how your firm is currently performing, it’s time to think about where you’d like to go in the year(s) ahead. If you want to expand your law firm, how do you plan to get there? What does growth look like to you?
SMART goals set you up for success by giving you clarity, focus and structure.
- Specific: How much revenue do you want your firm to earn? How many hours do you want to work or how many billable hours per day do you want each fee earner to hit? What kinds of clients would you like to have?
- Measurable: Which KPIs (key performance indicators) will you track to understand your performance better?
- Achievable: Do your goals encourage you to reach beyond your current state, yet still feel realistic?
- Relevant: Are your goals worthwhile? Do your goals match your firm’s needs?
- Timely: Is your timing right? What needs to happen to create the right environment to achieve these goals? What timeline do you give your legal team to achieve these smart goals?
Develop Your Law Firm's Key Performance Indicators (KPIs)
Once you’ve set qualitative goals for the year ahead, it’s time to develop your Key Performance Indicators (KPIs). KPIs are measurable values that enable you to make informed, data-driven decisions and ultimately meet your goals.
Below, you’ll find important metrics that all law firms should consider tracking, as well as practice area-specific goals.
General/Multi-Practice Law Firms
- New Client Acquisition: The number of new clients onboarded across all practice areas.
- Conversion Rate: The percentage of leads or consultations that turn into actual clients across all practice areas.
- Revenue per Client: The average amount of revenue generated per client across all practice areas.
- Practice Area Distribution: The breakdown of revenue or client distribution among different practice areas to identify areas of strength and opportunities for growth.
- Client Retention Rate: The percentage of clients who continue to work with the firm across all practice areas over time.
- Referral Rate: The number of new clients acquired through referrals from existing clients or other professionals across all practice areas.
- Marketing ROI: The return on investment for marketing efforts across all practice areas, measured by the revenue generated from marketing activities compared to the cost.
- Conversion Rate Optimization (CRO): The process of improving your website's ability to convert visitors into leads or clients across all practice areas.
- Client Satisfaction: The level of client satisfaction with the firm's services across all practice areas as measured through surveys or recorded feedback.
- Average Response Time: The average time it takes for the firm to respond to client inquiries or requests across all practice areas.
- Employee Utilization: The measure of how efficiently the firm utilizes its staff and resources across all practice areas.
- Cost per Lead: The average cost associated with acquiring a lead across all practice areas, which helps evaluate the efficiency of marketing campaigns.
- Case Cycle Time: The time it takes to complete cases from start to finish across all practice areas.
- Profit Margin: The percentage of revenue that represents the firm's profit after deducting all costs and expenses across all practice areas.
Estate Planning Law Firms:
- Average Case Value: The average value of each estate planning case or transaction.
- Estate Plan Completeness: The percentage of estate planning cases that result in a comprehensive and finalized estate plan.
- Number of Transactions: The total number of real estate transactions handled by the firm.
- Average Transaction Value: The average value of each real estate transaction.
- Time to Close: The average time it takes to complete a real estate transaction from start to finish.
- Market Share: The firm's percentage of the local real estate market in terms of transactions or value.
- Case Success Rate: The percentage of criminal cases won or resolved successfully.
- Average Time to Resolve: The average time it takes to resolve a criminal case.
- Settlement Amount: The average amount of settlement or compensation achieved for personal injury cases.
- Case Success Rate: The percentage of personal injury cases won or resolved successfully.
- Average Time to Settlement: The average time it takes to reach a settlement in personal injury cases.
- Case Success Rate: The percentage of civil litigation cases won or resolved successfully.
- Average Time to Resolution: The average time it takes to resolve a civil litigation case.
- New Business Clients: The number of new business clients acquired within a specific time period.
- Revenue per Client: The average amount of revenue generated per business client.
- Client Retention Rate: The percentage of business clients who continue to work with the firm over time.
- Revenue per Client: The average amount of revenue generated per family law client.
- Case Success Rate: The percentage of family law cases won or resolved successfully.
- Referral Rate: The number of new family law clients acquired through referrals from existing clients or other professionals.
Legal Software that Delivers Custom Insights for Your Firm
No matter your practice area, Smokeball’s Law Firm Insights offer the data and reporting you need to improve your firm’s financial health and team performance, build more informed strategies, and exceed your company goals.
Devise and Test Your Legal Marketing Strategy
Once you understand your ideal client and know how to track success, it’s time to think about a strong marketing strategy that will bring in new leads. As with everything these days, the future of marketing is digital—so think about how you can form online connections that will drive in-person relationships.
68% of legal clients prefer virtual meetings-Source: State of the Law 2023: The Great Automation
- Marketing initiatives to consider
- Website and landing page optimization
- Digital advertising
- Legal marketplace listings
- Social media
- Digital content: blogs, white papers, case studies, videos
- Podcast appearances
- Outdoor advertising, print, TV, radio
- Direct mail
- Speaking engagements
- Word of mouth
- Build a marketing team
- Research and hire an agency that can handle marketing externally.
- If possible, hire a dedicated marketing staff for your firm.
47% of law firms have an internal marketing department
46% of law firms build and maintain their website internally
Delegate, Automate, Eliminate Tasks in Your Legal Workflows
You’ve analyzed your firm’s performance, set your goals, and put together a growth strategy. Now who’s going to get all of this work done?
This is where workflow management comes in. Helping your team understand who’s responsible for what is crucial in helping you achieve success this year and beyond.
- Update job descriptions so that each team member understands their role
- Set individual goals for each staff member that relate to your firm’s overall objectives
- Schedule regular performance reviews, using data to inform pay raises and promotions
- Leverage your legal software to help you track team performance.
- Create legal workflows to help the team collaborate transparently and in a streamlined, timely fashion, allowing individuals to take ownership of their tasks.
Legal practice management software drives team performance and efficiency
A case management tool like Smokeball helps you automate your team’s tasks from start to finish. Our legal workflow software helps you manage all your tasks, reminders and calendaring with Smokeball's preconfigured and customizable workflows. And with our legal reporting tool, you can track which team members are most productive and who needs to improve their billable hours.
- “What is Legal Case Management Software?” eBook
- How Case Management Software Can Help Your Law Firm Project Manage
- Automating Legal Case Management at Your Law Firm
- “Getting Automated: An End-to-End Guid to Law Firm Automation” eBook
Revise Your Law Firm's Business Plan
Once you’ve analyzed your KPIs and gained insight from other metrics, it’s time to revisit your business plan.
- Use data to inform your mission statement
- Adjust core values to align with your revised mission
- Determine what sets you apart
- Outline your firm’s structure and ownership
- Include your firm’s history
- Analyze your marketplace
- Determine your target market
- Assess your competitors
- Include financials (Use the metrics you’ve collected to create more accurate projections!)
Stay On Top of Legal Trends
When it comes to business planning, your work is never really over. As you work to expand your firm over the next year, it’s important to stay on top of new industry trends as they emerge. Here are a few ways to make it happen:
- Understand the tech landscape
- New legal technology emerges all the time, and it’s important to understand the latest and greatest. Download our latest report, The Tech-Stacked Firm, to find out how technology is changing the legal industry in 2023.
- Stay on top of legal marketplaces.
- Legal marketplaces help clients find legal talent. Keep your listings updated and review the competition to find out how other law practices in your area market themselves.
- Manage your online reputation.
- 10% of law firms use a reputation management tool to track their presence online. Be sure to track client reviews and social media comments to understand how your firm is perceived by customers.
- Invest in CLEs.
- Ensure that your team stays up to date on CLEs and offer other professional development opportunities that help your team advance their careers.
Learn more about Smokeball document management for law firms
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