Law Office Management: An Ultimate Guide
April 27, 2023
In addition to skillfully practicing law and representing your clients, effectively managing your law practice and client expectations is critical to the ultimate success of your business. For many lawyers, the task of managing the daily operation of their practice is one that is reluctantly handled, with minimal attention to human resource matters, marketing and business development, and financial and accounting matters. This guide will explore best practices and must-have resources and skills for effective law office management.
What Is Law Office Management?
Law firm management is the handling of the business side of your law office - beyond legal services. This includes:
- Office finances and budgeting;
- Legal marketing;
- Client relationship management;
- Benefits management;
- Bill collections;
- Hiring and onboarding;
- Human resource management;
- Facilities and vendor management;
Effectively managing the business aspects of legal practice is critical to attorneys’ ability to practice law.
Skills Needed for Effective Law Firm Management
Law school teaches people how to be attorneys, not how to navigate the legal industry or run successful law firms. Business skills differ significantly from legal skills, so it is important to learn what is necessary to run a law firm. You or your law office manager should have the following skills:
- Critical thinking;
- Employee motivation;
- Honesty and integrity;
- Time management.
Your law practice can be innovative and successful, using more modern management principles than the Cravath System that many large law firms still model. A powerful and productive law firm culture starts with you.
Law Office Manager vs Leader: Is It the Same?
Your business requires an exceptional leader and an effective manager - and these are two different things. Although both require effective communication and problem-solving skills, there are differences between law firm leaders and law firm managers:
- A leader sets a vision for a legal practice and guides them in the direction, while motivating and inspiring. They coach and encourage individuals and teams. A leader is constantly evaluating where an organization stands, where they desire to go, and how to get there.
- A manager does what’s necessary to make the vision happen, including hiring the team, solving problems, and having the difficult conversations. A manager focuses on achieving organizational goals and organizing available resources to get there.
Numerous law firm management books are available to educate and empower law firm management and leadership. Topics include professional development, project management, and delivering exceptional client service.
The Basic Organizational Structure of a Law Firm
A “law firm” can range from a solo practicing lawyer to a firm with thousands of lawyers. Leadership and management become more critical as an organization grows, and many law firms follow the same basic model. Generally, the hierarchy and structure of most successful legal practices include the following roles:
Usually an owner or part owner, managing partners oversee law firm management and run business operations, including handling financial matters. They track the productivity of other attorneys and staff and adjust roles as necessary.
Partners / Shareholders
Equity partners own a share of a law practice and receive a share of profits on top of their salary, while not participating in law firm management. Depending on the terms of a partnership agreement, partners may be required to bill enough hours to maintain their position, or risk being moved back down to an associate level.
Some law firms have non-equity partners, or income partners, who are at a higher level than associate attorneys, but do not have an ownership share in the law firm.
Associate attorneys work for a law firm without having an ownership share. Their work may be reviewed and overseen by partner attorneys. Typically, associate attorneys are less experienced than partners. Entry-level associates are often fresh out of law school and will earn more privileges, responsibilities, compensation, and partnership opportunities the longer they are with a law firm.
The role of a marketing director is to generate new business for the law firm. This can vary depending on the type of cases a law practice handles. For example, marketing for criminal defense attorneys is different from marketing for corporate law firms. Tasks involve website construction, search engine optimization, writing and editing content, social media marketing, managing Pay Per Click (PPC) campaigns, obtaining client testimonials and reviews, and fostering referral relationships. Some marketing directors work with PR firms to generate and distribute press releases when requested by law firm management.
Contract attorneys are hired on a temporary basis to handle specific tasks, which may or may not be outside the knowledge or experience of associate or partner lawyers. Firms outsource work to contract lawyers, who may handle work remotely or travel for temporary assignments. A contract attorney may be hired for a specific task, like a document review or appearing in court, or for ongoing work.
Paralegals help with administrative support for attorneys, specifically with legal work. Their scope of work can include:
- Conducting legal research;
- Drafting motions, judgments, statements, and other documents for attorneys;
- Interviewing clients;
- Maintaining records;
- Onboarding new clients (client intake process);
- Preparing attorneys for trial;
- Preparing clients for court appearances, depositions, and meetings;
- Preparing discovery materials;
- Reviewing documents and evidence.
Not all law firms have law clerks. In most law firms that hire law clerks, the clerks are either law school students or recent law school graduates who have not yet passed the bar. Their roles are similar to paralegals, but their end goal is different. Law clerks are often only employed seasonally, such as in the summer when law school is not in session.
Legal secretaries perform clerical and administrative work. As staff members, they may support attorneys directly, or work with paralegals. Many legal secretaries keep lawyers’ calendars and schedule client meetings, depositions, and court dates. Some legal secretaries have a receptionist role and may assist with billing.
Law Firm Administration Vs. Management – Don’t Be the Office Manager, Hire One
Law firms are businesses and partners are the owners upon whom the management responsibility falls. As a firm grows, the owners find themselves faced with a myriad of responsibilities in addition to their chosen field of representing clients in legal matters. Lawyers find themselves managing all aspects of a business, oftentimes reluctantly and not very well.
Most successful law firms are people-intensive businesses, with labor costs being the major overhead expense. One popular benchmark is that the average firm needs at least 1.4 staff for each attorney, taking a modest firm of 20 attorneys to a total size of 48 individuals. This size of enterprise needs an office manager or firm administrator. This position is generally responsible for five main areas:
- Finance and accounting;
- Human resources;
- Information technology;
- Marketing and business development;
- Office services.
While all of this daily activity must be efficiently managed, the firm must also be guided in its overall direction. This is the job of the managing partner, whose responsibilities include:
- Partner Relations and Compensation;
- Client Service;
- Marketing Strategy.
As a managing partner, you find yourself spending too much time on the first list, and too little time on the second, and all while your personal law practice is withering. You want to, and should, separate your executive management duties from the office administrative duties. Here are some ideas to avoid and manage the inevitable gray area between the two.
The 11 Best Law Office Management Tips
1. Hire a Competent Office Manager
Your office manager or firm administrator is a key position that will handle professional responsibilities of running the business side, allowing you to focus on practicing law. Since this person will be leading your staff, take time to find someone who is the right fit. This person should:
- Be able to make decisions and solve problems;
- Be an excellent communicator;
- Be organized;
- Take pride in the business;
- Understand how the business works.
2. Provide Clear Leadership
Effective law firm management starts at the top. The roles of employees of a law practice must be clearly established and communicated to the entire firm. The leader of law practice has unique law firm management responsibilities and must motivate the team, manage conflict and resolve disputes, and provide direction.
3. Establish Standard Operating Procedures (SOPs)
If you ever fly on a commercial airline, there is a real possibility the pilots that are flying you met for the first time that day. Airlines hire thousands of pilots and it is common for them to meet for the first time in the cockpit. How do they ensure any captain and first officer can safely fly together? Standard Operating Procedures (SOPs). SOPs work just as well for law firms to ensure that everyone that works for your law office has documented guidelines to follow. This provides instruction and guidance for new and temporary hires and accountability for existing employees. SOPs should be tailored to the type of law you practice and should cover daily tasks like:
- Calendar management;
- Client onboarding;
- Document review;
- Document storage;
- Legal research;
- Scheduling appointments;
- Tracking time;
- Trial preparation;
- Archival procedures.
The result of following SOPs is consistency across your organization. SOPs help firms succeed. It is beneficial to standardize processes and procedures before automating (next step).
4. Leverage the Technology
Technology can improve almost every aspect of your legal practice. Examples of common uses of technology in a client-centered law firm:
- Virtual meetings over Zoom or Microsoft Teams;
- Electronic billing with credit card payment options;
- Electronic document signing;
- Online document portals to upload and review documents.
5. Prioritize Time Management
Lost billable hours are lost revenue. Fortunately, thanks to advances in modern technology, time tracking is not nearly as time consuming as it used to be - in fact it is simple. Automatic lawyer time tracking software eliminates errors and frustration in time tracking and ensures billable hours are maximized. Even if you do not bill your clients hourly (such as charging flat fees, contingency fees, or subscription fees), both large and small law firms can benefit from understanding how time is spent.
6. Automate Legal Workflows
Collaboration doesn't have to be tedious or technical with workflow management. With workflow automation provided by legal practice management software, it's possible to assign tasks and set reminders for law firm owners, attorneys, and staff. Without automated legal workflows, you can stay organized and have the peace of mind that you will never miss filing deadlines or Statutes of Limitations.
7. Automate Legal Document Management
With automated legal document management and document automation, you can save hours of administrative tasks and effectively manage documents and digital storage. Manually entering client details, and copying and pasting client documents together makes you vulnerable to errors and confidentiality breaches. Using old PDFs of court forms risks not having the most current forms available. Fortunately, legal document management software can help you stay organized, and have the bandwidth for more clients.
8. Organize Productive Team Meetings
Meetings play an important role in bringing the team together and addressing questions and concerns. Depending on how other law firm management communications are handled, weekly, bi-weekly, or monthly meetings may be the right fit for your team. Meetings should only be as long as necessary, and should stay on topic and follow an agenda.
9. Think of Security Management
Whether or not clients think about data security when they turn over their most confidential documents to law firms, law firms absolutely must prioritize security. Maintaining confidentiality of information is also an ethical obligation for members of the American Bar Association (See Rule 1.6). Failing to secure data can have incredibly negative consequences including loss of client trust, lawsuits, and diminished reputation.
10. Opt for Regular Billing
Effectively billing your clients is critical to cash flow and your law firm’s success. No matter how you bill your clients (hourly, flat fee, monthly subscription, etc.), billing should not be a painful chore.
Invoice your clients frequently and easily with legal billing software that totals billable hours automatically. Your bills should be detailed, accurate, and consistent. Giving your clients easy ways to pay will ensure you are paid promptly.
11. Measure, Measure, Measure
Management guru Peter Drucker famously said, “you can’t manage what you can’t measure”. Law firm managers make decisions for their own law practice based on key performance indicators (KPIs). Some essential and easy-to-access measurements available to executive management include:
- Profitability (revenue per client and revenue growth);
- Client satisfaction;
- Billable hours;
- Overhead costs;
- Invoice payment;
- Trust account compliance.
Law Office Management: Final Thoughts
Improvements to your own law firm do not stop when you hire a manager. In fact, they become more important than ever, as the culture of your firm evolves and your manager sets the tone for the entire team.
Effective law firm management is attainable for any law firm. If you are ready to see how Smokeball’s legal practice management software empowers law firm managers to do their very best work and build a more profitable business, contact us to book a demo today.
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