How to Run a Small Law Firm

How to Run a Small Law Firm (and Staff) to Increase Profitability

Managing a Law Firm

Managing a law firm isn’t easy — even if you’re successful. Law firms that have thrived as solo or small enterprises and are ready to venture into midsize law firm territory sometimes face many serious challenges. And when they’re ready to move past working with just one or two employees and venture into midsize law firm territory, they face many serious challenges. Let’s take a look at a few barriers that stop transitioning law firms.

Team Zero. For law firms that want to grow from small to midsize, having a solid team is critical to making the transition. Core team members are individuals who have specialized knowledge in sales, customer service, management and process/systems development. But because many lawyers running small law firms are so accustomed to doing everything themselves, they stumble when it’s time to put together a team that will help their law firm grow. And oftentimes, they wait until it’s too late to put together a larger and more skilled team.

No Market Knowledge. Once a small law firm attempts to compete on the field with midsize law firms, they are competing with more experienced and better resourced law firms that fully understand the market. When it comes to running a small law firm, many lawyers are targeting clients simply based on guts, hunches, intuition and a very cursory knowledge of what exactly the market for their legal services wants and needs. Failure to research market dynamics and focus on niche offerings may make it difficult to successfully transition from small law firm to midsize law firm.

Bad Systems. The systems, processes and technology used by midsize law firms can be very different from what’s used by a solo or small law firm. Many small law firms patch together systems, processes and technology when there are only one or two employees, but once they begin to hire more people this can lead to chaos. With legal practice management software, you can replace multiple systems with one and manage your law firm more efficiently. When technology is outdated and cumbersome, this can have a huge cascading effect when 10 employees are involved instead of just two.

In this guide we will explore just what law firms need to do to avoid the many challenges and obstacles that could stop a law firm from successfully transitioning from small to midsize and share tips on increasing profitability.

Developing Systems and Processes

WHAT IS A PROCESS?

A process is a system for completing a task that can be done the same way repeatedly. When law firms are small, they often have few formal “systems” in place. And because there are few formal systems in place, each employee may have developed their own system. When they leave no one may be aware that the system works and/or they may be unable to use the system.

This might go unnoticed at a firm with 2 or 3 people, however, when law firms grow from small to midsize, there’s a huge risk in allowing every employee to create their own system for every task because failing to establish formal systems in a midsize law firm can create inefficiencies and reduce productivity.

It’s important to realize that every task you complete at your law firm needs a process. You need a process for tracking associates’ time. You need a process for tracking client/attorney communication. You need a process for billing your clients. All of these tasks are things that are done over and over by employees  in your law firm, and when you grow from small to midsize, you need a process that everyone can use so that you can get uniform results.

For example, the last thing you want are 20 different associates submitting their time-tracking in 20 different formats. This same principle applies to every legal tasks and workflows at your law firm. If you want to successfully grow from a small law firm to midsize, you must seek out process and system solutions that work for your law firm. Most case management software offer turnkey systems and processes for many of the everyday law firm tasks — legal time tracking software, calendaring software for law firms, legal billing software, legal document automation and assembly and more.

In the case of time tracking, Smokeball automatically tracks your associates’ time while they’re working on a matter within the system so that the associate doesn’t have to spend time manually tracking activity and can focus on other tasks. Today’s technology is here to help establish systems and processes and each software offers different features that may or may not benefit you. This is why it is worth taking the time to research and write out “5 Questions to Ask in Your Software Demo.”

HOW PROCESSES HELP YOUR FIRM GROW

Efficient processes can help your law firm increase productivity and profits, and they can help you keep valuable employees from leaving because they don’t feel overwhelmed or unorganized. No one wants to work at a law firm that has inefficient or nonsensical processes if they don’t have to. Let’s take a closer look at what implementing strong systems and processes can do for your law firm:

  • Save time on repetitive tasks. There are many repetitive tasks that can be automated to a certain extent, such as document assembly. Law firms hiring new staff should take advantage of law firm software that automatically populates client and matter data into necessary documents so that associates don’t have to manually do it.
  • Reduce errors with automation. Anytime an associate or assistant is tasked with repetitively doing something, the chance of an error being introduced increases significantly. Whether it’s a simple typo or something more obvious like submitting the wrong document, implementing the right processes, with the right systems, leads to fewer mistakes.

  • Allow you to delegate repetitive but important tasks to other employees. Once you have simplified a process for completing a task, sometimes you can hand off that simple task to others. This saves you money. And using a case management system allows you to track and assign tasks, set reminders and keep everything tied together in one place.

  • Make it easy to train employees on existing systems. Once you begin to expand beyond two employees, having effective processes in place make it easier to train new hires. For example, Smokeball has an award-winning onboarding process that makes it easy to master the many helpful features.

If a law firm is growing from small to midsize, implementing strong systems and processes BEFORE hiring new employees and expanding services is critical to having a successful transition. Failure to implement strong systems and processes could cause you to lose money because new employees are too busy trying to create their own processes and/or they’re using inefficient ways to get things done.

Building a Strong Legal Technology Foundation

Small law firms transitioning to midsize often have outdated technology infrastructure that’s badly in need of an upgrade. However, it can be challenging for law firms to make this technology transition while also growing and focusing on their business. Because technology is so important to our daily life, there are a few best practices every transitioning law firm should take into account to build a strong technology foundation.

TAKE INVENTORY OF YOUR NEEDS

Before you purchase your next software tool, take stock of your law firm’s needs as you transition from a small firm to a midsize one. Ask these questions:

  1. How many law firm employees will you have? Once you expand beyond one or two employees, you need software solutions that are scalable and that make it easy to train each employee. Case management software like Smokeball is designed to work well with companies that are small and big so there’s no problem scaling up when necessary. And with award-winning legal tech support with free training and a dedicated account manager, you and your staff will know how to use the software.
  2. How many locations? The last thing any growing law firm wants to do is juggle multiple documents on a physical drive. And if you have more than one location, your important documents and other information should be easily accessible from anywhere; paper files are not ideal for this and many other reasons. This is why using software tools that leverage cloud technology to securely store your data is a smart move especially as you transition to a midsize law firm.  Smokeball is secure cloud-based practice management software that stores your data so that you can access it from anywhere — another office location, while you’re in the courtroom, or while you’re on the go — and you have unlimited storage so you’ll never run out of space.

  3. What type of invoicing system do you need? As your law firm grows from a small practice to a midsize one, dealing with multiple cases and clients simultaneously can make invoicing manually a cumbersome and time-consuming process. But Smokeball attorney billing software uses invoicing systems that are fully integrated into the time-tracking system making it easier for law firms to issue accurate and timely invoices to clients without the process eating up too much time. Also, if you haven’t already been offering to take credit cards or set up payment plans through our legal software integrations with LawPay and more! As a business scales and you’re working with more and more clients, being able to offer payment options could ultimately impact if they choose to hire you.

  4. What kind of time tracking system do you need? If your growing law firm is using a manual time-tracking system, it’s time to make a change. With Smokeball, you’ll never start and stop multiple timers with our automatic lawyer time tracking software. Now that you’re managing a staff, you’re going to need to know how they are spending their time, what they are billing for and where they can improve. Midsize law firms that depend on manual time tracking-systems can become bogged down in handling too much paperwork and dealing with errors. This is why the automatic time and activity tracking in Smokeball makes it easy to track what your staff is working on because it’s all done automatically and all tied back and saved to the matter. This means that there are fewer errors and less time loss due to misplaced time-tracking notes — which means more billable hours and revenue for your business.

  5. How will you use calendaring and task management systems? As a law firm grows, there must be an easy way to maintain legal calendars and give everyone at the firm access to that information. Smokeball’s legal calendar has week, work week and month views as well as a timeline. Once an event is in the calendar, you can see that specific matter and access the entire client file from any calendar event. Plus, you have full visibility in your staff’s calendar, so you can stay in the loop on everything at your firm.

  6. How are your current systems benefiting/failing? If there are systems currently working for your law firm, you need to choose software that has robust integration capabilities so you can continue using something familiar and comfortable. Smokeball connects to dozens of software solutions such as Microsoft Word, Microsoft Outlook, LawPay, Quickbooks and more.

For small law firms that are expanding and making the leap into the midsize arena, building a strong technology foundation with adaptable software that can grow with you is critical.

Law Firm Recruitment and Hiring

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As your law firm grows from small to midsized, there are some key ways that you will need to adapt your hiring and recruiting strategies.

Focus On Talent

Small law firms typically focus most of their energy into growing the number and quality of clients. But as a law firm grows, they will need to shift some of that focus to hiring more quality associates who can take on the increased number of cases coming through the door. Having the right number of quality associates on your team will be a key factor in determining if you can successfully transition to a midsized law firm. Having a robust team will allow you to take on larger cases that bring in more revenue but also require a lot more people to handle the matter.

Recruiting Sources

For both small and midsized law firms, the best source for high quality new hires is employee referrals. However, as a law firm grows it is compelled to depend on outside sources to help it fill staffing needs. This is when quality can suffer if the candidate sources are not thoroughly vetted. Reach out to other lawyers for  recommendations on which recruiters, job boards and professional organizations/networks are the best sources for finding quality people. At this stage there are many benefits to working with an experienced legal recruiter who has an existing network of potential candidates in your practice area.

Good Law Firm Marketing & Branding

Once you begin to seek out candidates for your growing law firm, you must remember that you will also be judged on your firm’s brand, image and reputation. Make sure that your branding material such as your law firm website and social media has clear and accurate information about why it’s a good place to work for lawyers and other legal professionals. You may even want to include quotes from former employees or link to reviews left by former employees on a third-party site if most of those reviews are positive.

Competitive Compensation

Compensation is one of the primary deciding factors in whether someone wants to work with your law firm. As you grow from small to midsized, you must do your research about compensation packages offered by competitors. What are other law firms in your practice area and region offering associates and support staff? Can you top it? Or, can you at least match it? If you find it difficult to match or top prevailing compensation packages in your practice area and region, think about how you can offer other incentives that may be just as enticing such as extra paid time off or other perks like being able to work remotely since you’ll have access to all your firm files with your lawyer mobile app and legal case management software.

Training Law Firm Staff

Training your employees is one of the most important parts of successfully transitioning from a small law firm to a midsized one. But what often happens is that both trainers and trainees become frustrated in transitioning because too many assumptions are made about a new hire’s knowledge, and training sessions are not structured in a way that is pace appropriate. That’s why there are a few common mistakes transitioning law firms should avoid and few best practices they should adopt.

Mistake #1 – Focusing only on the ‘how.’  Too many transitioning law firms focus on how to train new employees but fail to convey to their new hires why they are learning something and how that knowledge will help them do their jobs.

Best Practice #1 – Focus on the ‘how’ and ‘why.’ When you begin training your new employees, focus on conveying to them why they should learn a new system or process and let them know why that knowledge is important to doing their jobs effectively.

Mistake #2 – Cramming in too much information. To many small law firms transitioning to midsize fail to give their new hires enough time to learn new information. They may try to give information all at once and/or they may expect that new hires completely understand the information in too short of a time.

Best Practice #2 – Pace yourself. When you’re training new hires, give them at least 30 days to learn new information and 90 days to effectively implement it. Keep in mind that it can take longer for some people to master a system or process. Have patience and don’t do it all alone.

Mistake #3 – Not having proper support. Many small law firms have partners who wear many hats including the trainer hat. This simply won’t work as you transition to a midsized law firm. There’s no way that partners or associates have the time or knowledge to train new hires on everything they need to know to do their jobs.

Best Practice #3 – Have a dedicated trainer who can help onboard new hires. And when you buy a new technology solution such as case management software, make sure that the company offers training support. Smokeball offers dedicated account management and award-winning client support with onboarding and training so your new hires can work with your Smokeball team to learn the software and systems (which means you can focus on practicing law).

Mistake #4 – Failing to improve. Making the leap from having no training process to having a basic training process is so huge and difficult that some transitioning law firms may stop there. This is a mistake because training processes are living systems that must evolve as needs change.

Best Practice #4 – Get feedback and change when necessary. Always get feedback from new hires about their training experience with your law firm and implement changes based on what they’ve said. If you can implement a comprehensive and effective training process, you can reduce new hire frustration and turnover so that you can effectively transition to a midsized law firm. And when it comes to your law firm software, let Smokeball help train your new employees on your case management software.

Law Firm Risk Management

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Generally speaking small law firms are more likely to take reckless risks and still survive while midsized law firm who take the same risks face disastrous consequences. This is because small law firms have less to risk and have more flexibility to recover from mistakes. However, once a law firm begins to transition from a small firm to midsized, they will need to  implement effective risk management strategies so that all business decisions can be properly vetted to ensure that they benefit the firm and don’t put them in an unnecessarily risky position. Let’s take a look at two primary areas that transitioning law firms should consider—capacity and customer need.

CAPACITY

One of the main benefits of becoming a midsized law firm is that it allows you to take on larger (and more profitable) cases. There are some cases that small law firms can’t handle because of the matter’s complexity and the amount of manpower the matter requires. However, as transitioning law firms take on larger cases, they need to assess the profitability of those cases and their capacity to take on the larger cases without jeopardizing the rest of their business. In other words, can your law firm expand your capacity in a way that allows you to maintain your current clients and take on newer and more profitable ones?

CUSTOMER NEED

Some law firms transition from small to midsize because they want to begin serving clients in a profitable practice area. However, midsized law firms expanding into new practice areas must do a serious assessment of the real customer demand for any services they’re offering. Is the practice area really booming? What kind of services are the customers looking for and at what price point? Will serving this customer need allow you to do so in a way that is beneficial to the client and to your law firm’s profit line? Looking at quality data, you must take the time to determine if your plan to serve certain customers is as profitable as you think it is.

Achieving profitability as a law firm transitioning from small to midsized requires you to properly assess risk in a data driven way. But don’t try to do this without the assistance of professional tools such as Smokeball’s law firm insights which tracks the performance and profitability of your law firm by taking into account all of your staff’s time and activities whether the work is time billed, fixed fee or contingency.

When a law firm decides to grow from small to midsized, it isn’t just about getting big, it’s about increasing profitability. But law firms that want to successfully make that transition must consider how the way they do business today will impact their firm’s change.

How will they change the way they recruit, hire and train new employees? And how will they implement effective systems, processes and technology solutions so that they can professionally and efficiently service new clients while not getting bogged down with time-tracking, invoicing and overall case management systems that won’t work for a law firm that has more than a few employees?

Ultimately, if a law firm wants to grow and stay profitable, it must use the tools, strategies, systems and processes that work for a larger firm.