When creating a strategic plan to improve your business & practice, it is crucial to examine how you are managing the resources that help run your business
If you’ve been following this series, you’ve already read about a range of critical topics regarding strategic planning, notably why strategic plans are so vital to the future success of any law firm, how to plan the goals you want to accomplish within a strategic plan, as well as the importance of dedicating the necessary resources to accomplish your plan.
All of this is essential background, but now it is time to turn our attention to practical applications of strategic planning that will move your firm forward.
It is crucial that we recognize a few realities. Running a law firm means owning and running a business. That, in turn, means effectively managing the resources you need to keep your business running — not just the ones you need to help you practice law. Everyday work like managing your calendar and client contacts, handling client intake, bookkeeping, and collecting accounts receivable (AR) all require attention and resources. This could be your time and energy, that of a member of your staff, or maybe staff you contract for the job. But these tasks have to be done, and you, as the owner-operator of the firm, need to deploy the right resources in the right way to optimize how they are done.
As I’ve stated before, many small law firm partners are reluctant business owner-operators. It’s a feeling I can understand, as I remember how little my own legal education prepared me to run a business. Yet, if you’ve hung out a shingle or are running a small law firm, you wear both hats — that of a practicing attorney, as well as that of a business manager.
Managing your law firm means more than just deciding how you allocate billable work to your timekeepers. The 72% of firms who say they are challenged by spending too much time on administrative tasks are proof of this. Indeed, administrative tasks are those pesky things most law firms don’t spend enough time planning for, but they’re necessary evils. We could write volumes covering the myriad functions involved in making a modern law firm run and all the various iterations of roles that can handle these tasks. But that’s overwhelming.
Instead, let’s focus on a couple, narrower examples. For a starter, how much time do you spend thinking about who answers the phones at your office?
This may seem like a trivial concern, but in reality, who answers your phone and how they do it is central to determining what marketers would call your “conversion rate” — the number of potential clients calling in who actually end up hiring you and ultimately writing you a check.
The person answering the phone has to be able to:
- Communicate your expertise — This helps a potential client understand why they would want to meet with you or hire you. If this isn’t communicated effectively, you could end up missing an opportunity for work.
- “Qualify” the person on the other end of the phone — You need to know how serious the caller is about seeking legal help, whether their issues are those that you can competently handle, or how likely the caller is to actually meet with you and sign on. Without that information, you could end up wasting your time with a “prospective client” that never really met that definition.
- Articulate the value and brand of your business — There should be something about who you are and how you practice that makes you unique and gives you a competitive advantage in the eyes of potential clients. It’s more than just your expertise; it’s the benefit the client will get from working with you that they can’t get anywhere else. It’s your brand and value proposition. If your potential clients don’t get a sense that working with you will be better because of what you offer, they may keep shopping.
Let’s look at another example of a seemingly tactical thing that can have a much broader impact: how your firm handles collecting your accounts receivable (AR). Here again, there are very particular skills that must be managed.
- Provide good service by focusing on “soft touch” skills — The person collecting your bills represents you. How will how they do their job impact your clients’ perception of your business? In today’s world, bad reviews travel fast and at scale. A bad client experience with your firm’s AR staff could cause a serious hit on your reputation.
- Actually collect the money — It might seem obvious, but if you can’t collect the money you’re owed, you won’t stay in business for long. Think objectively about how well you understand your AR cycle time. If your collections process is inefficient, you’ll lose money and possibly more than that.
- Most of your business is repeat or referral business — Our research shows that small law firms rely on repeat and referral business as a key source of new work. How you treat your client today determines whether they will give you more business in the future.
So why talk about such seemingly tactical considerations when we’re discussing strategic planning around resource management?
Because these resources — you, your time, your staff, and their time — are the most valuable resources you have to manage. Mismanagement of even seemingly mundane work can cause a ripple of inefficiency throughout your firm, a problem that plagues 60% of small law firm leaders.
To address these challenges, begin by looking at who is doing these things today. Can they handle the tasks mentioned? These can be relatively easy hurdles to conquer, yet they’re vital to how you earn the money you need to keep operating. In this sense, I would characterize looking at these types of staffing questions as a 90-day goal.
Less time spent on administrative tasks leaves more time to serve your clients, earn a living, or find some work/life balance. To learn more about how better allocation of firm resources and improved efficiency can benefit your firm, I encourage you to download the white paper, Is Inefficiency Hurting Your Firm’s Profits? The Curable Problem Plaguing Today’s Law Firms.
The sooner you can identify where you have an imbalance in how you are utilizing the resources needed to run your business, the sooner you can improve your firm’s business model and profits.