| With the current economic downturn, a high level | | | | For every associate that is lost, the typical firm |
| of law firm dis-solutions have taken place and will | | | | loses between $100,000 and $600,000. Firms with |
| likely persist. Firms that were able to disguise their | | | | high turnover rates in associates or key staff |
| vulnerabilities during better economic times now | | | | members are far more likely to fail than firms |
| must come to grips with why their practices are | | | | with a stable and content workforce. Allowing a |
| struggling, and prepare for the worst. The silver | | | | culture of inadequate or ill received partner |
| lining to the current crisis may be the opportunity | | | | contact, not spending sufficient time on mentoring |
| to identify weaknesses and turn them into assets | | | | and employee development, and not offering a |
| by emulating the characteristics of successful | | | | healthy balance between work and personal time |
| firms - an effort that will benefit a firm | | | | contributes to dissatisfied employees. Successful |
| immediately by lowering the risk of failure and | | | | firms make a commitment to consistent and |
| providing the long term benefits of more | | | | skilled employee management and therefore |
| predictable growth and profitability. | | | | enjoy a high level of staff satisfaction and |
| There are six primary reasons practices fail. They | | | | retention. |
| are poor financial planning and money | | | | Running a law practice is above all else a business. |
| management, inadequate investment in | | | | Firms that focus too little on successfully running |
| technology, lack of effective leadership, | | | | and growing their practices have a higher |
| ineffective guidance of staff and associates, | | | | probability of failure. The inability to prepare and |
| inability to prepare and execute effective | | | | execute an effective marketing plan means you |
| marketing plans, and problems ensuring client | | | | are not establishing a brand that builds awareness, |
| satisfaction. In order to have a successful practice | | | | loyalty and trust. You should keep track of every |
| you must take a hold of all of these things - and | | | | marketing dollar you spend to be sure your return |
| now is the perfect time to do so. | | | | on investment is high enough for you to continue |
| Mismanagement of firm finances is the number | | | | using the marketing channels you are investing in. |
| one reason firms fail. Successful firms are far | | | | Differentiate yourself from the competition |
| more likely to have their financial house in order. | | | | otherwise people will have no reason to hire you |
| With all of the fraud and embezzlement scandals | | | | over the next guy. Successful firms exhibit their |
| rocking law firms recently, you want to be sure | | | | skills in effective marketing even when they are |
| to know where your money is going. Poor financial | | | | not actively seeking new clients. |
| planning activities include excessive borrowing to | | | | Incorporating new marketing techniques is a great |
| pay for expansion or to compensate partners, | | | | way to reach more potential clients. Social media |
| shouldering high levels of debt due to insufficient | | | | sites such as Twitter, Facebook and LinkedIn |
| capitalization, and not preparing detailed cash flow | | | | allow lawyers to market their services to potential |
| budgets and projections. If you are spending too | | | | clients by striking up casual conversations to get |
| much money on practices that don't bring in new | | | | to know them on a friendly basis. The use of |
| clients and not keeping track of these finances, | | | | new marketing channels is a great way to keep |
| you constantly put your firm in a dangerous | | | | your firm current and in the know. |
| position. Prepare detailed cash flow budgets and | | | | Clients don't generally express their discontent. |
| projections in order to track your expenses | | | | They often feel intimidated and avoid complaining |
| properly. | | | | directly. Yet dissatisfied clients are often the |
| Inadequate investment in technology hurts firms | | | | undoing of a healthy practice as repeat business |
| on a variety of fronts, including productivity, | | | | declines, receivables go down, negative word of |
| flexibility, employee morale, firm image, | | | | mouth swells, referrals fall, and most dangerously, |
| competitiveness and customer service - all critical | | | | ethics complaints are issued. Poor client service |
| issues for firms. However, the greatest single peril | | | | practices include not updating clients as to their |
| of underutilizing technology is risk, a significant | | | | case status, not interacting with clients to |
| predictor of failure for small firms. Successful | | | | sufficiently to gain their trust and build rapport, |
| firms generally invest wisely in technology to | | | | and not listening to their complaints. |
| ensure all office activities are streamlined with | | | | For successful firms, excellent client service |
| minimal risk exposure. Calendaring errors are the | | | | provides a significant competitive edge. One |
| number one cause of malpractice claims being | | | | practice of excellent customer service is |
| filed against law firms. | | | | answering your phone - like showing up, it is 80% |
| The ABA estimates that nearly 20% of all | | | | of your success. People want to feel important |
| malpractice claims involve missed deadlines or | | | | and if you don't return their calls promptly they |
| administrative errors. Because of this, many | | | | will feel as though you are not giving them your |
| insurance carriers require firms to invest in | | | | full, undivided attention. It is important to keep |
| electronic calendaring and docket control software | | | | communication open with your clients and send |
| systems, and will not write premiums for | | | | them an email or give them a call when |
| companies who do not have these in place. | | | | something on their case changes. Practice |
| Others offer discounts on premiums to those | | | | management software makes doing this fast and |
| who use practice management software because | | | | easy since all emails, phone conversations, |
| it greatly reduces the risk of malpractice suits | | | | matters and documents are stored together and |
| against your firm. | | | | attached to each client's name. Being organized is |
| Other poor technology practices include being | | | | key to being able to keep clients happy and in the |
| careless with data backup, not using firm-wide | | | | loop. |
| phone messaging software, performing conflict | | | | There are many common practices that lawyers |
| checks manually or depending on memory, and | | | | can implement to help turn this economic |
| relying on trust accounting software not designed | | | | downturn into a time of great opportunities. |
| for law firms (these don't offer strict safeguards | | | | Although painful, critically evaluate your practice |
| against overdrawing client funds and co-mingling | | | | and come to terms with what ails you. |
| accounts). | | | | Transforming your weaknesses into strengths |
| It is especially true for law firms that flawed | | | | may not be an easy or quick process but it will |
| leadership greatly increases the likelihood of failure. | | | | allow you to sail through financial upheavals that |
| Conversely, leaders who promote a common | | | | will knock down the less prepared firms - and |
| purpose, common goals and shared culture | | | | make you more successful in the long term. |
| generally preside over successful firms. Stephen | | | | Implementing practice management software is a |
| Covey said, "Management is efficiency in climbing | | | | surefire way to combat poor practices. It allows |
| the ladder of success; leadership determines | | | | you to take control of your practice by eliminating |
| whether the ladder is leaning against the right wall." | | | | double entry and significantly reducing the risk of |
| Poor leadership practices include alienating | | | | manual errors, all helping to lower malpractice |
| associates and staff with an autocratic style, not | | | | risks. Practice management software allows you |
| establishing a clear and powerful direction for the | | | | to eliminate paper files and consolidate all of your |
| staff, not keeping staff well informed and not | | | | office software: calendaring, case management, |
| reconciling incompatible goals among partners. | | | | document management, document and form |
| When employees do not know the long terms | | | | productions, billing, and accounting. This leaves you |
| goals of a firm it leads to ineffective | | | | spending less time on administrative tasks and |
| communication in day-to-day interactions. | | | | more time on billable projects. |