Law Firm Management 101 for the Modern Firm
Lawyers are trained in legal representation. But managing a law firm? That's an entirely different discipline. Learn the basics of law firm management below, including the traits of a good law office manager, best practices, and the top law firm management tools.
What Is Law Firm Management?
Law firm management is the set of processes required to run a law firm as a business. Those processes include business planning, financial management, branding and marketing, vendor relations, and hiring, paying, and training employees.
Even solo lawyers need to know how to manage a law firm as a business. A one-lawyer firm still needs a business plan, marketing, and a system that streamlines case management. Larger firms will have more complex business needs, such as branding guidelines, customer service programs, compensation strategies, and employee development programs.
Why Is Good Law Firm Management Important?
Strategic law firm management is critical to a practice's success—and growth—over time. Without reliable business processes, the firm can flounder in many ways. For example:
- Administrative tasks can take longer than they should. Inefficiencies in administration increase non-billable hours and, possibly, limit billable hours. It can also contribute to lawyer burnout.
- Cash flow problems can arise without a realistic budget in place.
- Marketing programs can be ineffective or nonexistent, stifling the firm's growth.
- Good employees can leave for firms with better compensation packages or development programs.
- Clients can feel underwhelmed or disappointed with the service they receive, because lawyers aren't empowered with effective tools for legal case management.
Understanding how to manage a law firm as a business can prevent some of these problems. Perhaps more importantly, the discipline of law office management provides a framework to identify and resolve business issues.
As an example, if the firm is regularly running low on cash, finding a solution is vastly easier when there's already a budget in place. Rather than guess on where the problem lies, the financial decision-maker can compare actual spending to what was budgeted.
Note that a firm will have greater success establishing processes and addressing business issues when it has the right person leading the way. A dedicated office manager can be a key hire in a small firm's growth trajectory. Filling that role frees up lawyers to do what they do best—serve their clients.
What Are the Traits of a Good Law Office Manager?
A good law office manager is organized, charismatic, flexible, intuitive, and logical.
Organized: The job of a law office manager is complex and broad. It can't be done well by someone who has trouble setting priorities, overseeing small and large tasks, delegating, and keeping projects from moving forward.
Charismatic: The office manager is often a change agent. They must unite employees to adopt new processes and find new efficiencies. That requires a convincing, likable personality.
Flexible: Business processes are always improvable. A strong law office manager doesn't get attached to ideas or certain ways of doing things. They must ask regularly, "How can we do this better?"
Intuitive and logical: The best business decisions come from a combination of intuition and logic. When there is sufficient information or data available to support decision-making, a logical analysis is appropriate. When there's no data, intuition is necessary. The best law office managers are comfortable working in either style.
Law Firm Management Best Practices
Every firm will have its own approach to law practice management. Where you operate, the types of clients you serve, and how your competitors work will dictate your firm's business priorities and needs.
Even so, there are commonalities that apply to most firms. If you aren't sure where to begin with law practice management, focus on the six best practices outlined below.
Listing out your firm's high-level goals can provide a law office management roadmap. Does your business need to recruit better talent, grow its client base, get cash flow under control, or streamline daily tasks for lawyers? Documenting and prioritizing those goals highlights the pain points that should be addressed first.
Get Your Employees on Board
Employees have a huge role to play in this process. Their feedback and suggestions can be invaluable as you transition your firm to a more efficient and productive workplace.
Employees also must implement mandated office practices. Examples include switching to digital time tracking versus manual and storing documents in the firm's cloud solution rather than on a hard drive.
Those who resist change will undermine the process. Address this potential issue proactively by getting employees on board from the start. Let them know what you're trying to accomplish and how they will contribute.
Invest in Branding/Marketing
Law is a competitive business, and your brand is your key differentiator. Devote resources to defining your brand and its core messaging. Those resources might include time spent documenting how you want the firm to "show up" to clients and prospects, or the funding needed to enlist a consultant for guidance.
Once you have branding and messaging defined, consider all the ways you can reinforce the brand. This goes well beyond a logo or email signature. Branding can influence many of your business processes too, from how often lawyers check in with clients to the language used on your invoices.
Tasks that are repeated often should be standardized for efficiency. You'll need to set the standards and then document them. Consider creating a paper procedure manual to share with new employees. Alternatively, you could build out online wiki pages accessible only to logged in users.
Processes that are good candidates for standardization include:
- Client intake
- Time keeping and invoicing
- Document naming
- Organization of digital client folders and document storage
- Digitizing paper files
It's also useful to have a procedure for reviewing and updating procedures. Consider scheduling a procedure review with key employees periodically.
Technology can standardize many processes for you. You might use a timekeeping application that ports that data into invoices automatically, for example. Or, you could use an app to automate client intake and form execution.
Don't underestimate the power of technology. The right legal technology stack cuts down on hours of administrative work and contributes to a happier, more productive team.
The overarching goal of managing a law firm is to improve the health of the business. To know whether you are achieving that goal, you must track and analyze your firm's business performance.
Areas to focus on in your legal reporting include marketing and client acquisition, client profitability, client satisfaction, productivity, and financial health. Common metrics within these categories are listed below.
Marketing and client acquisition: Cost to acquire a new customer, customer growth rate, conversion rate on specific marketing campaigns (such as a radio ad that runs several times a day for two weeks).
Client profitability: Average earnings per client, average earnings per practice area.
Client satisfaction: Client retention rate, client referrals, net promoter score.
Productivity: Billable hours relative to total working hours available in a day/week/month, billable hours relative to total worked hours (including time spent on non-billable activities).
Financial health: Monthly billing, monthly collections, collection rate, operating margin, profit, cash flow.
Top Tools for Law Firm Management
As noted, technology can be an essential resource for strategic law practice management. Tools to consider include law firm billing software, case management software, and office document applications. Let's look at each one.
Legal Billing Software
Legal billing software automates compliant handling of customer payments and trust accounts. It also provides convenient payment options for your customers plus efficiency features for the firm, such as automatic payment reminders and emailed customer statements.
For example, LawPay helps attorneys get paid 39% faster with a range of digital payment options, including QR code payments, legal fee financing, and scheduled payments. Client account data is stored securely for customer convenience without increasing your firm's PCI compliance burden. And, because LawPay is built for lawyers, all customer payments and refunds are accounted for in compliance with ABA and IOLTA guidelines.
LawPay also supports time and expense tracking, integrated with invoice creation—to streamline and speed up billing and invoicing. Your financial dashboard can then provide easy insight into payment activity as well as lawyer productivity.
Case Management Software
A full-featured case management application centralizes client files, automates client intake, allows for full-text document search, and automates common workflows.
A leading case management software, MyCase is an end-to-end case management application that includes these features and more:
- Built-in intake forms plus e-signature capability streamlines onboarding
- A client relationship manager (CRM) tracks and supports lead management
- Website development offering quickly creates an online presence for your firm
Case management capabilities include a firm-wide calendar, cloud-based storage, document management, and a dashboard to track cases and productivity. MyCase also has a secure Client Portal to centralize communications and ensure messages never get lost.
Finally, MyCase offers robust billing and payments functionalities. Billing is near automatic thanks to a built-in time-tracking module. The module even prompts lawyers to add time when emails are sent or documents are uploaded, ensuring that your billable hours are tracked and available to be invoiced. MyCase also integrates with LawPay for convenient, seamless customer payment options.
All in all, MyCase case management software can help you gain 3+ billable hours per day and increase your caseload by 38%.
Office Document Software
Office document software includes a word processor, plus spreadsheeting and presentation software.
Microsoft Office 365 is a popular choice with several subscription tiers. The base package includes web and mobile versions of Word, Excel, PowerPoint, Outlook, and internal messaging app Microsoft Teams. Upgraded packages include desktop software plus enhanced security.
Running your law firm like a business requires discipline, but the rewards are ample. To build and grow a profitable law practice with happy employees, satisfied customers, a stream of referrals, and healthy financial statements, you must be comfortable with analyzing and improving business processes.
Not sure where to start? Kick off your business improvement efforts with savvy technology decisions.
Reach out today to find out how LawPay and MyCase can generate efficiencies within your firm on both billable and non-billable tasks. For legal billing and payments, book a personalized LawPay demo. For comprehensive legal case management, book a customized MyCase demo.