The Happy Lawyer’s Guide
to Running Your Law Firm
like a Business
The Happy Lawyer’s Guide
to Running Your Law Firm
like a Business
Confession: I love filling in the gap between what attorneys learned in law school and what
they need to know in the real world about running a law firm.
Specifically, running a law firm like a business.
What causes that gap to begin with? Frankly, law schools have been a little slow in
understanding that there’s a major difference between running a law firm and running a law
business. This is a major issue for their graduates, especially the ones who don’t go on to “big
law” and decide to hang their own shingle.
Fortunately, more schools are recognizing this and offering practice management classes
and teaching the basic concepts of profit & loss statements, client evaluation, marketing, and
other aspects of how to grow and run a business.
But it’s not a widespread practice, and there are still thousands of lawyers, new and established,
who are great at practicing law but not great at doing what it takes to own their own law firm.
While it’s not rocket science to master the business side of owning a law firm, it does require
discipline and, most importantly, a shift in the way you see and operate your practice.
To make it simple, I’ve come up with nine keys to running your firm like a business. Follow these
steps and you’ll be surprised at how much more you’ll earn, how much happier your clients will
be, and how much time you’ll have to do more of what you’re best at: practicing law.
Nine keys to success
LexisNexis® | The Happy Lawyer’s Guide to Running Your Law Firm like a Business
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Key 1
Develop a Vision for
Your Practice
Being based in Seattle, I see Boeing, Microsoft, Expedia, Nintendo, and a number of majorlysuccessful businesses in my area. And the one thing that they have in common is that they
have a vision for their business.
They know what the business can be, they know where they want it to go, and they know how
they’re going to get there.
Unfortunately, the “If you build it, they will
come” law practice is a thing of the past.
In my consulting work for law firms all over the country, one of the first questions I ask every
client is, “What is your vision for your practice?”
Most of them don’t have an answer.
In fact, very few attorneys have even given it any kind of thought. They just open up for business
and assume that clients will come to them, and they’ll make some money, and that’s it.
Unfortunately, the “If you build it, they will come” law practice is a thing of the past. Today’s
increased market competition from online legal resources and savvier attorneys in their own
markets, coupled with pickier and more educated clients, means that every customer should
be treated like gold. And mined as such accordingly.
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Successful businesses have a roadmap to follow when they make business decisions, when they
plan for growth, when they hire, when they create a great customer experience, when they identify
new opportunities; they have a vision when they’re determining how best to spend money to
benefit the business and its clients, and so much more.
And this roadmap is called a business plan. And your business plan will start with a vision for
your practice.
Step 1: Where do you want to go?
Close your eyes for just a moment and think
about where your practice could go, what it
could become, what it will be when it grows up.
Imagine all the possibilities of how big you’d like
to grow and the practice areas you’d like to offer,
how many partners you’d like to have, the kinds
of clients you’d prefer, and so on.
Step 2: How will you get there?
Building the practice of your dreams doesn’t
just happen. Think about the steps you can
take, one at a time, to get there. What sort of
additional training could you use? What kind of
opportunities do you need to develop? What
location do you need to be in? What practice
areas do you need to add to your business?
Step 3: Who will help you get there?
To paraphrase an old saying, “No attorney is
an island.” Who do you know—either directly or
indirectly—that could help you reach your goals?
Think of mentors, additional staff, contractors,
accountants, bankers, marketing consultants—
anyone and everyone that might help
contribute to your success as an attorney.
Step 4: How will you measure
your success?
Success means something different to everyone.
Success might be that you have happy, satisfied
clients who are bringing you lots of referrals.
Success might mean that you have quality time
to spend with your family. It may be that you
have alternative income streams and you’re
able to practice law, but you’re also able to have
money coming in from other sources. Define
your own version of success, and then figure
out how you’ll measure it.
Step 5: Where are you in relation to
your goals?
Where is it that you’re starting at this moment
in time?
It doesn’t matter if you’ve been in practice for
a month, or 10 years, or 20 years. If you do not
have a business plan, this is exactly the right
time to start working on that.
And I’ll tell you what the business plan is meant
to do: it provides much-needed guidance when
you are making business decisions. With each
decision, ask yourself: “Is this taking me towards
my goals or away from them?”
This simple question should help make the
decision-making process much easier—and
more impactful.
LexisNexis® | The Happy Lawyer’s Guide to Running Your Law Firm like a Business
The Vision is the Foundation for Your Business Plan
Key 2
Bill what you deserve
When I ask attorneys how they set their rates, typically I get three or four different answers.
1
“I check to see what the competition is charging.”
2
“I think what might sound reasonable.”
3
“I consider who my target market is.”
And so on.
I rarely hear the correct answer, which is, “I considered how much money I need to make per
hour and then went from there.”
It sounds almost crazy enough to work, doesn’t it?
It is, and here’s the formula to help you get to that number.
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Target Revenues
Billable Goal X Realization Rate
= Minimum Hourly Rate
This is called your minimum hourly rate formula. Take your target revenues, which would
include your compensation, your share of overhead, your benefits if that’s in some way
separate from overhead, and desired firm profit.
By profit I’m not talking about the profit your CPA doesn’t want to see at the end of the year;
this is money that you want to have in the firm so that you can upgrade your computers, hire
new staff, or whatever else you need to do to support your vision and business plan.
These four things together—compensation, your share of overhead, your benefits, and your
share of the desired firm profit—constitute your target revenues.
Next, take your billable goal for the year and multiply that number by your realization rate. (Your
realization rate, in short, is the percentage of fees billed that are actually collected.)
For example, let’s say your billable goal is 1,000 hours—times your realization rate, and that
we’ll say is 90%. So those two multiplied together, divided into the target revenues, will give
you your minimum hourly rate.
ABA Model Rule 1.5
Beyond this minimum hourly rate, you need to consider ABA Model Rule 1.5, and many of
the local state bars have accepted Model Rule 1.5 with regard to fees, as part of their rules of
professional conduct.
So, check with your own state, but the ABA Model Rule 1.5 lists several different considerations
that you can take into account when determining your reasonable rate.
Now, I go back to this and let’s say that your minimum hourly rate works out to be $750, and
nobody in your community is charging more than $250. So is that a reasonable rate? Well,
you would go back to your target revenues and maybe you plugged in there that you want to
earn $300,000 a year. Maybe last year you only made $60,000 a year, so this is a “pie in the
sky” kind of figure.
LexisNexis® | The Happy Lawyer’s Guide to Running Your Law Firm like a Business
Minimum Hourly Rate Formula
If that minimum hourly rate comes out way out of line, look at the target revenues first and see if
those are reasonable numbers. Maybe the desired firm profit is way high or maybe you’ve added
in your benefits when they were actually part of the overhead expense.
Then look at your billable goal. Is your billable goal too low? If you’re planning to bill only five
or six hundred hours this year, then that may be the factor that created this—it’s not artificially
high, but this very high minimum hourly rate.
The other place I would look is the realization rate. If your realization rate is low—and by low it
would be under 90%—you’re leaving too much money on the table.
And if you can bring that realization rate up, the minimum hourly rate will drop down to a
more reasonable level. Getting better at taking money up front, case and client selection, and
pursuing past-due accounts will help to raise your realization rate.
Flat & Hybrid Fees
Not everybody charges on an hourly basis; some attorneys use flat fees now, or they’re using
hybrid fees. Let’s look at the flat fee first.
Your flat flee is based on the expectation of working X number of hours on a task or a project,
something that you have done many times and you know that it takes you, for example, ten
hours to handle a similar matter. So the flat fee then is based on the ten hours times your
hourly rate.
You need to make sure that your flat fee is working for you, and the only way that you can
actually do that is if you track all of your time.
A lot of attorneys prefer flat rates because they think, “This is great, I don’t have to worry about
timekeeping.”
Well, I hate to break it to you, but if you’re going to run your firm like a business, you constantly
have to worry about timekeeping. You need to know where the time is going and how much of
that is getting captured for billable time, for you and everybody else in the firm as well.
And after, say, ten of these matters, take a look at the average number of hours required and
see if your flat fee is actually working for you.
The concept is that a flat fee would cover the time that you actually put in at your expected rate.
What I find with many attorneys is that their flat fee is actually a discounted rate because they’ve
not properly figured the time required to handle this work.
If you’re going to run your firm like a business,
you constantly have to worry about
timekeeping.
They may go into it thinking they’re charging $250 an hour for 10 hours, and they’re charging a
$2,500 flat fee, when in reality when they track their time, they actually put in 17 hours. So their
hourly rate is much lower than anticipated.
Hybrid fees are, of course, a combination of several different billing methods. It may be a
combination of an hourly and a flat fee; there may be some unit pricing in there. By unit
pricing, I’m thinking in terms of a flat amount of time for certain routine tasks like reading
emails or taking a phone call, and maybe in your fee agreement you say that your practice is to
charge 0.2 hours for every phone call, and 0.1 hour for every email that you read. That would
be an example of unit pricing – billing for certain routine tasks with a preset unit of time.
If you’re using a flat fee and an hourly fee, you would use the flat fee for the part of the work
that you can control, so that you know it’s not going to take you more than, for example, five
hours.
The hourly fee would come into play for the work that you cannot control, where you’re
preparing answers to interrogatories, or your client hasn’t provided all the information that
you need up front and you’re trying to wrest this additional information from him because you
know there is more to this matter than originally anticipated. In these cases and others, hybrid
fees can be very helpful in making sure that you get paid fully for all the work that you’re doing.
LexisNexis® | The Happy Lawyer’s Guide to Running Your Law Firm like a Business
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Key 3
Know Your Finances
This can’t be stressed enough: monitor your financial situation on a regular basis.
The more familiar you are with your firm’s data, the better decisions you will make. You
need to look at your realization rate every month. While your goal should be 90% or higher
realization rate, it is possible to have 100% or higher. You may be collecting money from
continued cases that have been in the works for two or three years, or more. So if it works out
to be 104%, don’t panic, you didn’t do this calculation wrong.
This can’t be stressed enough: monitor your
financial situation on a regular basis.
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The realization rate is really critical because it tells you how well you’re getting paid and how well
your clients are fulfilling their obligation to you, what they agreed to in the fee agreement here.
The lowest realization rate I have ever seen was 31%. That means only 31 cents of every dollar
that’s billed is collected, which also means that 69 cents of every dollar billed is not collected.
It’s a major, major problem here, and we’ll cover how to overcome that.
Your Effective Rate
Your effective rate is what you actually earn per hour versus what you charge per hour. To
determine your effective rate, multiply your standard hourly rate times your realization rate.
As an example, if your hourly rate is $200 an hour and your realization rate is 50%, your
effective rate is $100 an hour – and that’s what you are actually earning. If you are budgeting
based on $200 an hour, your budget is wrong. You need to understand these numbers if
you’re going to monitor this business successfully and make smart business decisions here.
Your Overhead
I look at overhead, how much of your revenues is going to overhead, and I like to see in a small
firm no more than about 40 to 45% of revenues going to overhead.
The highest I’ve ever seen was 97%. That means 97 cents of every dollar that came in went to
overhead. It was an outrageous number, and it explained so much to me about this firm.
The attorney put every single new client on payment plans, and said, “But I don’t worry, all my
clients love me, you know, they all pay me.” When I looked at her receivables, I said, “You know,
357 of them aren’t all that crazy about you because they haven’t paid you a penny in over a year.”
Typically when your percentage of overhead is too high in comparison to your revenues, it’s
not that your overhead is too high, because small firms really, for the most part, run a really
tight ship and they don’t incur outrageous expenses or make extravagant expenditures.
LexisNexis® | The Happy Lawyer’s Guide to Running Your Law Firm like a Business
Your Realization Rate
The reason the overhead is too high in relation to the revenues is that revenue is too low:
they’re leaving too much money on the table. You go back to the realization rate and see that
they’re not collecting enough money up front. There any number of factors here. They’re
not taking an advanced fee deposit that’s appropriate, they aren’t choosing the right clients,
they aren’t billing regularly, they aren’t bird-dogging past-due accounts, and more. So if you’re
overhead is higher than, say, 50% of your revenues, you have some work you need to be doing
there, and you need to start with your profit and loss statement, go over that line by line, and
make sure you understand every penny that’s in every one of those categories. Then, look to
your revenues.
Outsource Bookkeeping
If you’re doing the books yourself, then you know how you categorized everything. But here’s
a great tip: if you’re doing the books yourself, you should stop. That’s not the best use of your
time and you’re probably not trained to do that well. So outsource it to a trained bookkeeper,
somebody with skills in this area; they will do it much faster and much more accurately than
you can do it, and they’ll provide you with all the financial statements you should be seeing.
But on a monthly basis, you want to: review your profit and loss statement, do these
calculations, review your accounts receivable, and understand your productivity—how much
you’ve billed and how much you’ve collected.
Know Your Budget
The last thing you want to monitor on a regular basis is your budget. You want to know your actual
expenses versus your budgeted expenses. And it seems like no matter how carefully you budget
every year, something unexpected comes up and takes you by surprise. So, do monitor your
budget versus actual expenses. If you’re using QuickBooks or any bookkeeping system at all, it will
be able to show you actuals, and budgeted, expenses in columns next to each other so you can
see where you are with all of those.
Too Many Small Firm Experience Past-Due Accounts
Frightening statistic: According to LexisNexis research, 73% of solo and small firms experience
past-due accounts, and they have past-due accounts for a number of reasons.
All of them can be corrected: poor case and client selection skills; not taking enough money
up front; not using an evergreen deposit account(otherwise known as a replenishing
account); poor client communication, not keeping your client in the loop; not billing timely and
73% of solo and small firms experience
past-due accounts.
regularly; a fee agreement that’s not clear on payment expectations and the repercussions
of nonpayment; weak collections policies and inattention to accounts receivable, — and I see
this over and over and over, an overwhelming fear of speaking with clients about money.
What to Look For, and How to Correct It
When you look at your receivables report, you’ll see multiple columns, usually 0 to 30 days, 31
to 60 days, 61 to 90 days, and 120 days and over. When you start actively working to collect
past-due accounts, usually the place people start is at the 120-plus days past due; that’s the
wrong place to start.
You want to start in the 31 to 60-day column because that’s the lowest-hanging fruit; those are
the freshest accounts, the folks that are most likely to pay you. The 0- to 30-day accounts are
still just working off the current invoice and aren’t past-due. But the 31- to 60-day folks, they
deserve an immediate phone call saying, “Just realized we haven’t received your payment here,
is there something we can do to help? Is there a problem?” And tackle that right away. Get on it
as soon as that account becomes past due.
Handle Past-Due Accounts Promptly
The older it gets, the less likely you will be to recover 100%. If your accounts are a year or more
old, you have a 5% chance of 100% recovery. So start where you’ve got the best chance of
bringing in the most money, and then work your way across. Once you’ve done all the 31- to
60-day accounts, then go to the 61- to 90-day accounts and make an attempt there, and keep
going from there. But 73% experiencing past due accounts, it’s a staggering number and it’s not
a surprise to me that so many small law firms continue to struggle financially. There are so many,
many factors behind this statistic, but failing to act promptly on past-due accounts is certainly one
of the bigger ones.
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If your accounts are a year or more old, you
have a 5% chance of 100% recovery.
Solo Attorney Earning Potential = $180K
In another study done recently by LexisNexis, the determination was made that $180,000 is
the average earnings potential of an average solo attorney, based on a comfortable number of
billable hours per year.
So if you are not making $180,000 a year, and that sounds really lovely to you, then you need
to go back and really look at your business and say, “Okay, what do I need to do differently
to make that kind of money?” So for solos especially, the billable hour is a critical lever for
increasing earnings.
Better Time Management an Easy Way to Increase Earnings
Several years ago, I gave a challenge to one of my clients who was not earning a lot of money.
I looked at his billables and he was billing out on average somewhere between an hour and
a half and two and a quarter hours a day. He was an incredibly gifted attorney and had a
marvelous reputation in his community—very well known, very active in the bar association, a
role model to younger attorneys, a great mentor and all this—but he just wasn’t making much
money and he was looking to retire in five or six years, and he said, “You know, I don’t know
what I’m going to do. I’ve still got another year of college to pay for my youngest child, and I
don’t have money put away for retirement, and I’m just not making enough money.”
I asked him if he had enough work, and he said, “Yeah,” he had plenty of work, and he’s in full
days but he doesn’t know where his time goes.
And I said, “All right, if you have plenty of work, I don’t want you to do this to milk a client, do
this only if you honestly have the work, but I’d like you to consciously choose to bill 15 minutes
more per day.”
“So, at say 20 minutes to 12 Noon, you’re getting close to lunchtime, you’re thinking, ‘Okay, no point
starting anything new now because I’m going to be going out in 20 minutes,’ so you get on the
internet and you start internet surfing or you’re playing on online game, or something like that.
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Towards the end of the day, do the same thing. If you’re thinking, “Well, it’s 4:30, no point in
starting anything else now,” and you kind of coast, instead choose to put in 15 minutes more
that day on something, and just see what happens.
Three weeks later and he called me and said, “I can’t believe what’s happened. I started out
the first day and I did 15 minutes more of billable time. The second day I did an hour and a half
more, and I didn’t work any later.” And he said, “I’ve been averaging an hour to an hour and a
half more every day simply because I make better choices about how I spend my time. I think
in terms of not, ‘Oh, what can I do to fill my time now,’ I think in terms of what’s my next task.”
Instead of frittering away this time, use it instead
to start the next project. Maybe you need to pull
a file folder and get an address together, or review
a document so that you can prepare to begin
drafting when you come back from lunch.”
And he anticipated that at the end of the year this little exercise would probably bring in
anywhere from $25,000 to $30,000 more in revenues. He said, “The thing is, I’m not working
any longer, I’m just choosing the way I use my time better.”
So, little tiny bits of time can make a big difference. And if you are not at your earnings goal,
that would be a challenge that I would throw out to you here. You don’t need to be making
$180,000, that may not be your goal, but if you consciously choose how you use your time
during the day and consciously choose billable time over internet surfing, or chatting with your
staff, or reading the newspaper or some other non-billable tasks, you’ll see a pretty significant
difference pretty quickly.
LexisNexis® | The Happy Lawyer’s Guide to Running Your Law Firm like a Business
Instead of frittering away this time, use it instead to start the next project. Maybe you need to
pull a file folder and get an address together, or review a document so that you can prepare to
begin drafting when you come back from lunch.”
Key 4
Create New Profit
Centers and Maximize
Existing Profit Centers
You can do this in a number of different ways. You can make better use of existing employees
by training to new revenue-producing skills.
I’m thinking in terms of a staff person who would love to be able to learn how to do some
shepardizing, or cite checking, or drafting, or whatever. You may have an associate attorney
that you could train to new revenue-producing skills. Add services or practice areas that
are frequently requested by your clients. Leverage a practice with paralegals and contract
attorneys.
Analyze the profitability of your current profit centers and look for ways to maximize them
through additional marketing, through cross-selling your clients, through streamlining for
improved efficiency. Create an extension of your existing business or a new business
altogether.
You can develop alternative income streams. One of my clients has written several books
and has them posted now as e-books, and there is some income from that. The books are
on a website that’s up 24/7; the money just comes in whenever anyone goes there and clicks.
Doing paid workshops, paid speaking engagements.
Online legal services, unbundled legal services, there are all sorts of alternative income
streams you can develop, and it’s really exciting to see some of the things that attorneys are
coming up with now beyond just the traditional brick-and-mortar kind of law practice. So
creating new profit centers, maximizing existing profit centers can be a great way to increase
your income.
Key 5
Leverage Technology
Technology is a top tactic for improving efficiency and running a law business. Working effectively
and efficiently, being organized, tracking time and expenses, collaborating with other attorneys and
clients is critical because clients are far more demanding than they were in the past.
I remember when I started in the legal field many, many years ago. Everything was done
on a handshake. And the bills that went out from our law firm consisted of four words:
“for professional services rendered.” And there’d be a dollar amount, and the clients just
accepted it and paid that.
Technology allows you to increase productivity
and capture more billable time, reduce the need
for costly support staff, and free up time to work
on marketing activities and more billable work.
But think of your clients now. If you sent them a bill that said, “For Professional Services
Rendered: $3,000,” how many of them would just happily write out a check without calling
you? Things have changed and technology is a fabulous way to keep up with the new
demands of practicing law, just to remain competitive.
Technology allows you to increase productivity and capture more billable time, reduce the need
for costly support staff, and free up time to work on marketing activities and more billable work.
And on and on—there are so many, many, many benefits of improving your technology. I’ve been
working with a firm the last several months that has OfficeSuite and Timeslips, and an outdated
version of QuickBooks, and this firm has a heavy trial practice. I cannot imagine how they’ve
operated without a case management program, without document assembly. They have no
naming protocol for their documents. So if somebody wants to go onto the computer system and
find a sample landlord-tenant contract, for instance, it’s much faster for them to send around an
email and say, “Has anyone ever done this? Can you send it to me?” Because they have no way to
track their work product. It’s just so amazing to me that in the year 2015, there is a firm that is about
20 years behind everybody else when it comes to technology. What they’re doing now is working
to correct that, and that’s terrific; they’re going to be amazed at the change in the practice here.
LexisNexis® | The Happy Lawyer’s Guide to Running Your Law Firm like a Business
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Key 6
Grow Your Firm
There is a hierarchy here, an inverted funnel here. You start with your vision, you
develop your values, you identify your mission, you set your goals, you create
strategies to achieve those goals, and then you put those into action. That’s how
you grow your firm strategically, it doesn’t happen by chance. If it is happening
by chance, then you’re letting outside forces shape your practice. You’re letting
your clients shape your practice, you’re letting the industry shape your practice,
but you’re not taking control of your business and growing it strategically.
When it grows by itself and with outside influences, you become a victim of your
business or a slave to your business, rather than the master of the business. So
think in terms of growing your practice strategically.
Go back to your goals: what do you need to do to achieve them? Forming alliances:
I am so big on alliances right now, putting together attorneys with complementary
practice areas to serve the same client. One of my business law clients has formed
an alliance with one of my estate planning/tax attorney clients to serve the needs of
business owners who have privately-held businesses. So the business law attorney
can ensure by working with the estate planning attorney that his clients’ wishes
for business succession, et cetera, are taken into account in the estate planning
process. He also can ensure that if there are shareholders or employees with a
share in the business or whatever, that they are taken into account also, that they’re
not overlooked in the estate planning, that they’re not robbed of their holdings or
whatever. The estate planning attorney knows nothing about business law, and she
really welcomes having him there saying, “Okay, with a corporation you can do this and
with a limited partnership you have to do this.” So it’s been a great alliance.
Virtual employees: you no longer need to have people on-site. It’s much cheaper if you can get
virtual employees; you pay only for the time you actually use. You can have employees all over the
world. Technology and the internet has just opened up the world to us, literally, in so many ways. You
may still need on-site employees, so if you do, look at that as well, but you may not need a 40-hour
employee; you may be able to get by with part-time.
How to recognize new business
opportunities? Listen to your clients.
They’ll tell you what it is they need.
If you need a marketing consultant, hire one, spend the money. If you need to outsource—do
it. If nothing else, outsource the bookkeeping, let somebody else do that, and you put your
time back into representing your clients and doing billable work. That’s the number one task
you should get rid of.
How to recognize new business opportunities? Listen to your clients. They’ll tell you what it is
they need. Consider what other attorneys provide from which your clients could benefit, like the
business law attorney and the estate planning attorney, or an estate planning attorney and a family
law attorney. Somebody going through a divorce needs a new estate plan, but you want to make
sure that the estate plan doesn’t in any way contradict the terms of the divorce order. So you work
with the estate planning attorney to ensure that your client’s needs are met and that everything is
protected that needs to be protected.
Review a recent opportunity and how you responded. Opportunity is around us every single
day. Some of the opportunities are bright, shiny objects, and we go chasing after them and
they don’t really make sense for our business. But there are other opportunities that make
great sense for our business, that we could actually do something with—incorporate it into the
business, and it could take us in a new and exciting direction. But you go back to that business
plan and say, “All right, will this take me closer to my goal or away from my goal?”
Ask your staff. They hear things from your clients that you will never hear. So ask them what
other services clients would like, what other opportunities they see, ways in which they believe
that you could better serve your clients or expand your business.
LexisNexis® | The Happy Lawyer’s Guide to Running Your Law Firm like a Business
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Key 7
Rid Yourself of
Underearning Behaviors
There are two types of underearning. One is passive underearning, which is choosing not to
do something or failing to do something that would have resulted in you making more money.
Some examples would be undervaluing your work, giving away time, failing to capture all
billable time, discounting fees, procrastination, disorganization, and lack of business planning.
Active underearning is knowingly doing something that will cause you to underearn, and that
can be failure to market, or reliance on inappropriate marketing strategies, rationalizing low
income, not working enough hours, accepting bad cases and clients.
I firmly believe that every law firm
could be making more money.
Underearning is an insidious behavior pattern in many, many law firms. I firmly believe that every
law firm could be making more money, and underearning comes in many different forms. I talked
about some of them here. I have identified more than 30 just amongst my clients alone. So if you
think underearning is an issue for you, you need to sit down and identify the symptoms and causes,
and build a plan around that destructive behavior.
Key 8
Invest in Your Business
Every day and in every way, you need to keep developing the business, growing the business,
making changes in the business, adding to the business. And when I say adding, it’s not
necessarily employees, it’s not necessarily a big outlay. Maybe you need to add a different
service, maybe you need to upgrade your technology. There may be any number of things
that you’re considering right now that would be an investment in your business. You go back
to the business plan again, I keep harkening back to that, but go back to the business plan.
Where is it I’m going, what do I want my business want to be, and how will I get there? Will this
decision take me closer to my goals, or further away?
You need to spend money on things that will help generate more revenues. And you need to
think of money spent on your business as an investment, not an expense. I encounter that all
the time. For instance, this firm that’s looking at new technology now, they are so far behind
that it’s going to be a major outlay to get them anywhere near where they need to be. So
they’re looking at this, and it’s “Oh, my gosh, what’s this going to cost?” They need to instead
be looking at it as an investment because they are quickly falling behind their competition.
And the larger firms, with all of the fancy equipment and the technology and the software,
and all the staff and everything, will be leaving them in their dust. Some of them already are.
So you need to get past this idea that every penny out of your pocket is an expense -- it’s an
investment in your business. And successful businesses reinvest in the business.
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Key 9
Develop a Culture of
Thinking and Working
Strategically
You need to develop a culture of thinking and working smarter and more strategically.
Develop an action plan to reach your goals, and write it out so you can refer to it on a regular
basis. Assign responsibility. If there are various tasks in this action plan that somebody else
can do, pass those tasks on to them and set up accountability.
Do something daily to move towards your goal. You know where it is you want to go, you’ve
worked out your goals, and your action plan, how you’re going to get there. Now you have to
make this work by moving it forward on a daily basis; even if it’s a tiny thing every day, keep
moving it forward.
Summary
At the end of the day, these practices can be summed up succinctly:
Treat your practice as a business. Make sound business decisions. Follow a plan.
Monitor your firm’s situation daily. Benchmark your progress. Readjust as necessary.
And most importantly, enjoy the fruits of your labors!
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About the author
Ann Guinn With over 35 years of experience in the legal field, starting
as a legal secretary, Ann Guinn has helped hundreds of attorneys
discover how to overcome the underearning trap that keeps them
from providing the life they, their families and their firm members
want for themselves. She is the author of Minding Your Own Business:
The Solo and Small Firm Lawyer’s Guide to a Profitable Practice (ABA
2010) available at www.americanbar.org. She also travels the country
conducting seminars, webinars and CLEs, as well as leading practicebuilding groups. Ms. Guinn makes herself available as a practice
management consultant for solo and small firm attorneys across the
country. She can be contacted at 253.946.1896 or by email: ann@
annguinnconsulting.com
Ann Guinn
Practice Management
Consultant
235.946.1896
[email protected]
About LexisNexis®
At LexisNexis, we are committed to helping you spend more time practicing law and less
time worrying about the business of law. Running a successful firm means making the
best use of your time and resources while reducing risks. LexisNexis helps you increase
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