There are many traps and pitfalls a small law firm can easily avoid. Lawyers are highly skilled professionals in their field, however can sometimes fall short on the practical knowhow in managing a successful business. Here are five thoughtful tips on how a small law firm can avoid traps that could threaten the productivity and growth of the small law firm.
1. Avoid taking on clients that hinder your marketing objectives
Imperative to a small law firm’s success is close adherence to a marketing plan. This might mean turning down new clients who don’t fit the bill, but by taking on bad clients you’re only sapping the resources you can devote to the clients you do want. Before taking on a client, ask yourself:
- Do I have adequate time, resources and expertise to handle this matter with the appropriate degree of competence?
- Can I accept any financial risks associated with this matter?
2. Don’t work for free
Many lawyers take on non-paying jobs to gain experience in a new area of law, or they are pressured into discounting their fees after the work is done based on what the client is prepared to pay. Working for free does not build a lawyer’s business, nor does it promote a client’s expectation or willingness to pay fair market price next time.
Instead, try setting fair legal fees at the outset and don’t be pressured to discount. Keep the client well informed about your actions at all stages so they are happy with the progress of their case. Protect your position with a written client agreement and collect fees from the client when they receive the work, no later.
3. Trust accounting
Poor trust accounting practice is a common causes of run-ins with the Legal Services Commissioner. Despite this, lawyers are quick to delegate trust account management to a bookkeeper or assistant without proper supervision. To avoid any complications, reconcile and review trust accounts every month. Maintain a systematic filing system for paperwork and don’t be rushed or pressured by clients to release funds prematurely.
4. Just because you are a small law firm doesn’t mean you have to appear that way
Small law firms often reason that simply having an online presence is sufficient and fail to appreciate the level of sophistication that is being set by their competitors. Research has found that 46 per cent of consumers consider website design to be the most significant factor in judging a company’s credibility.
Don’t skimp on an informative and well-designed website. Incorporate a blog to show off your knowledge and allow clients to share your brand with social networking buttons.
5. Find the right balance with time-based billing
Some small law firms make the mistake of placing too much emphasis on total billable hours, resulting in inefficiency, over-remuneration, job dissatisfaction and stunted professional growth in their professional workforce. Instead, try evaluating an employee’s fee-earning performance based on realisation rates, not total fees billed. Also, reward employees for pursuing marketing objectives and professional development goals.
Avoid these common mistakes that many small firms make and watch your practice thrive.