Understanding the business of law is not always easy for lawyers. However, in order to be successful and grow the law firm, these fundamental learnings on business operations are imperative.
Remember the first day you started your own firm or perhaps the day you became a named partner? That very special day meant the start of responsibilities and decisions that you most likely never imagined. Learning the intricacies of running a business on top of your case load duties and client services can at times be overwhelming. In fact, most law school curriculums do not include courses on law firm management. Therefore, understanding the business of law is not always easy for lawyers. However, in order to be successful and grow the law firm, these fundamental learnings on business operations are imperative.
To begin, a firm must identify their objectives. Some law firms are very satisfied with being a sole practitioner and providing the services that they can manage. The business objective of these law firms is to cultivate and maintain clients based upon the time the lawyer can provide. Some law firms begin with a growth objective while other firms evolve into this goal.
Growth within a law firm can mean a variety of things to different firms. Objectively evaluating the law firm business is one of the very first steps when a firm is considering growth opportunities. A deep analysis of the objectives of the practice is required. For example, is the growth objective to expand the number of lawyers, the type of legal services, or geographic perspective? These answers will then formulate the billing, accounting, and practice management requirements that will support the growth objectives. The firm will need to ensure that they have in place the right technological services that will perpetuate them further. This technological base is the foundation that will drive success.
Specific automated applications that need to be evaluated include time tracking, bill workflow, check writing, client payment processing, document organization, and profitability reporting. Some types of law will require specific software solutions for effective management. For instance, real estate firms may require closing software, or a matrimonial firm may require asset valuation software. If the basic system components are not functioning in the most efficient manner growth in the practice will stress the solutions and the result can be devastating. As an example, if the billing function in a firm is not efficient and requires many weeks of work, adding new employees or practice areas will further impede that process. Therefore, collections and cash flow may be negatively impacted. Prior to considering any further growth these systems must be efficient and functioning properly.
Determining the right solutions that will assist the law firm in its growth will resolve these identifiable issues. The firm should have applications that assist the timekeepers in recording time and practicing law. For firms that bill by the hour it is imperative the time tracking is simple and efficient. Time entry is often the key to profitability. Even firms that charge flat fees should have a mechanism to determine if the flat fees are greater than or equal to the amount of time expended in completing the legal work. The billing workflow should be simple and completed in a timely manner. The more accurate the time entries, the easier it should be to bill clients. The timeliness of billing directly impacts client payments. Offering clients easy and simple ways to process their payments helps in maintaining good cash flow. Practice management tools such as document management is another software solution that can assist in growing a firm. Most importantly, there needs to be an effective management system that streamlines information reporting in order to control and evaluate growth.
Legal software solutions used by law firms should be tools that enable a law firm to grow. If a law firm realizes that the applications they are currently using cannot grow with the firm, they need to consider new solutions prior to forging ahead with growth opportunities. When considering new solutions, it is important to identify the requirements that need to be fulfilled. The law firm must also evaluate the current computer environment and the costs related it. This will lead to the question of whether the company wants their solutions to be on the Cloud vs. on premise. The firm must evaluate all financial implications to make the right decision.
It is important to note that while the implementation of a new software may seem overwhelming, these are the type of investments that will lead to organizational structure and most importantly significant return. Without stable roots, a tree cannot grow.
Deborah J. Schaefer is a Certified Public Accountant in Connecticut and New York, who specializes in the selection, implementation, training, and support of computer-based accounting systems for law firms. Practicing for over 35 years, she has worked with hundreds of firms across the US and internationally. Prior to starting her own firm, Deborah worked in the computer audit and consulting divisions of several national accounting firms in New York and Boston. In addition to Soluno, Debbie also supports a variety of other software products.
Soluno is user-friendly, cloud-based billing, accounting and time tracking software made for law firms of all sizes.
Confidently manage your firm’s business all in one place; with matter management, time/expense entry, billing, accounting, trust banking, and reporting that’s accessible from anywhere. Soluno empowers law firms to be more efficient and profitable than ever; combining the advanced features and customizable workflows of on-premise software with the freedom, security, and convenience of a cloud solution.