Last Updated on October 30, 2024 by Owen McGab Enaohwo
According to the 2020 State of US Small Law Firms report, 74% of small firms spend much more time executing administrative tasks than practicing law. This shows that management is one of the biggest challenges in running a small law firm.
This can significantly impact your business to the point where you risk losing it, but it shouldn’t come to that if you take the right steps to adapt.
Choosing the right talent is a winning move to get your business out of its rut, but a great team is only the beginning. Management software can help you automate many tasks that take up the time you can otherwise spend giving your clients excellent legal representation, attracting more talent, and ultimately thriving.
In this article, you’ll learn how to streamline the management of your law firm for efficiency and to create more time for practicing.
How to Manage a Small Law Firm – Chapter Index
Chapter 1: Why Small Law Firms Fail
Chapter 2: How to Build the Right Team for Your Small Law Firm
Chapter 3: Operational Hacks for Success in a Small Law Firm
Chapter 4: Why You Should Streamline Your Small Law Firm’s Management
Chapter 5: Using SweetProcess to Manage and Accelerate the Growth of Your Small Law Firm
Chapter 6: The Biggest Risks Faced by Law Firms and How to Manage Them
Chapter 1: Why Small Law Firms Fail
Starting your practice as a lawyer is one of the most fulfilling things. Filled with big dreams, you envision growing your firm into a household name. Your dream is valid; after all, the majority of the biggest law firms today started small.
But unfortunately, there’s no guarantee that your story will be the same as theirs.
It’s you and your dream against the world. It’s up to you to do everything within your powers to ensure that your small law firm of today becomes a force to reckon with in the future.
The fact is, running a law firm isn’t a walk in the park. You are saddled with acquiring new clients and meeting their high demands, a constant struggle to win cases, putting up with hostile oppositions, etc. Combining all that with management functions is a lot to handle, but it’s not impossible.
Many people have pulled it off successfully. Increasing your chances of success involves taking a cue from them—understanding their struggles at the time and how they pulled through.
Knowing why most small law firms fail is a good start. Identifying the pitfalls to avoid will keep you in the safe zone.
So, why do small law firms fail?
Inefficient Teams
Establishing a law firm might be your dream, but you need other people to embark on that journey with you for success. Due to a lack of finances, lawyers starting their practice wear multiple hats—they do almost everything until they are burned out, and hiring employees becomes inevitable.
Even at that, they struggle with finding and hiring quality people.
Just like any other business, people are the driver of the vision. Hiring quality employees as a startup may be a challenge, especially due to financial concerns. However, you need to put your money where your mouth is.
Don’t hire just for the sake of it. Get people who have the qualifications and expertise to get your new firm off the ground.
Door Law
Door law is a common practice among small law firms. They are open to doing business with any clients.
Every new business has an urgent need to generate income—that is the motive behind door law in most cases, but it is counterproductive.
A successful law practice thrives on specialization. Law firms that focus on a particular niche build capacity faster—they sharpen their skills and become experts in a chosen field over the years.
Small law firms deny themselves the opportunity to be well-grounded in a particular niche by being all over the place and are unable to build the traction they need to be sought after.
Bad Pricing Models
Law practice is a business, and every business thrives on profit. The failure to generate reasonable profit is a hindrance to sustenance and growth.
Small law firms underprice their services to acquire more clients. The desperation to be in business makes them jump on low-fee cases. The circle continues as one low-fee case leads to another, and they end up working for peanuts. At the end of the day, they are unable to cover the costs of operation.
Set up a good pricing structure from the beginning. Keep it reasonable as you are starting but don’t shoot yourself in the foot in the name of staying in business because you are indirectly kicking yourself out of business.
Poor Marketing
A lack of clients is a pain in the neck for most small law firms, but that shouldn’t come as a surprise.
When you are starting a new venture, your family and friends are probably the only ones who know about it. You have to be deliberate about getting people to understand what you are offering, and that’s where marketing comes in.
First, you need a marketing plan. Having a marketing plan gives you focus—you need a high level of focus to ward off the urge to be all over the place.
Your marketing has to be rigorous. Remember, people don’t know about your business yet. So you need to put a lot of effort into getting and retaining their attention.
Little steps count in marketing. Cold calling a list of potential clients could get you a meeting to close some deals.
High Competition
Small law firms shiver at the mention of the word “competition,” and that’s understandable because law practice is one of the most competitive terrains.
Thousands of law firms and lawyers are constantly on the lookout for the next big client. Small law firms are inadvertently at a disadvantage in the face of the big fish in the business.
But there’s hope.
Your share of clients is in the pool—you just need to devise creative ways to get to them. Think outside the box and be prepared to make a strong case for yourself when you book that meeting with a potential client.
Poor Management Skills
As a small law firm owner, you wear two major hats – a lawyer and an entrepreneur. A law firm is a business, so you need to know about running a successful business, including hiring, finances, employee motivation, billing, marketing, etc.
As mentioned earlier, many small firms get immersed in complex administrative duties, neglecting the practice. You need to set up an operational structure and leverage tools to help you with the management of the business because it’s just as important as the practice.
Getting your hiring right is a criterion for success. In the next chapter, we’ll have an elaborate discussion on building the right team for your firm.
Chapter 2: How to Build the Right Team for Your Small Law Firm
Building the law firm of your dreams largely depends on the team you have in place.
Basking in the excitement of starting your law firm, you might think that you have it all covered. The fact is, you don’t. You need people to work together with you—people who will join you in the day-to-day operations.
Technically, the people you bring on board are referred to as employees, but it helps to see them as team members because they assist you. Yes, they need you, but you need them because their sheer determination can make your law firm successful.
Team building is a delicate process that requires utmost attention. Here are some vital tips to consider in creating a winning law firm team.
Step 1: Identify Your Goals
Identifying your goals is about knowing what you want to achieve in your firm. We often have our goals figured out in our heads but find it difficult to articulate them in words.
Begin by putting down your goals in words so you can communicate them to your team expressly.
Team members can only contribute positively toward achieving your goals if they understand them and believe in their potentials. Explain your goals clearly and be sure that potential team members buy them before proceeding with the hiring.
Step 2: Hire Suitable and Competent Hands
Small law firms are often in a fix regarding hiring qualified hands due to financial constraints. Most good lawyers would instead work with more prominent firms that offer big take-home packages, so your chances of getting them are low.
Focus on quality and not quantity. Identify a few competent hands and channel your resources to hiring and retaining them instead of making many hires.
If you are just starting your business, you have many things to learn along the way. Bringing greenhorns on board isn’t a good idea. You need people who have a track record of success in the business: people who know a thing or two that you may not.
Building partnerships is another way to make quality hires as a small law firm. Poach lawyers with promising careers in other firms to become partners in your firm—they might oblige you if you are convincing.
Step 3: Understand Team Members’ Abilities
One of the benefits of building a team is to have people bring their expertise to the table. Good team members produce results. But sometimes, it takes due diligence as a leader to get them to that point.
People are generally in their elements when in roles or positions that project their strengths. As a leader, it’s your responsibility to understand their strengths and position them in those areas.
Assigning team members to roles they struggle with is counterproductive; their results will be average at best.
Step 4: Cultivate Team Culture
The greatest teams are a product of thriving team culture. Cultivating team culture is a collective effort—every member of the team commits to enhancing the team.
Individuals must first feel a sense of belonging before committing to a team. You need to make them feel like they aren’t just working for your organization but are part of it.
Creating a sense of belonging in employees requires deliberate employee motivation to make them feel like they genuinely matter.
Employees look out for an organization when it looks out for them, and work better together when they have a good rapport. Encourage team bonding by creating opportunities for team members to work together on tasks. (This can even be accomplished through virtual team-building activities.)
Cultivating a thriving team culture entails creating equal opportunities for everyone by promoting equity, diversity, and inclusion in your organization.
Step 5: Create Open Communication
When employees don’t have the needed information, they might make mistakes or drop the ball.
You may be accustomed to doing things your way if you have been single-handedly running your firm and may not see the need to divulge certain information to your employees. Although some information is confidential and exclusive to certain people, you need to be open about information that directly or indirectly impacts your team members.
A lack of transparency creates a divide—with some people feeling left out.
Tribal knowledge in the workplace makes some employees feel less important. Use a centralized workflow system to pass information to everyone at the same time.
Step 6: Offer Incentives and Rewards for Hard Work
A little appreciation for a job well done is one of the best forms of employee motivation. Although employees signed up to do their best toward achieving the goals of an organization and are paid in exchange for their services, their best can’t be accurately quantified.
Doing the needful can be considered an employee’s best.
Appreciating workers for outstanding performances inspires them to do more. Your appreciation doesn’t have to be a grand gesture. Sometimes, a little thumbs up or pat on the back does it.
Now that you have the right team in place, it’s time to get into action. What should the operations of your firm look like to thrive? Let’s discuss that in the next chapter.
Chapter 3: Operational Hacks for Success in a Small Law Firm
Being a good lawyer isn’t an assurance for running a successful law. You can be a great lawyer and still fail at managing your firm.
Although law firms of all sizes experience operational challenges, the weight is heavier on small law firms due to their limited resources and experience in the business.
The following tips will help you in enhancing the operations of your small law firm.
Establish and Focus on Your Niche
As mentioned earlier, door law is one of the problems associated with small law firms. The desperation to work with every client who walks through the door turns out counterproductive in the long run.
What area of the law do you find most compelling? Stick to it. The journey ahead may be challenging, but it’ll be easier to work on cases that ignite something in you.
The biggest law firms are known for their expertise in a particular niche—be it immigration law, property law, criminal law, litigation, personal injury law, etc. By devoting their time and resources to a particular area over the years, they have great results for it.
Set Up Competitive Pricing and Alternative Payment Plans
Pricing is a delicate subject in managing a law firm. You risk losing clients if your price is too high—you could also shortchange your services if your price is too low.
Finding a balance is necessary to resolving pricing issues in business. Value is a major determinant of pricing. When the value tied to a price is sufficient, people have fewer reasons to complain.
The value of attorneys centers on efficiency. If you deliver outstanding results to clients, they will be comfortable with your asking prices, even if they are higher than what’s obtainable elsewhere.
The question is, can you deliver?
Your pricing should sustain your firm and still leave you with adequate resources to scale up. If you are struggling to stay in business, it’s a clear indication that your pricing is flawed.
Offering alternative payment plans to clients helps to increase income. Instead of requiring clients to pay for a service upfront, you can give them the option to pay in installments. You can also encourage clients to hire your services for the long haul by offering them a subscription-based payment plan.
Delegate Tasks to Team Members
Delegation helps to put the many moving pieces in a law firm in order. The people you have brought on board are there to assist you, but it’s your job to direct them on how to offer you their assistance.
If you paid close attention to your workers during the team-building stage, you should understand their strengths and weaknesses. The first call to delegating effectively is to assign tasks to the right people.
To get good results from delegating tasks to team members, you need to provide them with the information or resources they need.
Streamline Your Operations
The operations of your law firm revolve around procedures and processes. As a manager, you need to find ways to be efficient. Always ask yourself: How can my team be more efficient?
It’s no news that a lot of law firms streamline their operations with workflow productivity tools. The firms that fail to do so are displaced by competitors leveraging the benefits of digital workflow systems.
Streamlining your business operations simplifies complex and redundant processes. You can also automate repetitive tasks to free up your desk and have more time on your hands to be more productive. North Carolina Bar Association recommends SweetProcess for streamlining a firm’s processes.
There’s no better time to streamline your law firm than when you are just starting—before you have your big break. Streamlining your operations helps you to lay a solid structure to manage and drive your growth.
Adopt a Customer-Centric Approach
An organization that puts its clients first has more time to stay in business—and that’s because it’ll always have clients to cater to.
Treat every client like they are your only client. If you have any doubts about working with a client, don’t take up their case in the first place.
If your clients are invaluable to you, you’ll work round the clock to ensure their victory.
Every happy client is an opportunity to get more clients via recommendation.
The nature of your job requires a great deal of empathy. Clients must trust your judgment and counsel regarding their cases to cooperate with you. Prove to them that you are trustworthy and that all dealings with your firm are highly confidential.
Streamlining operations is an integral part of any modern law firm. Hence, we have dedicated the next chapter to elaborate on the subject. Check it out below.
Chapter 4: Why You Should Streamline Your Small Law Firm’s Management
Streamlining your law firm operations is so crucial that your failure to do so is a setback. For many businesses, it isn’t a question of whether or not to streamline their operations but finding the tools for the process.
To streamline business processes is to set them running efficiently. The burden of worrying about minor things is taken off your shoulders as your operations run on the structures that you have put in place.
Streamlining the management of your law firm offers the following benefits:
Better Time Management
The time you have to run your law firm is likely not enough given the numerous tasks on your plate. While you can’t extend the time clock, you can make better use of your time.
Streamlining your business processes takes off redundant tasks and simplifies the complex ones to run smoothly without clogs. By doing this, you’ll have more time on your hands.
Improved Productivity
Productivity at the workplace is about knowing what to do, how to do it, and doing it as fast as possible.
Streamlining your daily operations will give you and your team members a clear direction of your duties. Everyone will know what they must do, given the resources to do it and have a turnaround time. In the long run, your output will be increased.
Cost-Effectiveness
A redundant and complex workflow is a bottleneck in itself. The longer the workflow, the more time and money-consuming it is.
You probably have multiple people executing a single task when such a task can be completed by a few people when streamlined with the right technology.
Streamlining effectively will help you save some funds and channel them to areas that need them the most.
Risk Management
Risks of various degrees exist in running your business—from missing deadlines to making errors and flouting regulatory standards. There are always consequences when things aren’t done the right way.
Streamlining your operations will reduce risks to the barest minimum. Since most mishaps boil down to human negligence, streamlining your processes will allow you to close loopholes and empower your employees to be more efficient.
Improved Communication
The flow of information from one employee to another keeps the workflow running. Having many moving pieces causes a lot of noise and confusion among employees.
When you adopt a sound system for managing your workflow, your communications will be streamlined. Information directed to specific individuals will be made available to only them, while general information will be made available to everyone. You can also keep track of the workflow to know what team members are up to.
Choosing the Right Software for Documenting Your Policies, Procedures, and Processes
Enjoying the benefits of streamlining your business operations starts with adopting software that’s suitable for your business. There are many systems to choose from—with all of them promising to give you great results. Although each system offers unique features, there are general requirements that you should consider before making a purchasing decision.
Some of the factors to consider in choosing a management software for your small law firm include:
Industry Experience
Since you want to use the software in your law firm, you need to make sure that the software has been used by other law firms to be on the safer side. This information will assure you that it’s suitable for your organization.
Ease of Use
Adopting management software in your firm is about simplifying your work—the idea is defeated if your chosen system is hard to use. Whatever system you purchase, you’ll need to learn how it works: the key is that an easy-to-use system will also be easy to use and implement. You and your team will be able to use it effectively in a matter of days.
Look out for systems that offer free trials. You should know if a software solution is easy or difficult to use before committing to a purchase.
Hands-on Customer Support
Even if you get the most straightforward system, you’ll still need some assistance with some things. Is the system provider going to give you all the support that you need? You might come across some roadblocks in the future after setting up the system—will they help you resolve the issues?
An easy way to know what a company’s customer support looks like is by reading online reviews.
Flexibility of Use
The most suitable software is one that can adapt to your unique business needs. Since most productivity tools are designed for the general market, expecting one to cater to every unique need of your business isn’t practical. However, it should have room for tweaks to give you something close to what you want, if not exactly what you want.
Opportunities for Updates
Improvement is essential to be on top of your game. As your business needs evolve, you need to make the necessary changes to enhance your services. You are better off with a system that is constantly being updated for improvements.
Ask the software provider questions about how often they make updates and request evidence to confirm their claims.
Security
Is your business protected using the software? If you can’t get a confident “yes” to that question, you should take your business elsewhere.
The rising expertise in cyberattacks is a cause for concern. Cloud-based management systems are better than on-premise ones. Nonetheless, you need to be sure that they have advanced security to block unauthorized access.
Finding the right software is very tasking—having so many options to choose from gets confusing at some point. What if we introduced you to management software that will give you the results that you desire? We have evidence to back up our claims. Check it out in the next chapter.
Chapter 5: Using SweetProcess to Manage and Accelerate the Growth of Your Small Law Firm
Organizations that use SweetProcess have a common goal—to streamline their business processes for optimal performance. They accrue the benefits discussed above, including scaling, increased productivity, cost efficiency, better time management, etc.
As discussed earlier, part of the criteria for choosing a software tool is industry experience. Law firms of all sizes use SweetProcess to manage their operations. Canadian-based law firm Resolute Legal successfully scaled up by creating a proper structure for its business operations with SweetProcess.
Starting his law firm, the founder of Resolute Legal, David Brannen, wore multiple hats doing almost everything himself. Expectedly, he was burned out, and that stalled the growth that he desired. His business took a different turn when he discovered SweetProcess and streamlined his processes.
According to David, SweetProcess was “responsible for me scaling up from a lone dude doing his own thing to having a real business with a bunch of employees, and going from the guy trying to do everything in a crazy frantic state to someone who’s pretty comfortable right now.”
How exactly can SweetProcess enhance your law firm’s management?
Here are some of the features that make SweetProcess a powerful solution to your professional needs:
Documenting Procedures
The day-to-day operations of your law firm involve a series of tasks. How prepared are your employees to execute these tasks? There is a high chance of things slipping through the cracks if you don’t give your workers all the information they need at their jobs.
SweetProcess will help you document repetitive procedures with step-by-step instructions on the task. The documentation process is simplified with existing templates to choose from. You also have a chance to customize the templates to your specific business needs.
In a bid to helping you create the most comprehensive business procedures, SweetProcess provides you with documenting features, including texts, images, videos, audios, charts, and more, to enhance the usability of your procedures.
Co-founder of Spark Marketer, Carter Harkins, who has first-hand experience in documenting business procedures with SweetProcess, explains that the system makes it super easy to “break things out into new tasks and reorder them so that everything flows in a much more natural way.”
Implementing Policies
The implementation of your organization’s policies is necessary to maintain law and order in the workplace. How you create your policies will determine how your team will receive them. You want to be as transparent as possible, erasing all gray areas.
With SweetProcess, you’ll have a framework to create the most comprehensive business policies.
You might want to update your policies for the best practices in your organization—SweetProcess makes it drop-dead easy. Besides having access to your existing policies, each team is notified whenever a policy is updated, and you get to know those that have viewed the updated documents.
Onboarding and Training Employees
An inadequately trained employee is a disaster waiting to happen—one mistake from them could inadvertently send your business down the drain. It’s your responsibility to ensure that new hires in your organization are properly trained to be efficient and capable of making the right decisions.
It bears repeating that since your team has a significant role in your firm’s success, you should leave no stone unturned in their training. SweetProcess allows you to train new employees efficiently. Having documented your procedures in the system, you simply direct new team members to the documents. Afterward, you can give them a quiz to ascertain if they have acquired the intended knowledge from their performance.
Established employees also benefit from the training feature on SweetProcess. Whenever they doubt any tasks, they can simply access the procedures created for those tasks. Standing in for their colleagues or taking up new roles is easier because all the information that they need for their new duties is accessible on the system.
Thanks to SweetProcess, US-based law firm Brooks Law was able to train and empower its employees with all work-related information. This was liberating for Laura Johnson, who is in charge of administration and HR at the company. According to Laura, “It’s liberating for a manager. To me, it’s like: I don’t have to be available all the time to answer questions because they can go there.”
Manage Tasks
Keeping the workflow moving doesn’t stop at assigning tasks to team members. Knowing how they are engaging with the tasks at each point helps you to ensure timely delivery and mitigate risks.
SweetProcess offers tracking services that inform you about the latest activities. You don’t have to move around to know if your employees are working or not—their engagement or the absence of activity will be evident in the dashboard.
Getting approvals and sign-offs often slows down the workflow due to communication constraints. The automated notification feature on SweetProcess allows you to keep all team members updated on the workflow and notify them when their inputs are needed.
Create Public or Private Knowledge Base
The dynamics of communication in your firm will impact the knowledge level of your team members. There is a chance for certain team members to be more informed than others due to tribal knowledge.
A knowledge imbalance in the workplace makes some employees incapacitated and dependent on those believed to be more knowledgeable about tasks—this can be a big problem for your business when the go-to people aren’t available. There is little or nothing that can be done.
You are better off with a centralized knowledge base where work-related information can be accessed by your team members whenever the need arises, and SweetProcess offers you that. The system is designed with a search feature that allows you to search for specific information quickly.
A knowledge base is also beneficial to your clients. If you have any information that you want your clients to know, you can simply create and direct them to that page in SweetProcess instead of spending so much time answering repetitive questions.
E-commerce service provider Onogo enhanced its employees’ knowledge and skills by creating a knowledge base with SweetProcess. According to the company’s head of operations, Florinela Serban, “SweetProcess not only presented a platform to document the procedures and to bring all the teams onboard on it, but it provided an option to get all the information that we have in one place.”
SweetProcess wins when its users win. The system is so sure of its ability to deliver that it offers a free trial that doesn’t require a credit card. Why don’t you give it the benefit of the doubt and sign up for the 14-day free trial? If you aren’t impressed at the end of your trial, you can simply keep shopping for solutions without a scratch on your budget.
Running a successful law firm comes with some risks, and your organization’s fate lingers on how you manage these risks. In the next chapter, we shall identify the biggest risks law firms face and how to manage them.
Chapter 6: The Biggest Risks Faced by Law Firms and How to Manage Them
Growing your firm to become successful is achievable with hard work and dedication. But with success comes several risks that can ruin all that you have worked for.
Adopting a proactive approach rather than a reactive approach is vital in managing risks. Don’t wait until something goes wrong before looking for a solution. Understanding the possible risks that could endanger your firm and drafting a plan to prevent and address them beforehand increases your chances of survival.
The following risks may pose a threat to your business:
Cyber Threats
With confidential and sensitive information in your position, you should be concerned about cyberattacks. A data breach won’t only jeopardize your firm’s reputation but also that of your clients.
Rather than hoping that you won’t be a victim of a data breach, you need to take security measures to counter hacking attempts into your system.
Where do you store your work data? The need for a highly-secured system can’t be overemphasized. Although hackers’ abilities improve as software improves, they’ll have a tough time breaching your system if it has advanced security features like the ones offered by SweetProcess.
Human Error
Your law firm could suffer serious damages by the actions and inactions of you and your team members.
The relationship between you and your clients could take a downturn if clients feel that they didn’t get the best results due to negligence on your part—you could be slammed with a lawsuit for that.
For instance, a client could blame you if they lost a case due to an issue that you didn’t point out to them earlier.
Cultivate open communication with your clients. Present all sides of their cases to them beforehand and proffer your professional advice on how to handle them.
Treat all client-related matters with uttermost seriousness. Ensure that documents are well-written without typos or omissions and sent to appropriate channels at the right time.
Documenting your business procedures will help to prevent human errors.
Client- and Colleague-Related Risks
Clients expect a certain level of delivery when they engage your services, and if their expectations aren’t met, they feel disappointed.
Every client wants to win their case, and they trust your expertise to help them succeed. Your chances of winning a case are higher if you have a great deal of experience in that area. The best lawyers lose cases, but they wouldn’t be regarded as the best if their losses happened often.
Practice due diligence on clients before agreeing to represent them. Be clear about clients’ expectations beforehand and make sure that both of you are on the same page. If possible, redirect clients who stand a good chance of being challenging to work with.
Be mindful of the colleagues or law firms that you collaborate with on cases. Ensure that they have the expertise to bring favorable outcomes. Additionally, make sure that they have a clean record.
Mergers and Acquisitions
Growing law firms sometimes collaborate through mergers and acquisitions to achieve common goals faster—these are rewarding if the parties involved are committed to working together and are sincere in their dealings.
Getting entangled with a firm with questionable character could jeopardize your business. Investigate the integrity of the firm you are merging with before consenting to the arrangement or sharing confidential information.
Conclusion
Embarking on an unfamiliar journey without a roadmap is risky. There is a high chance that you’ll either get lost or waste a lot of time finding your way. A management system gives you a clear direction to focus on what matters when building a successful law firm.
Once you streamline complex processes and automate repetitive tasks, you’ll have sufficient time to develop your skills as a practicing lawyer. And with a track record of success in the field, it’s only a matter of time before the high-paying clients come knocking on your door.
Download our free Checklist for Streamlining a Small Law Firm’s Operations to set the ball rolling.
