While large law firms get more attention, it is the small law firms that make up the backbone of the U.S. legal industry. According to the American Bar Association (ABA), the overwhelming majority of legal professionals nationwide work at law firms with nine or fewer lawyers. Knowing how to manage a small law firm is not always easy. There are many challenges that need to be addressed—from building the right team, to running financials, to developing efficient systems, and to getting a handle on law firm SEO services.
At SunRize Marketing, we have extensive experience working with small law firms. Our core mission is to help law firms connect with more clients and develop their legal practice through a well-crafted digital marketing effort. Below is a comprehensive guide to managing a small law firm.
An Overview of the Common Challenges Faced by Small Law Firms
Owning and operating a small law firm can be difficult. While there are great opportunities available for small firms, Thomson Reuters reports that attorneys who manage firms still face “numerous challenges.” It is crucial that you and your team are properly prepared. Some of the most common challenges faced by small law firms include:
- Staying Competitive: Small law firms have an important brand proposition to offer to clients. Still, they face challenges in staying competitive with mid-size and large firms. A strategy is needed to ensure that a small firm can keep up with other firms that have more resources.
- Attracting Clients: The greatest law firm in the world will quickly fail if it cannot find clients. New clients are crucial to the legal industry. Attracting clients consistently remains a top challenge for small firms. It is imperative that small firms have a well-crafted strategy in place—which could include everything from SEO services to law firm PPC.
- Controlling Costs: As noted by the Associated Press (AP), inflation hit a 40-year high in 2022. The legal industry is facing rising costs. Controlling costs is a top priority for small law firms. It can be difficult and small firms need the right systems and processes in place for controlling costs.
- Implementing New Legal Technology: Legal technology is changing the way law is practiced in the United States. For small firms, implementing new technology can be a challenge. The potential for upfront costs—in both time and money—can sometimes feel daunting. The good news is that there are cost-effective, efficient solutions available.
How to Build the Right Team for Your Small Law Firm
The right personnel can make a big difference for a small law firm. As small firms are, by definition, made up of a relatively small number of professionals, the contributions of each individual person becomes even more important. It is crucial that the managers of small firms know how to put the right people in place. Here are four tips for building the right team for your small law firm:
- Know Your Goals and Your Needs: Building the right team of people starts with knowing what your law firm needs and who you need to look for. As an example, imagine that your small boutique law firm sees a real opportunity in expanding into family law. Do you have the right legal professionals on staff? Do you know how to find them?
- Make Everyone Feel Like Part of the Team: Of course, any person hired by a small law firm is an employee. That being said, it is important for small firms to emphasize teamwork. When everyone feels like part of the team—and understands their role—a small firm can accomplish big goals.
- Cultivate Culture and Communication: The most talented individuals do not always produce the most successful team. The best teams are even greater than the collective sum of their parts. By cultivating a strong culture and open communication, you can develop the right team for your small law firm.
- Reward Team Members for Good Work: A key part of building a successful team is retaining talented professionals (lawyers, paralegals, support staff, etc) when you find them. Rewarding team members for good work is a must. Small firms build the best teams when they offer competitive compensation packages, a strong work-life environment, and a positive culture.
Invest Time and Resources into Training Your Team
Lack of proper training is one of the primary reasons why small firms struggle to develop effective teams. As a manager of a small law firm, it is essential that you put adequate time, energy, and resources into training your team. It is difficult for a small law firm—or any other type of business or organization—to be truly efficient when team members are not on the same page. Proper training is a must. A relatively modest investment on the front-end can make a big difference.
The Importance of Learning to Manage the Firm’s Financials
Similar to any other type of business, a small law firm’s success will depend on the bottom lime. A lawyer who manages a small firm must be well-acquainted with its finances. Key reasons why learning to manage a small law firm’s financials are so important include:
- Budgeting: Law firm managers must be able to craft a workable budget.
- Decision-Making: Business decision-making requires knowledge of finances.
- Profitability Analysis: An understanding of the finances allows for a profitability analysis.
- Long-Term Planning: A sustainable business model should be based on financial reality.
Develop a Strong Personal and Law Firm Brand
Branding matters. It is especially important for small law firms. The fact that a firm is a small firm is itself a value proposition for potential clients. Whereas large law firms can feel stodgy and impersonal, people and businesses feel that small law firms are able to offer personal attention and narrowly tailored legal services. Lawyers who manage small law firms need to develop their personal and business brand. There are many ways to do so, including putting together a well-honed social media strategy for a law firm.
How to Organize Your Small Law Firm Efficiently
To reach its full potential, a small law firm needs to be efficient. Indeed, increased efficiency can actually be one of the (many) advantages that a small law firm can offer to clients. Compared to their larger counterplayers, most smaller firms have less formal systems and procedures. At the same time, a small law firm needs a well-considered organizational structure. Among other things, this means:
- Creating Procedures (SOP for Everything): A small law firm should have standard operating procedures (SOP) for all important aspects of the legal practices. Key areas include: client intake, tracking of attorney and paralegal time, assigning of legal work, communication with clients, billing, and tracking of firm revenue/expenses.
- Streamlining Your Processes: Small law firms can go a long way toward increasing efficiency by streamlining their processes. In many cases, modern legal technology and law firm practice automation can help streamline many of the systems and procedures.
The Use of Technology Can Make a Difference
Technology is changing legal practice in the United States. At its best, legal technology makes the practice of law more efficient and more effective. At its worst, legal technology is misused and can actually slow things down. A poll of lawyers found that most of them do not think that their employer is using technology effectively. The numbers are even worse for small firms. It is crucial that small law firms develop a comprehensive plan for using and implementing legal tech.
Develop a System to Streamline Client Intake
It is difficult enough to attract a reliable client to a law firm. There are few things more frustrating than losing a client in the intake process. Once intake has started, the prospective has already shown a genuine interest in retaining the law firm. The intake process itself should be as easy, efficient, and streamlined as possible. It will make things better for both the client and the law firm.
Improve Client Experience
A small law firm can offer a boutique experience to clients. Indeed, smaller firms are generally in the best position to offer truly personalized legal services. They can pay close attention to the small details that can make or break a case. On the other end of the spectrum, some people report that smaller firms can be disorganized or otherwise difficult to deal with. The client experience is crucial. Small firms rely on their reviews and testimonials. Reputation is at stake. Some principles for improving the client experience include:
- Make the client intake process as easy and smooth as possible. Seemingly small issues—from a non-returned phone call to problems with website design—can hurt a law firm.
- Offer realistic and transparent legal guidance. The client experience is best when they feel like they are being given accurate information. Overpromising leads to big problems for small firms.
- Communicate openly and consistently. Clients crave communication with their legal counsel. Small firms are often in a better position to offer open, consistent communication.
- Use legal technology well. Legal technology can improve the client experience. For example, implementing some relatively simple technologies like docusign and smooth file sharing can take a lot of the stress and burden off of a client.
Set Law Firm Goals and Objectives
All small law firms need clear objectives. Without real goals, it can be difficult to tell if your law firm is actually making a progression. Here are four key things to keep in mind when setting goals for your small law firm:
- Set goals ahead of time and consistently review your progress;
- Develop clear benchmarks for success;
- Make goals reasonable and attainable; and
- Do not be afraid to revise goals with circumstances change.
Develop a Competitive Pricing Model and Consider Alternate Payment Methods
Every law firm’s pricing model is different. For the most part, smaller firms offer more competitive pricing options to clients than the nation’s largest law firms. Though, there are exceptions. Ultimately, pricing depends on a wide range of different factors—from the experience of attorneys to the specific practice area. Small firms should develop a sensible and competitive pricing model. Additionally, they should be willing to consider alternative payment methods, including:
- Contingency fee arrangements;
- Payment plans for clients (12 to 72 months);
- Fixed fee pricing models; and
- Unbundled (limited scope) legal services.
Know the Risks Faced by Law Firms and Understand How to Tackle Them
Risk management is crucial for law firms—and small firms are certainly no exception. It is imperative that the managers of small law firms have a comprehensive understanding of the common risks that they face and the strategies for addressing these issues, including:
- Data security and cybersecurity;
- Inability to find and attract clients;
- Professional error (malpractice claims);
- Staffing problems, including understaffing; and
- Cost overruns.
Run Your Small Law Firm Virtually with a Cloud-Based Software
Telework is changing how law is practiced. The American Bar Association (ABA) reports that the large majority of lawyers expect to work remotely at least part-time in the future. Most lawyers desire the flexibility offered by the ability for telework—meaning law firms that are not set up for this option could be at a competitive disadvantage when it comes to attracting and retaining talent.
Small law firms can benefit from running their practice virtually using cloud-based software. Indeed, cloud-based legal practice management technology can offer a wide array of different benefits, including flexibility, security, efficiency, and even cost-savings. Small law firm managers should be aware of their options.
Why Should a Lawyer Hire Sunrize Marketing for Help With Managing their Law Firm?
At SunRize Marketing, we are the leaders in digital marketing for small law firms. Our team is dedicated to providing solutions-driven services to small law firms nationwide. We handle everything in the digital marketing space—from law firm SEO to PPC advertising to website design and development. No matter your specific needs, our professionals have the proven skills and experience that your team can trust. We understand the unique challenges that small law firms face. To learn more about our services for small firms, please call us now or connect with us directly online.