The Friday Five
Five Tips for Small Firms from Legalweek 2017
Last fall, when I learned ALM Media had expanded the Legal Tech conference for 2017 to include a small firm focus, I was intrigued. During the newly branded Legalweek small firm track last week, hosted by How to Manage a Small Law Firm (HTM), topics included marketing, technology, metrics and hiring, as well as the challenges facing small firms.
Here are five tips that I picked up from the small firm side.
1. Where Small Law Should Look to Big Law
Surveying the technology landscape, small firm solutions or versions of expensive platforms used by big law firms are now available. For example, cloud-based practice management or case management systems are available on a monthly subscription basis, and you can pay a flat fee for online research services. Solos and small firms have an advantage over larger law firms because they can be more nimble when it comes to evaluating and adopting new technology.
It’s not just about administration, though, it’s about creating a better client experience. Client communication and managing expectations are key, as shown in Avvo’s research on millennial legal consumers. Technology can improve the flow of information, thus improving client satisfaction.
Hiring practices can be universally applied, no matter the industry. According to HTM, basics such as creating job descriptions and understanding how each position supports your workflow allows you to analyze your processes and profitability.
2. Don’t Be Afraid to Focus Only on Ideal Clients
As the recent Thomson Reuters 2016 State of Small U.S. Law Firms survey reports, it is easy for solos and small firms to be overwhelmed by administrative tasks and the ever-increasing complexity of technology. And in the constant search for more clients (the top “significant” challenge identified in the report), it’s easy to get diverted into offering the broadest possible representation. Instead of trying to be everything to everyone, New Orleans-based Wealth Planning Law Group (WPLG) described how it defined its “ideal” client and said it does not attempt to work outside of that definition.
You only have one reputation, and people can’t wait to share bad news. Even if you do a poor job once, it is more likely to be broadcast than your good work performances.
3. Metrics Matter
Starting a small firm is just like starting a small venture — any professional service, including the law, is a business. The State of Small U.S. Law Firms report talks about the challenge of clients looking for “more for less.” In response, however, firms often focus solely on generating more billable hours. Improving client satisfaction and cash collection are often overlooked. By measuring client experience using a key performance indicator (KPI) like net promoter score, WPLG avoids spending money on marketing to attract new clients — they constantly measure and monitor their reputation. Their client survey is conducted when the clients are finished signing and their documents are being copied for their files.
Billable hours targets mean nothing if the cash is not collected. According to the RayNa Corporation, lawyers have one of the worst aged accounts receivable performance of any profession — usually at least 30 percent is over 90 days. Lawyers are unique in that they perform work before getting paid. However, most firms can change their fee structures and billing practices. Again, small firms have an advantage because they can quickly begin tracking KPIs and analyze their biggest pain points.
4. Keep Integration and Inoperability Top of Mind
Less is more when it comes to the technology needed to run a small firm. The list of enabling software solutions is long: document assembly, client intake, timekeeping, accounting, billing, project management, document review and more. While software can be helpful, if attorneys must learn multiple systems and input data more than once, it’s not efficient and can be prone to errors. Look for systems that either provide an end-to-end solution, so that everything operates within the entire platform, or the ability to transfer data seamlessly to and from other platforms. Keep it simple!
5. Technology Is a Great Equalizer
More than half of small law firms surveyed by Thomson Reuters say they aren’t doing anything about the challenges they identified.
Finding new clients and providing more for less requires technology. In fact, some firms are blending services and products, coming close to offering technology as a service. There is an access to justice issue in this country and the new models, like do-it-yourself platforms or legal services plans, will assist consumers and businesses alike in finding legal help. The legal market has been isolated from consumer pressure, but according to Avvo’s millennial research, that is changing. Firms of all sizes will need to adapt to the pressure.
I encourage you to read the State of Small U.S. Law Firms report with an eye toward challenges that can be met with technology. Be curious. Ensure that you are, at minimum, tech savvy, if not cybersecurity savvy.
Solo and small firms have a tremendous opportunity, but you must be proactive. As hockey great Wayne Gretzky said, “Skate to where the puck is going to be.”
Mary Juetten is founder and CEO of Traklight, and has dedicated her more-than-30-year career to helping businesses achieve and protect their success. In 2015, Mary co-founded Evolve Law, an organization for change and technology adoption in the law. She was named to the ABA's Legal Technology Resource Center 2016 Women in Legal Tech list and the Fastcase 50 Class of 2016. She serves on the Group Legal Services Association Board. Follow her on Twitter @maryjuetten and find her new book,"Small Law KPIs: How to Measure Your Way to Greater Profits," here.
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