Future Perfect: Staged Business Planning for Law Firms
This is probably wishful thinking, but wouldn’t it be nice if every solo practitioner and small law firm had a business plan? I mean, mostly nice for them. Probably not for their competitors … or for me. I’ve become somewhat ambivalent on the subject, as the sands have run through the hourglass. You see, I always tell our clients at LOMAP to create business plans. Almost universally, they never do. But if they did, I’d have to review them. Double. Edged. Sword.
Nonetheless, yes, it is a good idea to create and follow a business plan. Among other benefits, it allows lawyers and law firms to:
- Define what the practice means to them, and for their clients, via a mission statement — which can be spun off into elevator speeches.
- Develop and manage a budget.
- Set up a technology plan.
- Estimate revenue projections.
- Establish calculations for return on investment (ROI).
- Create publication schedules for content marketing.
- And more.
Further to that penultimate point, law firms should also develop marketing plans (here’s a template), whether as a separate document or as folded into business plans. It also makes good sense to install an “active” plan for running your firm. What I mean by that is, whereas most business plans get drafted and tossed in a drawer, the far better practice is to utilize the law firm business plan to break out achievable goals that can be rendered down to subtasks, which may be listed among your general tasks, as placeholders for achieving longer-range plans.
Ah, but that’s just it: How long-range should you run projections out? If you string things along (long long), then what happens? Dynamics, people and circumstances can change enough to scuttle even the best-laid plans. So how far in advance can you plan before you start to lose effectiveness?
I’m so glad you asked.
A Coat of Primer
For many solo lawyers and small firm attorneys, tomorrow is always the next adventure. Systematizing tasks at the outset of a practice can decrease stress and reduce the amount of time you feel overburdened, while increasing the amount of time you are not working, spending time with family and friends. The challenge lies in putting the work in ahead of time: building systems, creating workflows. But as you put in the elbow grease, remember the long-range benefits. For example, developing a calendar system that fits your professional style and keeps you on-task will allow you to tame the daily grind. You can then move on in years along with your planning, without feeling like a sleepwalker across the term of your own life.
Once you put effective systems in place, once you can get past the day-to-day, then you will be able to effectively move your planning into the projection phase. This is when you begin to make guesses about what will happen to your law practice in future years.
Phase One: The First Four Years
When starting a law firm, it’s best to focus the business plans on the first three to four years of operation, because (in most cases) that is when a law firm will succeed, or fail. If you can’t make it through the first three or four years with a sustainable business model, it’s not likely to ever happen for you. The operational maxim here is to make hay while the sun shines.
Of course, no one predicts that their law firm will fail, and I’m not trying to say that you should extrapolate your law firm as a failure — then nobody would start in the first place. The problem is that many entrepreneurs create overly positive projections, which are improbable, at best, and impossible, at worse. The remedy is to remove the rose-colored glasses. There are two ways to do that:
- Create an aggressive projection, a conservative projection, and address the middle ground.
- Get out of your own head; run the notion of your future success past a trusted confidant.
This way, you can temper your enthusiasm, without beating it to a pulp.
What, exactly, goes into a short-range plan? Much of what people focus on in business planning is revenue projection. But that does put the cart before the horse somewhat — you must have a solid administrative plan in place before you can create a valuable service that potential clients are willing to buy. Instead of focusing entirely on revenue projection, unwind the future course of development of your practice:
- Spin out desired practice areas, and when and how they will develop.
- Project your overhead, since that will provide a baseline for revenue that you must achieve.
- Plan out various marketing tactics, and define the stages at which you will release the veritable hounds.
You’ll want to review the effectiveness of your efforts from time to time, and make tweaks to your processes. However, it’s important to note that, when starting a business, you must enrobe your compulsion with patience and allow your efforts to flower, especially with respect to marketing.
Phase Two: The Genesis of the Revolving Five-Year Plan
Let’s assume that you’ve made it to year five. Congratulations, your law firm still has a heartbeat — following your concerted movement through the danger zone. Now for the less-pleasant news: You can’t stop making plans, just yet — or, ever, really. Things will not run themselves, a byproduct of inertia.
Year five is when you dust off that naive first run at your law firm business plan — or better still, rip it up and draft an entirely new version. … Wait, you could have just created a 10-year plan. But if is an inexact science to project out three or four years down the road; attempting to accurately predict years five through 10 is a downright crapshoot. Why waste your time?
Think of all the changes wrought in our society and in the legal field over the past 10 years. A law practice in 2015 looks nothing like one did in 2005: paperless was but a whisper, social media a dew drop; people used flip phones. If a lawyer from 2005 was transported into the present day, she would be immediately overwhelmed by all there is to learn. It’d be like starting from scratch; so pretend you are. By 2017, the drones will have taken over anyway.
Of course there’s another reason not to overspend your time predicting out the first 10 years of your practice: because of the opportunity cost; you’ll lose valuable time thinking about the last five years, as opposed to the first five, which is when the rubber meets the road. Consider what you predict about the future of a child in daycare. Are you considering kindergarten or fourth grade? Right: You don’t think about fourth grade until kindergarten is upon you. In some cases, it’s better to let the choices come to you.
Phase Three: The Folly of Interminable Planning
Tomorrow never knows. If attempting to prophesy over years five through 10 is foolish, outlining over a decade or two is downright insane, and likely a depressing exercise. (You will be how old?) If you’ve run a successful law firm for a decade, that’s about the time you need to be watching out for complacency taking over. Are you relying too heavily on one practice area? Are there trends in the practice you’re missing because you’re resting on your laurels? Are you losing efficiencies because you’re not updating technology?
Just because most small businesses fail early, it does not mean that small businesses never fail late. Things can unravel in a hurry. The effectiveness that comes from developing three- to five-year plans is not limited to new law practices. If you develop short-range plans every three to five years, it forces you into “start-up” mode again, and reminds you of that hunger. It forces you to reevaluate yourself over and over again, to make sure you do not stagnate.
This is not to say, of course, that you do no thinking whatsoever about the long-term relevance and sustainability of your practice. Legal futurists (like Richard Susskind and Attorney at Work favorite Jordan Furlong) have many eloquent things to say about the future of law. Their method, and the method of others like them, is to spot trends and extrapolate them out over time, such that even the futurists base their long-range proposals on short-term insights. It’s the same for enterprising solo and small firm lawyers developing revolving three- to five-year plans, with an eye toward following trends and playing them out over the years, in segments.
After all, one long-range plan is only just a series of short-term plans linked over time.
The future perfect is a tense mostly forgotten by the majority of English writers. As a Latin, Ancient Greek and Spanish scholar, I am personally offended that the future perfect tense gets no love. The future perfect tense aids the construction of “will have”-fronted verbs. That is so much finer and more powerful than your standard “will” construction; it admits of no doubt. The notion that you will have done something connotes that, while that something shall happen in the future, it’s just as good as done. If you think of the range of your business planning options in the same way, you may imbue yourself with the confidence that comes with speaking in no uncertain terms: that the thing is more than half done already. And it’s your thing.
Jared Correia is Assistant Director and Senior Law Practice Advisor at the Massachusetts Law Office Management Assistance Program. Jared is the author of Twitter in One Hour for Lawyers. He writes on practice management for Attorney at Work, here, and for the LOMAP blog here. He is a graduate of Suffolk University Law School and of Saint Anselm College, where he was a captain of the debate squad that finished as national runner-up in 2000. He loves James Taylor and tweets @jaredcorreia.
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