Are you tired of working long endless hours and not making nearly enough for it? Not sure of where the money is going? Does it sometimes feel like the harder you work the less you make? Does it feel like your practice runs you; not the other way around?
Whether everyone agrees with it or not, a law practice is a business and needs to be treated like one. Here are my first 5 steps to start thinking of your law practice as a well-oiled and profitable business:
1. Become a Great Leader
Leadership is the one factor that can have a greater influence over an organization or activity than any other factor at any particular time. Every great law practice needs a great leader.
a. Understand your purpose and understand the purpose of your practice.
b. What are the values that serve as a moral and strategic compass for your business?
c. Define your practice’s mission statement that describes what you do to carry out your purpose.
d. Come up with a vision statement that describes where you see your practice being in 5-6 years.
2. Understand the Numbers
Get under the hood of your practice. Understand the numbers in depth.
a. What are my historical monthly expenses? What are my anticipated monthly expenses?
b. How much billing is required to cover my expenses and allow for an acceptable level of profit?
c. What is the impact of increases in my expenses (ex. Hiring or moving to a larger location)?
d. Define your budgets and understand your cash flow requirements.
e. Define your KPIs (Key Performance Indicators); track and monitor them. (Ex. Average Fee per Client, Revenue per Employee, Income, Expenses, Profit, New Clients per Month, etc.)
3. Set Smart Goals and Strategies
All successful people are intensely goal oriented. They have a clear picture of what they want and they are focused single-mindedly on achieving it. Setting clear written goals is the master skill of success. Make sure your goals are SMART, in the present, personal and positive. Make sure your goals are set within the framework of your purpose, values, mission and vision:
S – Specific
M – Measurable
A – Aligned with your values
R – Realistic
T – Time bounded
4. Define and Refine Your Processes
Make sure all of your critical processes are clearly defined and understood by all staff. Make efforts to refine and improve them on an ongoing basis:
a. Billing and Collection
b. Contract and File Management
c. Client Relationship Management
d. Standard Daily Procedures
5. Track, Stop and Reassess – Continuously
Use the KWINK methodology. “Knowing What I Now Know” what would I:
a. do more of?
b. do less of?
c. start doing?
d. stop doing altogether?
When you treat your law practice like a business, not only will you increase profits and find more time for yourself; you will decrease the stress levels of not really knowing what is going on from day to day and month to month. Follow the five steps above and you will be on your way towards getting control of your business and turning it into a well-oiled and profitable machine that work for you and your clients.
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