Law Practice Management
Making It Work
Effective law practice management for small to mid-sized firms.
By Joan Jenkins
Most lawyers choose our profession because they are interested in the
law and its application to real human situations. Few go to law school
to become office managers. Yet this is what the majority of lawyers,
especially those at small firms, become.
In my 33 years as an attorney, I have essentially stayed with one firm, growing slowly from three employees and two lawyers to 11 lawyers and 30 employees. Over time, I have observed the management styles of many small to mid-sized firms, and when it comes to law practice management, I have come to identify the following common problems and practical advice that can solve them.
BILLING AND COLLECTIONS
Every firm should have proper procedures for billing and collecting fees. For young lawyers or those with small firms, practice management software such as MyCase, Rocket Matter, or Clio can be an inexpensive way to track time, manage trust accounts, generate bills and attorney performance reports, and allow for online bill payments.
When managing a law practice, you must make sure that you, your associates, and paralegals have good billing practices. Billers should enter their time as they work through the day because it is nearly impossible to reconstruct billable hours after the fact. Proper billing not only increases your cash flow but also helps with collections. Clients are suspicious of time entries that are too vague. Give them detailed bills that demonstrate you are performing necessary work, not padding your bills. Sending out bills in a timely manner is also essential. Allowing two or three months to pass before sending the client a bill results in large receivables.
When you run into problems with collecting bills, you need to have a policy for handling the situation. A call from a staff member who has never interacted with the client is not likely to achieve the same results as one from the paralegal who has diligently worked on the client’s case. When a case is over and fees still remain unpaid after multiple attempts to collect, you must decide whether to send clients to a collection attorney or simply write off the balance. While few lawyers are in a position to risk suing a client for fees, a good collection attorney can produce similar results.
While effective billing is the first ingredient to successful law practice management, staffing and cultivating a good office culture are just as important. Think long and hard about what kind of people you want to work with. At my firm, we hire for both competency and character. In the practice of family law, it is essential to have a team that demonstrates compassion, firmness when necessary, and extreme patience with people who are often on the “ragged edge.” Your legal team will function far more effectively if its members have common values and a shared approach to the way they treat others. It is also essential to make sure that you have employees who will meet your needs. For instance, firms should have at least one employee who is extremely knowledgeable about current technology including computers, cellphones, and tablets.
Retaining staff members can be as difficult as finding them. Almost every successful lawyer has loyal, long-term employees. Small courtesies to your employees can go a long way to increasing loyalty. Be reasonable about time off and wise enough to provide the benefits your employees need, such as health care as well as short- and long-term disability. When thinking about ways to ensure the continuity of staff, consider small things that make a big difference. For example, our firm has an annual Halloween party. We close the office early and invite all employees and their families to join in the fun.
Every office should have a set of standardized procedures in order to function properly, such as common forms, including those that meet specific circumstances not covered by practice manual forms, and procedures for handling new clients. This includes deciding who is going to field new client calls and what should be said during this critical, initial conversation. In our office, the lawyer’s paralegal takes the call and schedules the appointment. This relieves the lawyer of the burden of fielding calls from clients who are simply fishing for free advice or whose issues cannot be handled by the firm.
You should also have a standard client intake form, information to provide about your practice, and a contract for clients to sign before you commence work on their case. One easy way to provide clients with quick access to information is a client portal on your website. Our clients are given a password allowing them access to the portal, which contains information concerning the family law experience and instructions for things like answering discovery requests.
With most offices going paperless or moving quickly in that direction, your staff should also establish a logical way to store client case information so that anyone can quickly access a case file. Your firm should also have procedures for closing files, including a checklist of tasks to be completed before the file is closed. Weekly staff meetings to review current cases can help you avoid missing deadlines or frantic last minute preparation.
Virtually every lawyer now has a website—or should. A prospective client will likely go to your website—your first point of contact—to learn more about you and your firm. Look at your website from the perspective of a new client and objectively judge whether it conveys professional, organized information that will make you stand out from other lawyers. Do not establish a website only to neglect it. Keep the content fresh and update lawyer credentials regularly.
We have found that one of the most successful ways to market our firm is to encourage volunteering in our community. Supporting individual attorney involvement in local charities, such as sponsoring a table at charitable events where your firm name is prominently displayed, generates goodwill and can be a better marketing tool than spending the same amount of money on advertising.
Marketing equates to advertising, and the State Bar of Texas has rules you must follow in that regard. If you are considering running an advertisement for the first time, go to the State Bar website, texasbar.com/adreview, to educate yourself about the rules.
As the size of your firm increases, consider outsourcing your human resources or financial analysis. Many firms employ outside HR to assist the firm with hiring and firing employees, establishing a clear set of employee rules and regulations, and ensuring the firm is in compliance with all state and federal regulations, including the U.S. Health Insurance Portability and Accountability Act. Outsourcing HR is relatively inexpensive. We have done so for over 10 years at a fraction of what we paid an office manager. Many HR groups that work with small businesses provide services for less than $3,000 a month.
You may also consider employing a part-time chief financial officer. If you do not have a clear understanding of your exact overhead and the actual cost of each employee, including their proportional share of the overhead, then it will be difficult for you to run a profitable practice. Our CFO works a limited number of hours per month at a reasonable rate and is responsible for producing detailed monthly financial reports and analysis. Don’t be penny-wise and pound-foolish. Your hourly rate is likely to be much higher than what you would pay an HR person or a part-time CFO. Think logically about whether capturing those billable hours would be more economical than continuing to do this work yourself.
Firm management is not as exciting as trial work, but it is just as important so put these suggestions to work and enjoy the profits they generate.TBJ
|JOAN JENKINS is a partner in Jenkins & Kamin and a co-author of O’Connor’s Texas Family Code Plus.|