5 Law Firm Business Tips to Help Grow Your Practice and Survive Tough Times
Working in a small law firm can be incredibly rewarding. Depending on the way you set up your business, you may be able to choose your clients, have control over your caseload, develop niche expertise in your preferred areas of practice, and maybe even be your own boss.
That said, like just about any business venture, running a legal practice can have its challenges. From marketing and client acquisition to budgeting and bookkeeping, you may often need to think like an entrepreneur and not just a lawyer. The law firm business tips below might help with that. Besides, they may be especially useful when your practice is going through tough times.
Law Firm Business Tips to Incorporate in Your Practice
As an attorney, it may not always be easy to switch your mindset and approach managing your firm from a business perspective – especially if you are just starting your own law practice or going solo. These tips could help give you a nudge in the right direction.
1. Prioritize Building Robust Client Relationships
Loyal clients could not only bring in repeat business but also help you get even more
clients. According to the 2020 Legal Trends Report
, referrals can be key drivers of new law firm business, with consumers saying that personal recommendations and favorable reviews are the most important factors they consider to determine if a lawyer is hirable.
With this in mind, it may be a good idea to invest in building (and maintaining) strong client relationships. One way to do that is by adopting a client-centric approach to most, if not all, aspects of your work – before, during, and after a case. Depending on the situation and the particular client, this may involve:
- Maintaining regular, timely, and clear communication with clients
- Ensuring billing and cost transparency
- Paying attention to feedback and making changes accordingly
- Treating your clients with compassion and respect
2. Do Not Shy Away from Networking
Admittedly, networking may sometimes feel unnatural or forced. If done right, however, it can be an effective strategy to help boost your firm’s profile and attract new clients. So, you may want to put any hang-ups you may have to the side and get yourself out there.
To that end, you could consider:
- Attending bar association events
- Mingling and socializing with fellow attorneys
- Getting involved in your local community
- Doing public speaking engagements
You should also keep in mind that practice makes perfect. Do not get discouraged if your first few attempts at networking do not work out the way you planned. As long as you focus on engaging in meaningful conversations that bring value to people and at the same time promote your practice, sooner or later, your efforts could result in referrals.
3. Invest in Legal Software
In this day and age, it may be impossible to run a law firm without using some form of software. According to the 2020 Legal Trends Report, 85% of the polled law firms said they utilized practice management software. A further 79% of lawyers said they stored data on the cloud, and 62% had clients sign and share documents digitally.
The good news is that while modern technology may well be unavoidable, it can help you connect with clients more easily. The 2020 report found that 50% of consumers were more comfortable with technology, and 52% said they used technology more often than before. Interestingly, 69% claimed they preferred to share documents electronically, and 56% said they would rather talk to their attorneys via videoconferencing than over the phone.
Given all that, you may want to consider incorporating modern technological solutions into your practice. Some examples include:
- Email and calendar tools
- Electronic legal research tools
- Marketing software
- Accounting, timekeeping, and billing software
- Law practice management software
- Legal contact relationship manager
- Paperless office tools such as external hard drives, cloud storage, and remote backup
Note that you may not need to buy all of the above – or not separately, at least. Many tools are free of charge, and others come as part of integrated software suites.
4. Consider Expanding in New Markets
To stay relevant in what can often be an oversaturated industry, you may need to become more flexible and explore new markets. Besides, many consumers may not be willing to travel more than a few miles from their homes to find an attorney. This is why you should consider expanding your practice to cover:
- New geographical locations, such as new boroughs, towns, or cities
- New practice areas
- Underserved consumer demographics
The more diverse your business, the more resilient it may become to potential slow periods in certain markets.
5. Insurance for Lawyers
Unfortunately, as your practice and client base grow, you may become more vulnerable to potential legal risks.
To help protect yourself and your business from claims arising from your professional services, you should consider purchasing professional liability insurance for small firms or solo attorneys as a minimum. Some states require lawyers and/or business entities to carry certain limits. In addition, the American Bar Association in its Profile of Legal Malpractice Claims 2016–2019
found that 62.51% and 32.33% of all claims were filed against firms with up to five attorneys and solo practitioners, respectively.
If you store or process sensitive personal, legal, or financial information electronically, it may also be a good idea to purchase cyber insurance for law firms. Internet crime can be costly for your business. IBM's 2020 Cost of a Data Breach Report
found that the U.S. experienced an average of $8.64 million in losses per attack – the highest data breach costs globally.
A business owners policy (BOP), workers’ compensation, or umbrella insurance may also be a good choice for your practice. To find out more, check out our dedicated triage page
Managing Your Law Firm with a Business Mindset: Final Thoughts
Whether you practice as a solo attorney or together with a handful of fellow lawyers, working in a small law firm could make for a stimulating and fulfilling career. Like any business, it does have its risks, but a comprehensive insurance policy or policies can help protect you.
Get your quote today.