Intelligent Planning for Your Law Firm Expansion
Being an attorney requires so much dedication to the law and clients that it may be easy to overlook key concepts when expanding a law firm. While growth may be a sign of good things to come, navigating this business aspect of the legal practice has its challenges.
You may be able to address these challenges of law firm expansion through intelligent planning that carefully considers the details of your practice. This planning may reduce the risks of growth and promote the chances of long-term success. These principles may apply whether you are a solo practitioner looking for a part-time assistant or a mid-sized firm hiring more full-time associates.
Stay Within Your Scope of Expertise
Attorneys with subject-matter expertise who continuously provide positive client experiences may start noticing an uptick in engagement requests and new client inquiries. Generally, this would be a sign of growth and expansion opportunities may be presented. However, issues may arise when those new matter requests start to land outside of an attorney’s competency.
The practice of law encompasses a broad range of services that require different levels of expertise. Nuances make it difficult to be simultaneously competent in multiple areas. For example, a criminal defense attorney may have a hard time advising a client about what corporate structure they should establish for their small business. Additionally, different laws further complicate the matter (i.e., federal, state, and local laws).
Attorneys and firms with growing practices might find it tempting to accept new matters outside their practice area for the short-term payoff. In other words, they assume that any business is good business. The downside to that expansion method is the increased risk of not knowing what you don’t know. Potential consequences include giving incompetent advice or underestimating the time and cost of accomplishing a matter, both of which can be harmful to a firm’s long-term growth. To reduce the risk of practicing outside your area of expertise, you may consider the following best practices:
- Develop a strong intake process to assess how a client’s needs align with your skillset
- Create tailored scopes of representation in engagement letters
- Hire qualified attorneys and staff to handle matters outside your practice area
- Don’t be afraid to refer clients to other attorneys better suited for the matter. This creates opportunities for expanding your network and receiving referrals in return.
Law Firm Expansion May Require Careful Delegation
Conventional wisdom about practicing law suggests that some attorneys spend very little time doing legal work – maybe a few hours a day. Administrative and business tasks tangential to being a lawyer may make up the bulk of their time. As your client base and open matter list grows, you may need to assess opportunities for delegating or outsourcing those tasks. The potential upside is the freedom to bill more hours and the reduced risk of neglecting client matters.
Delegating Non-Legal and Administrative Tasks
Common administrative tasks for a law firm may vary based on the practice areas but might include the following needs:
- Reception/front-desk services (e.g., calendaring, contacting clients, answering phones)
- Accounting, payroll, and billing
- Marketing (website, social media, finding speaking engagements, etc.)
The size of the firm may determine the appropriate method for delegating these tasks. You may wish to hire full or part-time positions for some functions (e.g., accounting and IT) or outsource to qualified third-party providers for others (e.g., reception and marketing). You may not be able to delegate all these items at once but rather, gradually over time. Some factors for prioritizing the delegation of administrative tasks may include:
- Current number of hours spent tending to admininstrative tasks
- Frequency of the task (e.g., daily, monthly, quarterly, annually, or longer)
- Cost of delegating (e.g., paying an employee, time spent onboarding, paying a third-party contractor)
Delegating Legal Work
Your practice may also reach a stage where there is too much legal work to do by yourself. Delegating legal work may involve hiring associates, paralegals, and contract attorneys. It could also include partnering with attorneys on a case-by-case or permanent basis. Many options exist for delegating work to meet the short and long-term expansion goals of your practice. When choosing an option, you may reflect on the following considerations:
- Identify the specific legal tasks you want to delegate (e.g., client correspondence, document review, drafting agreements, handling low-stake matters start to finish, etc.).
- Keep in mind that certain items may require different levels of expertise (e.g., the difference between drafting a form engagement letter and a motion for summary judgment).
- Know the cost of training
- Cost of delegation source (i.e., different costs exist for a full-time associate vs. a temporary contract attorney vs. a part-time paralegal)
- How will the delegation help you expand your practice? You may think about your day-to-day operations and how they would change by delegating certain legal work.
Expand Business Opportunities by Identifying Referral Networks
Expanding a law firm may require developing a strategy for finding new business opportunities. You more than likely have limited hours and resources to commit to business growth. This requires careful selection of marketing opportunities
that provide the greatest return at the lowest cost. Some examples might be:
- Create an online presence to establish yourself as a thought leader in your practice area
- Curate a roster of other service providers and contacts that will generate referrals (e.g., CPAs and financial advisors for estate planning and tax attorneys)
- Join organizations and volunteer programs with participants who may find a use for your legal services
- Develop a network of other attorneys who practice in complementary areas. For example, a wrongful death attorney may find a fruitful relationship with a probate attorney because a client filing a wrongful death suit likely needs estate administration too.
Consider Options for Purchasing Risk Transfer Assets
The growth of your practice – either through taking new matters or hiring new staff – may create additional risk and exposure. Law firm expansion naturally involves relinquishing some control over aspects of your practice that may leave you vulnerable to increased risk of malpractice claims. In some cases, this may happen in situations where you personally did nothing wrong.
Errors & Omissions insurance is one way to help protect your firm when defending malpractice claims alleged against you or your staff. Although the expense
of insurance premiums is another line item to your budget, malpractice insurance is also a risk transfer asset you can add to your balance sheet. You may want to reevaluate your policy limits and coverage needs a couple times each year for important changes such as:
- Hiring additional attorneys
- Expanding into new practice areas
- Expanding into new geographic areas
- Increased stakes of matters (i.e., accepting high dollar-value matters)
Aon Attorneys Advantage Makes Law Firm Insurance Quick and Easy
At Aon Attorneys Advantage, we understand that purchasing malpractice insurance is one more administrative burden for growing law firms. That’s why we provide an intuitive online platform for attorneys to obtain a quote quickly, process a renewal, or find additional coverage. Of course, when the need arises, our policy advisors are available for more specialized help – giving attorneys options to address their insurance concerns.
Get a quick quote today.
This information is provided for general informational purposes only and is not intended to provide individualized advice. All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy. Coverage is governed only by the terms and conditions of the relevant policy.