Successful Law Firms Are All Alik

Published April 14, 2009

Tolstoy famously began his novel Anna Karenina with the assertion that “happy families are all alike; every unhappy family is unhappy in its own way.” Much the same can be said about the business prospects of law firms. Firms that are in danger of failing have generally followed their own unique paths to destruction through a toxic combination of personality clashes, policy failures, and practice errors. By contrast, successful firms reflect similar positive attributes.

We are inundated with negativity about law firms these days, so I thought it would be timely to go back to the positive fundamentals, and list ten common characteristics of successful law firms that I have uniformly observed in decades as a lawyer, coach, executive and consultant. In these firms the lawyers:

  • Have a comprehensive business plan.
  • Remember that the client comes first. Without clients, there is no reason for a lawyer to exist.
  • Sell solutions (“provide value”) to clients, not sell time as expressed in billable hours.
  • Begin each matter with an engagement letter—a written agreement outlining the scope and responsibility of each party, including the client’s responsibility to pay.
  • Prepare budgets for each matter: tasks, events, timing and resources to be used for the benefit of the client. This requires early analysis and client signoff.
  • Understand that their inventory is not “billable hours,” it’s the cash those hours represent, and they focus on collecting accounts receivable and maintain a high realization rate.
  • Practice effective cash flow management by getting funds into the bank as quickly as possible.
  • Recognize that technology—emails, blogs, cell phones and voice mail—cannot replace personal relationships, personal integrity, and rapport with clients.
  • Work with a coach or mentor to achieve business and practice success more quickly.
  • Have a disaster plan in place and keep it current. Business survival and succession cannot be left to chance.

When combined, these characteristics have one message. To have a successful firm, view your practice as a business as well as a profession, and take a businesslike perspective to provide your clients with value. Doing that will ensure your firm’s long-term future.

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Audience type: Administrators, Associates, Large Law Firms, Small Law Firms, Sole Practitioners