Opening a Modern Law Office: Coping with Today’s Rapidly Changing Law Firm Business Model
By Jim Calloway
Comparing the opening of a law office several decades ago with today’s requirements can make one feel nostalgic about “the good old days.” Then, you would rent or purchase some office space close to the courthouse or downtown business activity, hire a competent legal secretary, get a typewriter (Does anyone else remember the ubiquity of the IBM Selectric?), round up some office furniture, stop by the office supply store for a few supplies and you were ready to go. Now, you need to do much of that, but also figure out Internet access (and security), purchase computers, figure out what law office software is required, update your mobile phone plan, create the law firm’s website, buy a scanner, develop written procedures for workflow of digital client files and a host of other items.
On the other hand, today the cash-strapped young lawyer can set up a law practice with a laptop, a smart phone, Internet access and a mailing address and be open for business.
I want to focus here on the numerous differences that lawyers are facing when setting up a law practice today as compared to a few years or decades ago.
The law office should operate much differently in 2015 than it did years ago. Advice from experienced lawyers is perhaps the most valuable thing a new lawyer can receive when starting a law practice. An experienced lawyer leaving a firm to start a solo or small firm practice may have different needs.
For the beginning lawyer, it is important to rely on local experienced lawyers and mentors for advice about:
• how the courthouse and judges operate,
• questions about substantive law,
• developing sound legal strategies,
• how to handle a matter where you have limited experience,
• your first jury trial and
• opposing counsel’s inexplicable behavior.
But, with all due respect to the experienced lawyers around the state, I also suggest to beginning lawyers that they should pay more attention to the modern experts on topics like:
• the need for a digital practice management system,
• legal project management,
• paperless office procedures,
• automated document assembly,
• online marketing of your practice and
• future trends.
WORKING IN THE LAW PRACTICE
In the good old days, the business of law meant working as a lawyer — doing legal work on client files. There were, of course, bills to be paid and a bank account to be managed, but you could always pay someone to do that for you.
Today, the business of law operates much more like any other business; the CEO has to spend time with strategic planning, budgeting, regularly reviewing financial statements and improving business operations. The challenge is that you also have to do most of the legal work.
The entrepreneur-lawyer, particularly the small firm lawyer, has to deal with the stark reality that you either do something yourself or you pay someone to do it for you. Most lawyers will benefit by having a full- or part-time assistant to free them up to do more legal work and fewer administrative tasks. But that’s not true for all lawyers and often not an economic possibility for some. Today it often makes sense to outsource some of the tasks that were previously done by law firm employees. High on my suggested list of things to be outsourced is payroll preparation and tax deposits. Virtual reception services, like the OBA-endorsed Ruby Receptionists, are also becoming more popular. These services can be used full-time or for just a few hours each week to cover lunch time closures or to give the assistant (or lawyer) some uninterrupted time to complete projects.
For years many lawyers would have said, “Well, of course we don’t want to be inefficient. We work hard and work long hours. But it is more important for legal work to be done right than fast. And the clients will pay for the time it takes to do it right.” That good old days attitude has been a long-standing tradition in the legal profession. There can be no compromise on doing legal work correctly.
But today’s clients want it done right and want done it quickly. Complex negotiations, fact finding research projects or formal discovery procedures in litigation understandably take time. But as American Bar Association President William C. Hubbard observed at the ABA’s 2015 Bar Leadership Institute, consumers who now order prescription refills by touching buttons on their phone, who bank online and who schedule dentist and physician appointments online do not want to call to schedule an appointment to meet with a lawyer two weeks later just to find out if the lawyer can assist and what it will cost.
Lawyers have always looked for ways they can improve their legal work, including client service and efficiency. Lawyers have always been creative about innovative new legal arguments or creative statutory interpretation. But the management of law practice used to be much the same as it was the year before. Today only a few lawyers have the luxury of being concerned only about the delivery of legal services without also paying close attention to business operations. Business today is about change management.
YOUR BUSINESS PLAN AND BUSINESS MODEL
For many, the business model was “We are lawyers. That is our business model, just like all of the other lawyers.” Certainly lawyers gravitated toward work and practice areas they found interesting or that seem to be the most financially rewarding. But mainly the focus was on getting the legal work done in front of you right now. Many lawyers today have deep expertise in a particular area of the law that often started with one or two matters in that area where the lawyer obtained good results. This brought repeat business and new business in that substantive area.
Today you need a focused business plan in writing for your legal services business model. It is true that the plan may change many times or that your business may take a far different direction than you anticipated. Modifying the plan as circumstances dictate is a good thing.
There are now storefront law practices, virtual law practices that deliver services online, home-based law practices, traditional law firms and virtual law firms where lawyers do traditional legal work but from different physical locations, just to name a few. A consumer-based practice will likely involve more automation and downward price pressures. A business or corporate law practice will be challenged by more of the routine work being brought in-house to be done by in-house counsel, leaving the more challenging and difficult work for outside counsel.
Your plan should include the types of clients you intend to serve, in what substantive areas, what you will do to attract those clients, how you will manage work flow, staffing requirements and a host of other areas. This is why your plan must be in writing so you can organize so many different activities.
In the good old days, being paperless meant that it was time to send somebody out for supplies!
Today it is critically important to set up the new law firm to handle client information and client files digitally, even if you elect to keep duplicate paper client files in the office.
For years I’ve noted that the use of practice management software or online cloud-based practice management services was an absolute necessity for the solo or small firm lawyer and likely a necessity for almost every lawyer. Many lawyers still resist this practice and if the established paper-based systems are not creating any problems for the firm or the firm’s clients, it is difficult to convince those lawyers to institute major change.
The arguments in favor of this approach seem almost routine now. There is no hunting for lost files because the files primarily live in the file cabinet and people actually work with the computer files. Data backup procedures only allow you to protect all of your client’s information (and your business survival) if all of the pertinent information is located within a digital file. If your office is destroyed and your data backup contains only those documents you created in your office and not those from opposing counsel, you will have a challenging several months ahead of you trying to recreate the lost files. You will be able to quickly answer many questions with a few clicks of your mouse that are sometimes challenging now like when a client asks for the exact balance of their bill as of today. You will always be able to see notes from conversations between clients and the other lawyers and staff in your office.
Established lawyers can continue their successful practices using the tools they are most comfortable using. But there is no question that a new law office needs to be set up with desktop scanners handy, and the lawyers should rely on practice management software or services.
MARKETING AND CLIENT DEVELOPMENT
In the good old days, the lawyers would open the office, introduce themselves to all of the local lawyers and court staff, perhaps send out a few announcements and then sit back passively waiting for clients and money to start rolling in.
Now, there is a bit of oversimplification in this observation. Obviously previous generations of lawyers worked hard to develop new clients. They participated in civic organizations, joined the right clubs, became closely acquainted with frequent referrers of legal business and engaged in a host of other activities designed to ultimately generate good clients.
Today, legal professionals operate in a highly competitive market, with more competitors (including nonlawyers) emerging every day. One needs to clearly understand the ethical prohibition against direct solicitation of clients. But technology opens many more opportunities for a new law practice (or any new business) to publicize the services offered to the public. It is simply foolish for a lawyer starting a new private practice not to have a website and, frankly, that is also not wise for most lawyers in established private practices. Today’s new lawyers are certainly not going to just sit around passively in their offices hoping someone decides to enter. LinkedIn and other social media sites will be set up by most new lawyers with links back to the firm’s primary website. Online videos promoting the law practice will be commonplace.
We have seen around $1 billion in venture capital money go into legal service startups over the last several years. I wouldn’t want to bet my future on believing most all of those new startups will fail. But, whatever these new businesses do or attempt to do, they will be promoted online and you might as well secure a healthy online presence for your law firm ahead of them.
TECHNOLOGY BUYING GUIDE
The 2015 Solo and Small Firm Legal Technology Guide is a great resource, and I would say that even if the authors were not good friends who asked me to write the introduction. Sharon Nelson, John Simek and Michael Maschke do a great job each year dissecting the various technology purchasing decisions that a solo or small firm lawyer must make. It may be purchased from the American Bar Association online bookstore or is available in the OBA MAP lending library.
There’s a lot of discussion about increased flexibility allowed by today’s technology and quality of life. But, the professional life of a lawyer and, for that matter, any entrepreneur with a startup business, is almost always more than a “full-time” job. Being your own boss does mean you can arrange your schedule to be a youth sports coach or take off a bit early on Friday afternoon when you have no deadlines and have just had your fill of work that week. But, it also means you had better have a reliable assistant coach for when that temporary emergency injunction hearing is set during practice time and you may pay for your coaching time by working some late nights after the kids are in bed.
Don’t get me wrong, we have a huge problem in our profession with lawyers working too many hours and suffering from so much stress. Work/life balance will likely be an issue you struggle with for most of your career. But, when you are trying to launch a successful new business in what has now become a much more competitive field, you will want to devote a lot of time to building a great law practice that will last for your career. That means, particularly if you have a storefront location, being in the office and available during business hours, including first thing in the morning. And if you represent individuals, many of them will need to schedule evening or weekend appointments.
A new lawyer in solo and small firm practice absolutely has to be able to work from home or on the road when needed, which normally means having a laptop computer and either remote VPN access to the client files on the office network or a practice management solution in the cloud. But working at home every night is not the best plan.
One thing that has never changed from the good old days is that you are the most important part of your law practice and taking care of the most important business asset is good business.
There will be challenges, and in many ways opening a law practice today is much more challenging than in the good old days. But, one can certainly have a successful career as a lawyer today and being successful with your own law firm doing it your way will be rewarding in more ways than just earning a living.
Author’s Note: For those seeking more information on equipment purchases for the law office, in the October 2012 Opening Your Law Practice Oklahoma Bar Journal, I wrote an article titled “Equipping Your Law Office 2012.” This article is online for your reference at www.okbar.org/members/MAP/MAPArticles/HardwareSoftware/Equipping2012
, as are all of the other articles in that issue.
ABOUT THE AUTHOR
Mr. Calloway is OBA management Assistance Program director. Need a quick answer to a tech problem or help resolving a management dilemma? Contact him at 405-416-7008, 800-522-8065 or firstname.lastname@example.org
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