February is all about discussing foundations – foundations of a legal practice (and therefore of a business). After all, you need to understand the simple, basic premise of something before you are able to take on anything more complicated, right?
So, in the first of the series, we thought we would discuss “practice management”. In two parts mind you – it’s that important.
Certainly not new words, “practice management” is something you have probably heard before. In fact, practice management is fundamental to the practical side of actually practicing law. So much so that LEAD offers a Practice Management Training Course for all legal practitioners to ensure that they are properly trained, prepared and armed with the requisite knowledge that they need to officially “run a law firm”.
What does “practice management” mean?
In trying to truly understand the concept of practice management, one should seek to define it in a way that makes sense to them. Because once something is defined, you know how to tackle it. It’s like looking under the bed only to discover that there is, in fact, no monster lying in wait.
So, what is this “monster lying in wait”?
Law firm practice management comes down to effectively managing a legal practice like a business (because that is exactly what it is). This includes concepts like marketing, finances, case or matter management, staff management, the proper use of technology (which will include workflow and document automation) as well as that one other ingredient that no one talks about – being flexible.
And with all these topics in mind, it stands to reason that the definition (and therefore the understanding) of practice management will differ from law firm to law firm. Why do we say that? Well, with the changing nature of work (due to technological advances, innovation, globalisation, work-from-home to hybrid working environments, and all that those entail), business and the provision of legal advice that goes along with it means that, how a legal practice is managed will differ depending on the work being undertaken, the type of technology being implemented, where your offices are based and how your workers are working (at the office, at home or a bit of both).
The management of a legal practice can therefore be seen as an ever-evolving thing – as your practice evolves, changes and adapts, so will the management of it. So, as a legal practice you will need to be able to both accommodate and adapt to change. And with ease we might add. That said, let’s talk about some of the more foundational topics that make up “practice management” –
As mentioned in our article Part III: Starting Your Own Firm, there are some practicalities and day-to-day operations that you need to undertake in order to effectively manage your business. And this starts with the very basic principle of “selling yourself”.
After all, if you do not have sufficient brand awareness, how are you attracting new clients or keeping current ones interested? It is therefore vital that you not only develop a strong brand presence but that you effectively undertake a sustainable and intelligent marketing strategy. You need to remain relevant by reminding people that you are out there and give them reasons for wanting to work with you.
A good marketing strategy can also help you understand what your client’s need are, whilst also educating them on what you can offer them. You can attract new clients with your intellectual and legal prowess and more importantly you can convince clients to remain with you, thereby securing repeat business (which is crucial for any business, not just law firms).
A suitable branding, marketing and creative agency can help you navigate your way through the realm of branding, marketing and communications. They can be your “go-to” people when defining who you are and what your law firm does (realistically), they can help you define who your target market should be and most importantly, they can help you remain consistent – which is key.
But they don’t come cheap. Starting out, you may not have the extra capital to retain the services of a professional branding, marketing and creative company. But that doesn’t mean you can’t design your own logo via platforms like Canva, undertaking marketing campaigns via social media (which costs nothing – read our articles here) or design your own branding through websites (and apps) such as Upwork (which utilise the skills of various freelancers at affordable rates).
It is all doable – so market yourself and get your name out there!
When one thinks about running a business, one of the first things that comes to mind is “bringing home the bacon”. Which is fair enough. And law firms are no different.
Law firms provide a professional legal service and being paid for these skilled services should therefore go hand-in-hand with the provision of them, right? Wrong, because if you don’t properly account for your work, you will not get paid for it. And that sucks!
Its therefore safe to say that unless you have the invoicing process of your legal practice sorted, there won’t be a business to discuss or a practice to manage. So, it is probably worthwhile going through a few basics to ensure that your finances remain in the green –
1. Invoicing – your billing process begins with an invoice. Your invoice is one of the many ways you can communicate the value of your services to your clients. They should therefore always be clear and concise (clients should be able to easily read them), after all, when a person knows what they are being billed for (your time and the resultant work) they are more likely to pay. In theory. Some helpful tips –
a) Work in Progress – one of the easiest ways to ensure that you are paid regularly is to record the work you undertake, as a work in progress (“WIP”) immediately as and when the work is completed. Recording WIP in this manner assists lawyers by preventing unallocated costs i.e. missing out on certain tasks which could have been billed for – it is almost impossible to remember all attendances and perusals done a few weeks after the fact.
b) Interim Billing – start the practice of invoicing your clients regularly during the life cycle of a matter. This ensures that clients pay each invoice as the matter progresses, under the assumption that they still require your services. An advantage of interim billing is that the final account is a smaller percentage of the total outstanding amount, avoiding the inevitable and so called “bill shock”. Of course, it must be noted that it is not always possible to invoice a client during the life of the matter. For some matters, invoicing can only be done after the matter is finalised (such as matters taken on a contingency basis). In these cases, firms should at least try to invoice disbursements as this is a “hard” cost. And clients normally understand that disbursements need to be paid for straight away.
2. Automated billing software – the time it takes to complete the invoicing process (which can sometimes take days), especially if done manually, is valuable time wasted that could have been spent on more important tasks, like actual billable hours. So, why not use legal billing software to automate the process? Take the time to investigate various billing /invoicing systems, such as AJS. Systems such as AJS offer completely integrated billing, legal accounting and practice management modules within their Express, Pro and Enterprise solutions and the time saved in manual processing of invoices alone covers the cost. It’s really worthwhile looking into.
3. Unpaid invoices – regardless of the size of your legal practice, unpaid invoices aren’t just an inconvenience, they can impact everything – if cash flow is interrupted you will not have the capital to keep your business operational. This situation would mean you can’t pay employees, suppliers, or vendors. As a result, you yourself could be slapped with late fees whilst at the same time damaging your reputation by being considered a delinquent payer. Not ideal for a legal practice. There are a couple of options available to you here – make sure you followed the correct accounting procedure and then, follow-up politely (a little nudge in the right direction usually kicks non-payers into gear), offer a 5% or 10% discount on the total invoice amount if an invoice is paid in full within 10 days and if incentives don’t work, motivate late payers with a penalty fee (you can charge a late fee or interest ensuring this is discussed with clients upfront).
Case or Matter management
We believe that the easiest way to approach case or matter management is to compare it to the running of a project. For instance according to the Project Management Institute –
“Project management is the use of specific knowledge, skills, tools and techniques to deliver something of value to people”.
And if you ask us, that sounds very much like the managing of a legal case or matter. You see, each case or matter (like a project) will ideally have –
1. A beginning and an end;
2. A (legal) team that is assigned to the matter;
3. A cost estimate (or budget);
4. A schedule (i.e. when documents need to be served by and when they need to be filed at court), and
5. A set of expectations (like those of their clients) that the (legal) team will not only need to meet but will also need to manage.
Each case or matter (or project) is unique and will differ from other routine operations – just like the managing of any other type of project in the business world. Some cases or matters (or projects) are undertaken to urgently resolve problems (like interdicts and urgent applications) whilst other cases or matters (or projects) will have a longer duration and/or produce an outcome that will need further action (i.e. when taking a matter on appeal) or may simply come to its conclusion (i.e. when a divorce is settled). Still others will be a mix of both of these types of “projects”. Ditto for the everyday business.
In terms of business principles, a project is usually deemed to be a success if it achieves its objectives according to the accepted criteria, within an agreed timescale and budget. Time, cost and quality are the building blocks of every project. And the same can be said for case or matter management – the time it takes to bring a matter to conclusion, the quality of legal services provided as well as the final cost to the client. An almost like for like comparison.
Are you seeing the similarities yet?
When you look at case or matter management objectively, it very closely resembles that of ordinary project management. The same principles apply. So perhaps (as hard as it may sometimes be) it is a good idea to separate yourself from being “just” the legal practitioner from the person who is managing a project (which in this case is a legal case or matter) and therefore the business.
The following quote, we think, rings true here –
“Law is not a profession at all, but rather a business service station and repair shop” – Adlai E Stevenson
From the above, it should be clear that practice management, something once considered generic and boring is actually anything but. Not only is it the very foundation on which you build (and then manage) your own practice (a “superstructure”) but it also helps you formulate basic business principles that you can apply to almost any business transaction.
- Because the minute you see your legal practice as a business, that is the day that you will be able to effectively manage it as such.
An obvious statement to be sure. But a realisation that many legal practitioners need to come to terms with in order to successfully manage their practices.
We understand that sometimes the challenges faced with running your practice and managing the business side of it effectively will seem hard and difficult to overcome. The world is changing and with it, not only how you are expected to practice law but also how you are expected to manage the business of it as well. It can be overwhelming.
But remember –
“Progress is impossible without change, and those who cannot change their minds cannot change anything” – George Barnard Shaw
“Without continual growth and progress, such words as improvement, achievement, and success have no meaning” – Benjamin Franklin
Know that to progress, to improve and to achieve success you need to embrace change. And that, most certainly, applies to how you run your practice too.
If you have any questions about practice management, contact AJS today to see how we can help you.