How to Run a Small Law Firm in 2022

Published on January 18, 2022
11 minute read
<a href=''>Sarah Bottorff</a>
Written by Sarah Bottorff

Welcome to the 21st-century legal market — it's more competitive than ever, and client expectations are at an all-time high. As if you didn't already have enough pressure on you to be an outstanding attorney, you also are faced with the challenges that come along with running a small law firm. And as most lawyers soon find out, while law school may have prepared you to be a lawyer, it hardly prepares you for running a small business. Running a law firm is so much more than simply offering your legal advice, strategizing, and representing clients. You also have a business to run.

You have to think about things like costs, marketing, administrative tasks, and the client experience. While once upon a time lawyers had the upper hand, it's now a buyer's market. Potential clients have more options than ever before, and it's up to you to attract and retain clients by delivering a seamless client journey. Unfortunately, because you're a small firm, you don't have a lot of luxuries that a larger firm may have. From the size of your budget to a smaller staff, you likely have to do a lot of things yourself rather than delegating to a staff member.

On top of everything that goes into handling your existing clients, it can seem overwhelming having to do your own marketing, and client intake, on top of your administrative tasks. Throw on top of that a worldwide pandemic that has flipped the legal industry upside down and has forced lawyers to completely change the way they practice law.

The great news is that there is a solution for effectively managing your small or solo law firm despite the restraints of your challenges.

Common challenges small law firms face

!Long manual processes

When a lead first calls your law firm or sends an email asking for more information, there are a lot of vital tasks that follow. From taking down their contact information, to scheduling a consultation, to sending and receiving agreements — completing these processes manually can take hours to days to get done.

Unfortunately, in addition to being time-consuming, manual processes also risk being riddled with errors. Yet, clients come to you for solutions, not more problems. If you hope to build a solid reputation for your law firm, then mistakes aren't an option.

!Keeping up with the competition

As of 2020, there were a reported 1.3 million practicing lawyers in the USA. It goes without saying that there is an oversupply of lawyers for the number of potential clients. It's up to you to attract leads and fight for your clients.

One of the first things that clients do when they're looking for a lawyer is to turn to the place they know best, Google. As a small law firm, likely the first search results that come up in your area are larger law firms with larger marketing budgets. In many cases, small law firms simply accept this as their fate and submit to the competition. However, small law firms can stand a chance against even the biggest competition. The key is having an effective management strategy in place.

!Putting in long hours

Lawyers are some of the hardest-working people out there. On average, lawyers put in 60 hours or more a week, and in many cases even more when running a small law firm or solo practice. Despite how passionate lawyers may be about working on behalf of others in need of legal assistance, with those heavy workloads often comes extreme stress.

A recent study revealed that attorneys have one of the highest mental health disorder rates out of any profession. Nearly 30% of lawyers interviewed claim to suffer from depression, just under 20% suffer from extreme anxiety, and a whopping 10% claim to have experienced suicidal thoughts at some point during their career.

For attorneys trying to scale their firm, long hours don't just equate to less time for other areas of their life such as vacations or spending time with their family, it can damage their mental well-being and quality of life.

!The juggling act between paying clients and potential clients

One of the biggest challenges of running a small law firm is balancing your attention between your potential clients and your paying clients. Because lawyers have so much going on with their current clients, it can be challenging to get back to incoming leads quickly. Yet slow response times can be the death of your small law firm. Statistics show responsiveness has a 60% influence over a potential client's choice of a lawyer. 42% of law firms in a 2021 study took three or more days to respond to a lead inquiry. With so many competing law firms out there, that's a massive window of time that you're giving them to go with the competition. When someone is looking for a lawyer, chances are they're in a hurry. If they don't hear back from your law firm right away, they'll go on Google and click on the next ad that comes up.

!Client cost expectations

Today, over 50% of Americans say that they feel anxious about their finances. When you consider that lawyers charge anywhere from $100 to $1000 an hour, it goes without saying that most Americans can't afford legal representation. Consequently, your average person will avoid hiring a lawyer at all.

For that reason, many lawyers are moving towards a flat fee system to appeal to clients who feel uneasy about hourly billing. Hourly billing comes with the implication that costs are uncapped; they may receive an astronomical bill that they won't be able to afford. A flat fee presents your legal service in a neatly wrapped package that is much more appealing to the average budget.

However, in an attempt to appeal to potential clients' budgets, many small law firms may be shortchanging themselves with their flat fees. After all, your legal expertise comes with a certain price tag attached and a considerable amount of administrative work, so taking a financial hit is not the answer.

Unfortunately, many small law firms blunder trying to find a balance between appealing to client cost expectations while also pricing their legal services fairly. Aiming too high or too low is a common problem for many.

!Budget constraints

4% of small law firms claim they can't generate enough revenue to be able to invest more money into their firm. Unfortunately, budget constraints can make scaling your firm much more difficult.

From hiring more staff to investing in legal technology, making your law firm more efficient comes at a cost. Without the cash flow it takes to finance these upgrades, many small law firms find themselves trapped in a perpetual rut of long and tedious processes.

!Lack of insight about where time is going

According to a recent trends report the average lawyer devotes only about 2.5 hours of their day to billable tasks. The other part of their day is spent on the “other” parts of running a law firm.

Yet, the secret to success as a law firm is knowing what every hour of your day is devoted to. Many small law firms have no idea just how much time they're losing that could be committed to more revenue-producing tasks. Data is power. By following the right metrics, you can identify where you're losing the most time in your practice, and what improvements need to be made to increase your productivity and consequently boost your revenue.

Small law firms may find the idea of running law firm data analytics reports daunting. However, the same trends report shows that law firms who rely on legal technology like CRM Reporting and insights software collect nearly 40% more revenue per lawyer compared to firms not using those technologies.

Tips for effectively managing your small law firm

Develop a strong law firm brand

If you don't remember taking Law Firm Branding 101 in law school, don't worry. It's probably because it wasn't one of your courses. One of the rude awakenings for many lawyers is that law school set them up with knowledge of the law, but didn't teach them how to run a business.

In the business world, a brand is more than just the name of your law firm. It’s an intangible feeling your law firm evokes in potential clients. Smart branding appeals to your target audience by sparking their interest and peaking their emotions.

There is a whole galaxy of elements that go into a brand. From font choice to website layout, to your logo colors, all of these elements come together to form what we call a brand.

Developing your firm's brand should depend on what kind of emotion you hope to evoke in your potential clients. Who do you hope to appeal to? How do you hope to make an impression? Most importantly, what makes you stand out against competing lawyers in your area? Creating a unique strong brand for your small law firm is paramount for your success.

By piecing together the right mold for your brand, you'll be able to better appeal to your target audience, and stand out in a sea of competition. Creating a strong brand for your law firm will take patience and consistency. There may be a lot of trial and error in the business development process, but with enough diligence, you'll create an effective branding strategy that stands out.

When creating your law firm's brand ask yourself the following questions:

  • What kind of lawyer am I?
  • What can I promise my clients?
  • What’s my unique selling proposition?
  • Who is my target audience?
  • What is my core message?

Above all, take things step by step, and remember you must learn to walk before you can run. Don't put your law firm's brand out there until it's fully developed if you intend for it to be as resonant as possible.

Streamline client intake

As a lawyer, time is synonymous with money. Therefore you should make every second count by streamlining your processes as much as possible. As you probably well know, onboarding clients is incredibly tedious and time-consuming. Yet, if you aren't on top of every step, you can make a poor first impression on your client. The only way to ensure that you give every new client the kind of attention they deserve while still being able to keep up with your workload is by streamlining your client intake process with client intake software.

Automation in law firms means no more having to stop what you're doing to take down a lead's phone number and enter it into your database yourself. Client intake software like Lawmatics inputs contact information directly into your law firm CRM and tracks your leads from that point on. They'll receive an initial welcome email introducing your firm, and any other details you'd like to add. From that point on, client intake software follows up for you on autopilot with drip email marketing, keeping your client up-to-date with where they are in the client journey. In other words, they'll feel completely connected to you, without you actually having to do a thing.

An e-signature tool streamlines your client intake process even further since it eliminates the friction often associated with asking your clients to print, sign and scan important documents back to you. Electronic signature for legal documents makes it possible for your clients to sign and send important documents from anywhere with an internet connection. That way, you have everything signed on the fly, in a matter of seconds so that you can get the ball rolling on your case.

Thanks to an easy-to-read dashboard, law firm client intake software gives you a birds-eye view of where each client stands. No more scrambling, or digging through your inbox to find out whether clients have been followed up with. Attorney intake software makes it easy to seamlessly move leads through a clear and consistent intake process thanks to workflow automation for law firms, ultimately making it possible to take on more clients at the same time, without having to sacrifice your sanity.

Improve the client experience

One of the biggest contributing factors to customer loyalty is the amount of effort you ask your clients to put in. In other words, the easier you can make things for your clients, the more likely they will be to refer you to friends and family and return back for repeat business.

Improving the client experience starts with being as efficient as possible while requiring minimal effort on their part. One of the best places to start is by making it easy to get a hold of you when they have a question. Access to a client portal means they can log in at any time to see their case details. From important documents to events, everything is located in one central and secure location. Clients can send you a message and even self-schedule their own appointments with automated appointment scheduling without having to contact you directly. Self-service options included in a client communication portal elevate and modernize the client experience, giving your small law firm a big law firm feel.

You should also consider accepting multiple payment options. Statistics show that 65% of consumers prefer to pay with a credit card. Offering online payments for your clients can make a world of difference in the client experience.

The latest Clio trends report revealed that growing firms are 37% more likely to accept online payments. What's more, online payments can significantly reduce your administrative tasks, by automatically updating your outstanding balances, and alerting you about which clients still require payment follow-up.

Set law firm goals and objectives

The secret to successfully running a small law firm isn't just an elevated client experience — it's also thinking long-term by setting goals and objectives. Yet setting goals without measuring them is a fruitless endeavor. To ensure that you're en route to meeting your objectives, actively tracking your most important metrics is the key to progress.

Legal reporting software makes it possible to stay on top of what's working and what's not at your firm, keeping you (and your staff) accountable for where your time and resources are going. Running regular reports gives you better insight, and it gives you the tools to better plan for the future. Above all, you'll see increased revenue. Once you start setting concrete objectives and tracking them, you'll see an increase in your efficiency thanks to goal tracking for law firms. From how much time you’re spending on each task to who your most efficient staff members are, information is power. Increased efficiency equals increased revenue — it's really that simple.

In order to get the most out of setting and tracking objectives, you should develop a long-term strategy. Where do you see your small firm further down the road? Who is your ideal client? The more specific you can be about your targets, the better you can adjust your tactics as you go.

Some essential management reports you should run for your small law firm are:

1 Productivity

Productivity reports show you how well your small law firm is performing on an individual and collective scale. By tracking your total amount of tasks compared to what you've actually completed, you can start exploring where you're losing the most time and why.

Once small law firms start tracking their productivity rates, they're usually shocked to find just how much time they're losing on long drawn-out manual processes. This is why the smartest law firms turn towards automation software to skyrocket their productivity by putting their administrative tasks on autopilot.

2 Client acquisition

Are you attracting enough prospective clients? Can you say whether your potential new client to retained client conversion rate is where you'd like it to be? The more you get to know where your best clients are coming from, and why, the more you'll be able to increase your conversion rates. Turning your leads into loyal clients is often a process of trial and error. Many firms have to try several different methods before they get their footing. By running a client acquisition report, you can determine whether you have quite a low rate, which is usually an indication that you've got holes in your client intake process. Yet again an important reason to rely on client intake software to streamline the process.

3 Client satisfaction

The only way to ensure your attorney client relationship is healthy and that your clients are satisfied is by measuring their behavior. One of the most reliable ways to do so is by tracking the number of client referrals you have along with client retention rates. You can also measure client satisfaction by sending out regular surveys, asking your clients to evaluate their experience with you, and asking them to leave you a review online.

4 Marketing

It's critical that you keep an eye on your marketing campaigns so that you only put your resources into the most revenue-producing sources. The idea is to get the maximum return on your investment, so measuring your marketing strategies is essential. Marketing metrics like visit-to-lead ratio email click rate and SEO keyword ranking will help you gain better insight into whether your marketing efforts are where they need to be. Since 30% of clients look for lawyers on Google, you want to make sure that you're standing out. Running reports like average bounce rate may reveal that your legal website needs an upgrade.

5 Revenue

It goes without saying that tracking your revenue is one of the most important parts of managing your small law firm. By using time and billing software for lawyers, you'll be paying close attention to KPI’s like the total revenue billed over the course of the month, compared to what you collected, average fee per matter, and which marketing sources produced the most revenue, you'll be able to make changes in your strategy where needed and make more data-informed decisions.

Give your small law firm a big law firm feel with Lawmatics

Small law firms face numerous obstacles that larger firms simply don't. Not to mention we also find ourselves in the middle of a worldwide pandemic. For many small law firms, success can feel like a long shot under the current conditions. However, with the right legal technology, you can make better-informed decisions, streamline your processes, prioritize what matters most at your law firm, and elevate the client experience. Are you ready to see how Lawmatics can help you manage your law firm and create more business with less busy work? Sign up for a free demo today!

Sarah Bottorff

Sarah is the Head of Growth at Lawmatics, the #1 attorney-client relationship management platform that provides law firms with client intake, CRM, and marketing automation. She has over 18 years of marketing and sales experience and has a proven track record of building brands and driving growth at companies like MyCase, Smokeball, CJ Affiliate, Johnson & Johnson, and FastSpring.
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