Business fundamentals attorneys need to run a firm
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Most people pursuing careers as attorneys enter the legal field because they are motivated by an event that demonstrates the world’s many injustices. And while these motivations are usually virtuous, for most future attorneys, they have nothing to do with aspirations of one day owning and operating a business.
For me, it was seeing my father during my childhood get ripped off by a lawyer who was helping us out with a legal matter involving our home. I certainly didn’t get into the law because I wanted to one day be a business owner, but nevertheless, that is the role I assumed once I decided to establish my own firm.
While law school may prepare you to practice law, it certainly doesn’t teach you how to run a business. Here are some of the business fundamentals that I believe every attorney should know something about if they hope to one day lead a firm.
Find the right accounting and bookkeeping practices
Figuring out how to manage accounting and bookkeeping was easily one the biggest challenges to overcome when I first established my firm. There are a variety of ways a law firm can generate revenue. Some firms make most of their money from settlements and don’t ever take funds directly from the clients they are representing, while others are structured to rely on retainer fees for their services.
One of the trickiest things about trust accounting can be keeping track of hundreds of retainers while also charging some flat fees. When you take in both types of financial matters, you have to be very careful to make sure the trust funds go into your IOLTA trust account. You have to also make sure your flat fees for earned income stay in your business checking account.
Additionally, all the money coming in and out needs to be tracked and redirected to the budget, insurance, clients, courts, taxes, staff, third parties and more. With so many funds coming in and out, you can see why financial accounting and bookkeeping practices for a law firm can be much more complicated than most other types of businesses.
However, keeping these deposits properly allocated can be very time consuming and cumbersome. As our firm grew in size, we recognized we needed to hire someone whose job it was to be dedicated to that particular task. There is nothing more important to an attorney than making sure your clients’ money is set aside in the proper account when you have not yet earned it.
Building a strong online presence
Today, your online presence is essential to positioning your firm to thrive and will ultimately determine whether people are enticed to click on your name when it shows up on a search engine results page. However, effectively marketing your firm to consistently generate “Page 1” results for keywords related to your practice area is a complex undertaking that extends beyond the appearance of your website.
Research shows that consumers prefer organic results nine out of 10 times, and that content marketing generates three times more leads than conventional marketing. This means that in addition to maintaining an aesthetically pleasing website and strong online presence, firms must consistently create high-quality content with reliable links, two of the major key factors Google uses to assess a site’s authority, to rank higher in SERPs.
When I began my firm 15 years ago, like most attorneys, I had to start my practice on a shoestring budget. For that reason, I tried to do everything myself. I’m pretty tech savvy since I grew up with computers and personal technology, so I figured I could easily create my own website through WordPress. While I was able to do so, it didn’t take long for me to realize that this wasn’t the best use of my time and energy.
The reality was that I lacked the expertise that is necessary to stay on the cutting edge of technology and excel at legal marketing. I first tried a smaller website/search engine optimization company and grew with them until the owner told me I was getting too big for them and should seek out a company that deals with larger law firms. Google’s algorithm is constantly changing, and it’s foolhardy to think you as an attorney can follow the trends as efficiently as a company that focuses solely on this area. Working with third-party professionals can keep you current, and ideally, a step ahead of the competition.
That being said, you cannot put your head in the sand and leave it all to your web company. You need to understand, at the very least, the basics (and ideally more than the basics) of SEO, pay-per-click advertising and what is necessary to compete in the market. Educating yourself in these areas will help you develop the skills and confidence to assist and monitor the company handling your online marketing.
Developing the right leadership skills
If you want to be an effective leader, you need to learn how to balance the needs of your clients and the needs of your employees. Your clients have specific personal needs that they expect you to anticipate and guide them through, and this requires sincere empathy. Additionally, your employees will want to work in an environment that recognizes their strengths and weaknesses as they develop their professional skill sets.
When it comes to managing your employees, you can’t overlook the importance of developing skills and providing mentorship to the young and upcoming lawyers and paralegals at your firm. If you want to keep skilled and reliable employees on your legal team as your firm grows, then you need to learn how to effectively coach your team and foster their career growth. By showing your team that you are invested in their future with the company and how it aligns with their professional goals, the more likely it is they buy into your overall vision and business strategy.
However, communication is key if you want to achieve these leadership goals. I suggest writing down the specific vision you have for where your firm should be in one year, five years, 10 years, etc. Writing out your goals in clear, concise language will help you communicate effectively with clients, partners and associates. Receiving direct feedback from your employees about your leadership skills also can help you identify and develop the right style of leadership that works for your particular law firm.
Assessing your strengths and weaknesses as a leader will also benefit your firm in the long term. Identify any gaps in your leadership skills that need to be refined or tweaked, then set clear goals for how you plan to address any deficiencies you discover. Receiving direct feedback from your employees about your leadership skills also can help you identify and develop the right style of leadership that works for your particular law firm.
Running a business requires a different skill set than practicing law. The good news is you don’t need an MBA to manage your own firm. For me, transitioning to running a law firm required learning the fundamentals of accounting and finance, marketing and leadership.
Eric Pines is the business owner and attorney at Pines Federal, a federal employment law firm headquartered in Houston. The firm represents and has represented employees at some of the largest federal labor unions and virtually all government agencies, including the Department of Veterans Affairs, the U.S. Coast Guard and the Department of Defense. Pines is also the founding partner of Pines & Goldenzweig, a personal injury law firm.
Mind Your Business is a series of columns written by lawyers, legal professionals and others within the legal industry. The purpose of these columns is to offer practical guidance for attorneys on how to run their practices, provide information about the latest trends in legal technology and how it can help lawyers work more efficiently and strategies for building a thriving business.
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This column reflects the opinions of the author and not necessarily the views of the ABA Journal—or the American Bar Association.