Strategies for converting your practice into a business
BY CHRISTOPHER T. ANDERSON
The law is a “learned profession.” As such, lawyers traditionally “set up practice,” “hang a shingle,” and apply all the knowledge that law school and other learning opportunities has given them. This process is often relatively devoid of any practical knowledge of how to run a business. And, for many of us, it shows.
Since my early days in the profession, many things about the practice of law have changed. The complexity of the law has changed, our clients’ expectations have increased, our professional responsibilities have evolved, and our employees’ hopes, dreams, and desires are evolving, too. We must serve our clients, our team, and ourselves.
What follows are some strategies for ensuring that you are not just an excellent practitioner of the law, but also a savvy business owner who is able to meet your obligations to clients, employees, and other stakeholders.
DECIDE WHY YOUR LAW FIRM EXISTS
It doesn’t matter if you’ve been practicing for 35 years or 35 days, it is always time to decide why your law firm exists. This is an exercise that you must engage in at least annually to keep your operations headed in the same direction as your goals.
Before diving into your own goals, it is important to first get clarity around two concepts:
- The business of a law firm.
- The purpose of the business.
It is in within these constructs that you can effectively establish goals for your law firm and understand how meeting those goals will serve you.
The business of a law firm is exceedingly simple:
- Selling legal services (solutions to problems that lawyers are best suited to solve); and
- Delivering the legal services that were sold.
That is all. A successful law firm must do both. If you sell legal services but don’t deliver what you’ve sold, you risk disciplinary action from the Bar and possible civil action from unhappy clients. If you deliver legal services without selling (and being paid for) them, you will likely find yourself out of business.
Don’t be distracted from these core tenets. Do these well, and the rest becomes much, much easier.
The purpose of a law firm business is likewise straightforward. The purpose is to satisfy the needs of the owner(s), to fund their ideal lifestyle, to give them the ability to live the way they want to live, and to be the vehicle through which they achieve their professional goals. If the business does not serve the owners, the likely result is a terrible business and unhappy owners.
The purpose is not to provide jobs, pay taxes, or support the community. The purpose is not even to improve clients’ lives or make employees happy. These are all things that we get to do when we run a successful business.
Serving the owner sounds like a nebulous concept. This first strategy is all about making sure that it is anything but. No one else can determine for you whether your law firm business is serving you; that is something you must do for yourself—repeatedly. I recommend that you work on this at least once, and preferably twice, per year.
DETERMINE YOUR BUSINESS GOALS
Begin by asking yourself to honestly define four things about the life you want to be leading five years from now. It requires you to think big. We tend to overestimate what we can do in the short term, yet underestimate what we can do in the long term.
In five years:
- Who do I want to BE?
- What do I want to DO or be doing, or have done/accomplished?
- What do I want to HAVE?
- How do I want to FEEL?
Examples of answers sometimes include:
- I want to be the owner of a $XXX,XXX-per-year business.
- I want to be a good, loving, attentive, present spouse/parent.
- I want to be healthy.
- I want to be working 30 hours/week.
- I want to ski 30 days a year.
- I want to have completed my fifth marathon.
- I want to donate $XXX per year to XXX charities.
- I want to have (a specific) vacation home.
- I want to have $X,XXX saved up for my children’s college.
- I want to have $X,XXX invested toward retirement.
- I want to have an amazing garden.
- I want to feel professionally fulfilled.
- I want to feel in control of my finances.
The BE/DO/HAVE model is used by coaches and authors as diverse as Steven Covey, Tony Robbins, and L. Ron Hubbard. In working with our clients, my team has added FEEL to round out this model. Because many people are not used to articulating what they want out of life, we don’t recommend trying to do this on your own the first few times. You will be less likely to complete it, and more likely to limit yourself, which will limit your business, which, in the end, will limit the number of people you help. And that would be a shame! Working with a colleague who has successfully done this several times, or with a professional coach or facilitator, will enhance your likelihood of success.
After completing the five-year vision, you then start over, but this time asking yourself: “In order to BE who I want to be in five years, what/who do I want to BE in two years?” Repeat the question for DO, HAVE, and FEEL. Some of the answers are the same. In order to be a good, loving, attentive, present spouse/parent in five years, you probably can’t be a bad, aloof, absent spouse/parent in two! Some will be related. In order to have $X,XXX saved in five years, you may need some fraction of that in two. And some may be unrelated. Just think of stuff you want to BE, DO, HAVE or FEEL in two years that may help get you to five.
And then, finally, you repeat the exercise once more, asking “In order to BE who I want to be in two years, what/who do I want to BE in one?” Again, repeat for DO, HAVE, and FEEL.
These last answers then form the foundation for your business goals. In order to BE, DO, HAVE, and FEEL what you want in one year, what does your business need to deliver to you and to your family? This grounds your business objectives in goals that come from a deeply personal and honest place. This also sets up an understanding that failure to meet your business objectives will threaten the one-, two-, and five-year goals for your life.
What comes out of the BE/DO/HAVE/FEEL exercise should be concrete definitions of what you want your business to do for you, in three key areas:
- Financial—How much money must the business provide to you to achieve the life you’ve defined?
- Temporal—How much time will you need to provide to the business, and how much time will you insist on having for the rest of your life’s goals?
- Professional—How will your business affect the world in a way that makes you proud?
When you have answered these questions, you have the basis for planning your business to achieve your desired outcomes.
Your business is a vehicle. There is no point in owning and operating it without knowing where you’re going!
CREATE A WRITTEN PLAN
Do you own stock, sit on a board, or have a stake in the outcome of any other enterprise? If you do, you may ask, from time to time, “Why should I continue to put my time, energy, and money into this?” You owe it to the stakeholders in your law firm business to be able to answer that same question for them, whenever they ask it.
Stakeholders? Yes! Anyone in your life who feels they have, or who you feel has, a claim on your time, your money, or your presence and happiness is a stakeholder in your business. You have a tacit agreement with them that you will invest into your business time, energy, presence, temperament, etc., that you might otherwise give to them. What return should they expect from that? Seriously, you owe them an answer. You owe you an answer!
You should be able to describe to your stakeholders, to your employees, even to your clients, how your business will operate to produce the results that each of them expect. This description should explain how the following three main components of your business will work together:
- Acquisition—the addition of new clients and/or new business from your clients;
- Delivery—the activities across the business that produce the results that your clients are entitled to receive in exchange for the revenue they deliver to your business; and
- Results—what the business delivers to the owners; defined under each of the owner’s business goals.
For each component, your written description will address four key areas:
- What are the relevant policies that guide this part of the business? (WHY do we operate the way we do?)
- What are the key standard operating procedures to which the business adheres to deliver consistent results? (HOW do we get things done?)
- Artifacts: forms, checklists, and examplars. What does excellent production look like?
- Objectives: Putting all these things together, what are the results we’re expecting from each component of the business? How will we know we’ve achieved them?
When you begin, you may have most of this, some of this, or none of this filled in. You can rate yourself, on a scale of 1 to 5 (with 1 being almost nothing, 5 being perfect written descriptions). Your goal is to bring the lowest areas up—to perhaps a 3 and then improve from there. Fives are hard to achieve because we should always be improving—a 5 today might be a 2 tomorrow. Evaluating and reevaluating these descriptions is the essence of business planning. Always ask the question: “How well suited is this part of the grid to producing the business results upon which your personal plan depends?”
The result should be a succinct and clearly stated document that explains how each of the key areas of your business should operate to produce results. It is essential to then share this document with a peer or advisor—who should review it and question you as to how well it fits your objectives—before sharing it with your team.
Building upon this framework, some further strategies to build out your practice into a sustainable business that produces the results that you desire from it include:
- A well-defined acquisition plan, including:
- A marketing plan.
- A client education plan that reliably converts leads into clients.
- An operational plan that moves some work away from you, so that you can focus on your highest and best contributions to the business.
- A measurement plan that defines objectives and key results that you expect from your business, so that you can compare progress to your expectations and make course corrections along the way.
The WSBA offers free resources and education on practice management issues. For more information, visit www.wsba.org/pma.