The quarterly publication of the International Legal Technology Association
Issue link: https://epubs.iltanet.org/i/11430
BEST PRACTICES The Successful 2020 Law Firm Embracing a Traditional Business Model M any lawyers don’t view themselves as running businesses, but that’s precisely what they’re doing. Sure, there are ethical guidelines and rules to play by, but at the end of the day, legal professionals are trading advice and knowledge for money. If law firms didn’t know they were businesses before the stark economic downturn, they certainly know it now. Lean economic times expose weaknesses in any business model, and the legal market is no exception. We’ve witnessed how the recession, combined with the dynamic forces of technological shifts and changes in client expectations, can turn legal services on its head. The year 2020 may seem like a faraway time from a science fiction movie, but it will be here in the blink of an eye. The law firms that thrive will be the ones who have evolved their operations to mimic traditional businesses. We’re already seeing how the shifting billing structures of attorneys, as they embrace alternative fee engagements, are forcing firms to think strategically about operations. Margins, fees, and performance indicators will likely drive firms to economize all aspects of their practices. INCORPORATING BUSINESS PROCESSES Law firms seeking to operate more like a business should take the following three steps to help transition to a business mindset. • Embrace Project Management • Incorporate Data-Driven Decision-Making • Use Technology to Its Fullest Potential • Embrace Project Management: Successful companies creating products ranging from software to automobiles use a formal discipline known as “Project Management” to drive their initiatives. The 14 www.iltanet.org Peer to Peer whole concept behind project management is, in essence, organizing your resources to achieve specific goals. In legal terminology, matters or cases are projects: they have start and end points; they have to be marshaled through a series of phases; and they have stated objectives. By viewing cases as projects, firms can more efficiently process their work. A case proceeds through a series of key events, or milestones. These milestones enable firms to measure the progress of a case and determine the potential of a similar case when the two are compared. This allows a firm to gauge the relative value of a given case. By embracing formal project management techniques, business processes related to matters will become more streamlined over time, eliminating unnecessary work and expenditures. • Incorporate Data-Driven Decision-Making: Most businesses have a handful of numbers, in addition to obvious financial data, which they examine to quickly determine company health. Typical metrics might include conversion rates from a sales process, number of customers retained, or average lifespan of a customer. Does your law firm track such numbers? Key Performance Indicators, or KPIs, should be used in conjunction with your firm’s core values to guide strategic decisions. By isolating decisions based on data and trends, you handle two important issues simultaneously. First, a data-driven approach helps quell interpersonal conflict in the firm by removing irrationality from the decision-making process. When charting a new direction, you should rely on numbers, not emotion or hunches. Second, correctly measuring key parts of your firm’s performance over time will tell you quickly if you’re headed in the right direction and will help you answer such questions as: Is the new marketing campaign working? Is the multi-year contingency case bleeding the firm dry? How have the new associates been performing in a quantitative sense? Are average hours worked on flat fee cases decreasing?