How to Manage Your Law Firm with a Business Mindset with Laura Terrell
Oct 20, 2022
No matter the size of your law firm, most lawyers like to focus on what they do best — law. But when you're running a law firm, you need to start treating it like a business. If you are struggling with your law firm, adopt a business mindset.
Executive coach Laura Terrell joins us in this episode to discuss how law firm owners can treat their firms as businesses. She shares the importance of consistent planning and reevaluation, from your business model, employees, financials, and even investments. Learn to value finances and make better decisions for your business.
If you want to level up your law firm and increase both your profits and financial stability, this episode is for you!
Here are three reasons why you should listen to this episode:
- Discover why you need to adopt a business mindset when running your law firm.
- Understand the importance of your finances and how they can help you become profitable.
- Learn the art of being proactive and consistently evaluating your actions.
Introduction to Laura
- Laura started as an enforcement attorney for a financial regulatory authority.
- Eventually, she became a specialist in litigation and even had the opportunity to work in the White House.
- Laura’s experiences made her realize the importance of treating your legal practice as a business.
How to Treat Your Law Firm as a Business
- Any business should have target clients and know their finances, including their revenue, expenses, taxes, and more.
- Lawyers need to make sure their revenue is more than their expenditure.
- Remember, you need to know what you're selling. Location is also critical.
- To achieve rapid growth, become the go-to attorney for a sub-practice area.
Moshe: “You have to bring in more revenue than your spending and costs to make that work.”
Get People On Your Team
- Even if you're a solo attorney, you can still have people handle tasks for you. Assistants can free up time for you and help you expand the business.
- If you want to focus on being a lawyer, hire someone who can manage your office operations.
- Don’t try doing everything yourself. It’s easier than ever to hire capable people.
How to Think About Investments
- Starting a business or going solo are very similar to each other. Laura offers some questions to think about:
- How do you want to grow, and what should your first year look like?
- Look at your numbers. How much are your attorneys generating versus your expenses?
- What is your risk tolerance?
- You need to have a plan and know your business in and out. When you can look into future scenarios, it’s easier to prepare or avoid them.
Laura: “Don't wait until the creditor is there or your line is due. You need to be proactive.”
Importance of Evaluations
- Be proactive and anticipate problems.
- For example, if you observe difficulty in reaching clients during the holidays, maybe offer them discounts to encourage them to pay early.
- Be willing to let go of what is not working. Continually evaluate your actions.
Laura: “You should always be evaluating — is this productive? Is it effective? Is it financially savvy? Can I afford it?”
Know Your Standards
- When planning, consider your standards. How much are you willing to invest in something before pulling out?
- Think of your investments with trial periods.
- Set boundaries and understand when to let bad clients go. In the full episode, Moshe shares one method to avoid bad clients.
Laura: “What are the standards by whether I'm going to judge if this is working for me in my business?”
When to Evaluate and Check-In
- Laura recommends having a check-in every six months.
- Look into your client base, profitability, employees, and others.
- Have regular check-ins with your employees and get feedback from them.
- Don’t fix all the problems yourself. Give feedback to employees so they can also grow.
Have Radical and Candid Conversations
Laura: “Remember, you're selling yourself as a business, you're selling your services and your product. If you leave a client feeling dissatisfied, and you haven't had a real conversation with them, that's also not a great asset for your business.”
- Remember that your business involves people. Discuss any relevant concerns with them, whether clients or employees.
- If you have radical conversations with your clients, you'll know how to improve your services and products.
- Your conversations can also be educating the client on what’s realistic and setting their expectations.
- Know the costs your work will require. When you’re honest with expectations, there won’t be surprise expenses for the client and yourself.
Laura: “If you set the expectations upfront, it's hard to have surprises that come out of nowhere.”
Reflect on Your Business Model
- Any business should focus on increasing profit margin. Aim for a 40% range.
- Look at your business model and whether it helps you increase profits.
- For example, if you have a billable hour model, you’re motivated to spend as much time with your clients as possible.
- Having a set price motivates you to finish things as fast as possible and get staff to help with your tasks.
How to Become Profitable?
- The flat fee model can be profitable depending on how you run your business and spend your time.
- Know your actual profit margin and understand what increases or decreases it.
- Don’t be afraid to look at your numbers.
What Key Numbers to Know
- Look at your finances every month. Check how much you take in versus your spending.
- Break everything down.
- It’s similar to personal finance and observing your income versus expenses.
- Remember, some expenses can be variable. Understand and pay attention to the various factors affecting them.
Laura: “Understand what those fixed expenses are and also really question how many of them are really fixed, or how many of them you could make some alterations in.”
- Treat your firm as a business, and you'll be more fulfilled.
Laura: “Once you get a good picture about what you want your business to be, what your business goals are, whether you're meeting those, you really have a much clearer picture and you have frankly a more fulfilled legal life.”
Laura Terrell is an executive coach with over 25 years of professional experience. She is the Principal of Laura Terrell LLC and Managing Director of Golden Seeds. Laura has worked with clients from different industries, including law, financial services, pharmaceutical, non-profit, technology, and more.
Before her coaching practice, Laura was a Special Assistant to the President at the White House, Senior level appointee at the US Department of Justice, an equity partner in two large global law firms, and in-house counsel at a major global consulting and business advisory firm.
Want to know more about Laura’s work? Check out her website.
You can also connect with her on LinkedIn and Instagram.
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