How to be the “Chief Ecosystem Officer” of your law firm:
Understand that you’re an Entrepreneur Selling Legal Services – Mindset Shift From What You Learned in Law School
Recognize That as a CEO Your Job is Multi-Fold:
•Vision & Strategy (Choose a niche and define what differentiates you from other firms.)
•Rainmaking (Cultivate relationships, become a networking & marketing expert to attract new business.)
•Operations (Manage the office and the staff, set systems, policies and procedures.)
•Financial Management (Utilize your financial data to make informed business decisions. Implement a system to track and project cash-flow, as this has the biggest effect on the day-to-day operations, but represents the #1 problem small law firms struggle with. Develop financial goals, spending plans. Have a basis understanding of your key performance indicators.).
What Is Your Excuse for Not Acting like the CEO of Your Business?
•Managing partners of big Law Firms have the advantage of working with various dedicated professionals, company CEO’s have a board of advisors.
•Good News: Solo & small law firm owners have a myriad of resources when it comes to building their own successful businesses: – Practice management books & coaches, outsourced CFO services, technology tools/apps, VAs, etc.
•How to build your own unofficial board of advisers/accountability partners
.Building Your Successful Solo Practice Starts with “Reverse Engineering” Your Financial Goals:
•Your branding/marketing, visibility, lead generation, pricing structure, staffing level, all have to be aligned with your financial goals. Know how much you want to make and build the “enterprise-machine” that will get you there.
Knowing & Understanding Your Numbers Is the Only Way to Build a Legitimate Business
Examples of your Important Numbers & Key Performance Indicators:
•Income and Spending Budget (the Plan/Goal)
•Actual Income and Expense figures (the Reality) (per month & year-to-date)
•Budget Variances: When you compare the actual numbers to the plan. This gives you the insights into what’s working and what needs more attention.
•Profit Percentage Benchmark for Small Law Firms: 1/3rd of revenues go to staff salaries, 1/3rd to general & marketing expenses, 1/3rd is partner’s profit. This should be taken into consideration when you price your services
•Successful small law firms spend at least 5-10% of their revenues on marketing
•Your monthly “nut” or how much fees you have to bill & collect to pay for all regular monthly expenses, including your take home pay
•Number of new clients each month
•ROI (return on investment) of each type of marketing activity (long term)
These numbers have to be looked at & interpreted REGULARLY (at least monthly, but weekly is preferred)
•Financial numbers are not just to give to your tax person on April 13th (Ort Oct 13th)
•They help you make better and more profitable business decisions during the year
•Online programs like QBO revolutionized and made this affordable for everyone. You can create your budget in an online accounting software, then you can track variances & profitability in it
•Ask your CPA to be your outsourced CFO / business adviser / accountability partner
•Schedule regular (at least quarterly) meetings with them to review your progress & get insight into what your numbers & KPIs mean