How to Manage a Small Law Firm

Mar 24, 2020 | Law Firms

Patrick Carver
Founder, Constellation Marketing

Like any business, managing a law firm can be challenging. You not only have to figure out how to acquire and retain clients, but also how to hire and manage staff, keep track of expenses and revenue, and ensure that everything is continually running smoothly, all while potentially bearing the brunt of the legal work yourself.

As a digital marketing firm primarily servicing new and small law firms, we’ve helped guide many of these firms toward success, while also bearing witness to their wins and losses outside of the marketing realm. What we’ve noticed is that in many cases, one of the determining factors of a law firm’s success is how it is managed.

Although a law firm should be treated as a business, your practice has unique needs that go far beyond the needs of a typical business. Even if you have extensive law or business knowledge, knowing how to combine these specializations will set you up for long-term success.

Here, we discuss some of the most important facets of law firm management so you can begin elevating your firm to new heights.

How to Start a Law Firm


  • • Starting Your Own Law Firm
  • • Law Firm Business Plan

Are you interested in starting your own law practice? Do you have questions about starting a firm? Unfortunately, most law schools teach you how to think like a lawyer, not how to start a law firm. So, you may not know where to start. The most important thing to remember, though, is starting a law firm is starting a business. If you are wondering if you should open and run your own law practice, you should ask if you are ready to own a business. Law practice is a business and profession at the same time – you must remember that.

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Namely, the skills that you need to run a successful business aren’t the same needed to practice law. They may help you in your business, but running a business requires solving different issues, which don’t go away as your business matures. There will always be new challenges when it comes to being a business owner.

According to Lawyerist, you should ask yourself the following three questions:

• Do I want to be involved in the entire running of the business?
• Am I committed to being a business owner and leader – not just an attorney?
• Do I consider the time I spend working on the business as important as my billable work?

If you answered yes to the above questions, take risks, have an entrepreneurial spirit, and have goals of building something that’s yours, you can and should start a law firm. There are many benefits to owning your own law firm like the ability to do more than practice law. Also, you’ll be able to better control what clients you want to work with and develop a business model that really works. You can build your firm around your personal and business goals and formulate what solutions you want to offer your clients.

Be prepared to put in the time and energy. You’ll need clear goals, the right tools, a smart strategy, and (of course) some hard work. But you’ll first need to know what you want out of your law firm. What’s important to you? How many days off do you want? What are your retirement plans? What does success look like?

There is so much to consider – from staff to technology – before signing the lease on a building. The following are an integral part in beginning a law firm.


How to Market Your Law Firm (Business Development)


Law Firm Management (Operations)

  • • Legal Operations
  • • Law Firm Operations
  • • How to Organize Law Firm Files

In order to be successful in starting and maintaining a law firm, there are ten key principles you should know:

Marketing – The purpose of marketing is to generate leads and there is a wide variety of ways to do this. Find at least three ways that work for you and use them to grow your business.

Sales – The purpose of sales is to sign up clients. Once you start generating leads, you can convert them into paying clients through sales.

Services – Once you have mastered marketing and sales, you must perform services for them. This leads to payment.

Staff – Eventually, you’ll need staff – the right staff to do the job. You’ll have to figure out what kind of culture you want to develop and who best fits that culture. Develop a list of characteristics you’d like in staff members.

Systems – Without documented systems – policies and procedures – you cannot scale your business and you need written systems for every part of your business.

Space – After you start hiring staff, you eventually need more office space. It’s easy to get caught up in “keeping up with the Joneses” and rent a bigger, fancier building than necessary. But keep things manageable and avoid signing a long-term lease.

Money – Very few attorneys have bookkeeping and accounting experience, but it’s important to manage your finances. You need to be able to know the basics of finances, how to read a profit loss statement, and how to analyze cash flow.

Metrics – You need to be measuring numbers to keep your business afloat.

Strategy – Come up with a great strategy then implement it. Get leads, make the sale, collect the money, do great work, and then obtain referrals.

Self – Upgrading yourself is the most important step. Read books, do research, take classes, network with other successful business groups… You’ll never build a successful law firm by staying in your comfort zone.

Law Firm Accounting (Financial Management)

  • Legal Accounting
  • Accounting for Law Firms
  • Law Firm Accounting Software
  • Law Firm Bookkeeping

In addition, you will need to know what records you need to maintain. Namely, you’ll need to know the fundamentals of accounting and what specialized software can keep your practice secure. According to The Balance Small Business, “A good accounting system for any small business will include strong internal controls to monitor both revenues and expenses. As an attorney, you need to ensure that your accounting system has strong internal controls, both fees billed and costs and expenses advanced, for clients.”

Regardless of how you build, your fee should be based on your clients’ projects. Therefore, it is helpful to maintain impeccably detailed records to track how much time is spent on a case.

In addition to the records, attorneys typically maintain at least the following:

1. Appointment book that contains records of appointments, usually in a calendar format.
2. Accounts receivable journal, which shows the receivables billed but not collected.
3. Ledger accounts with a description of services rendered, charges, credits, a summary of non-billable charges, and final invoices.
4. Case time records for each client.
5. Cases-in-progress register, which summarizes any legal work in process and is usually organized by the client’s name.
6. Time summary reports to be sorted by the attorney and contain information such as the time, dates worked, billings, and other chargeable expenses.
These are basically what most attorneys will keep on file. They will also often use software to maintain their records in electronic form.

People Management (HR)

  • Law Firm Recruitment
  • Law Firm Hiring Process
  • Attorney Interview Questions
  • Standard Operating Procedure Hiring Process for a Law Firm

Screen Your Staff – Make sure any potential employees are qualified, fit in with the culture you’ve created, and has a great attitude.

Set How to Onboard Employees – You should have a way to give an Employee Handbook, sign paperwork, and orient new employees.

Delegate – Delegate work to paralegals and other staff to maximize your potential.
Run Effective Meetings – Make sure your meetings cover everything they need to, set an agenda, cover your core talking points, and talk with employees about projects they must report on.

Manage Employee Performance – Guide your employees toward success, reward them for their achievements, support them during failure, and provide resources to them.

Remember that opening a law practice is a huge undertaking that requires thought, determination, and know how (through research). With the above tips, you’ll be well on your way to being a business owner.

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