Law firm strategy is a future-proof plan that enables firms to prioritize objectives, remain competitive, and optimize financial goals. It allows firms to differentiate themselves from the competition, reflecting both strengths and weaknesses. Law firm strategy helps firms discover their opportunities and threats, uncovering key performance indicators (KPIs) to measure progress and offer the best chance at success.
Solo or small law firms can build sustainable law practices by focusing on client-centric services, future-oriented technology, profit-oriented business models, and access to justice and inclusion.
As a firm, your law firm strategy should include several concepts:
- Your mission and values are clear and documented.
- You have a documented business model built around solving client problems in line with their expectations at an appropriate price.
- You study trends that will affect your firm and clients, and you incorporate what you learn into your strategy.
- You’re working on projects and short-term goals connected to your long-term goals for your firm.
- You use a set of key performance indicators (KPIs) to monitor your firm’s health and help you predict your future success. Your KPIs are regularly reviewed and updated.
- You occasionally conduct a competitive analysis and adjust your strategy to win your market.
By looking to the future, you can build a successful law firm that stands the test of time. The best way to prepare is to create a strategy that flexes with the ebb and flow of the practice of law.
Craft a Law Firm Business Plan
Your law firm business plan acts as your roadmap, helping you reach your goals, keeping you accountable, and acting as the backbone of your law firm strategy moving forward. Plus, every business decision will rest on your plan, alleviating bureaucracy and indecision.
Before you craft your business plan, you must answer questions such as:
- What is the name of your firm?
- What are your areas of practice?
- What is your legal structure? For example, sole proprietorship, partnership, etc.
- Who is your target client(s)?
- How will you maintain your law firm’s files and records?
- What compensation structures are in place for you and your employees?
- What are your short-term and long-term goals?
- What financial assets do you possess, and which assets do you need moving forward?
Writing Your Law Firm Business Plan
There are seven distinct parts of a complete business plan. These parts include:
- Executive Summary. This section is an overview of your entire plan and includes your mission statement, values, and market differentiators.
- Company Overview. This overview should include your mission and values again, your location and the areas you serve, firm structure, ownership, and your firm’s history.
- Market Analysis. Take note of the history of your legal niche as well as its future, including market size to market growth. This section should also include your target audience, a complete competitive analysis and the projected amount your target audience has to spend to help determine service pricing.
- Firm Organization and Management. This section includes information about you and others who have ownership in your firm. It includes your background, experience and the “why” behind your leadership.
- Firm Services. Your service section must include the problems you plan to address for your client, the solutions you provide, and an overview of your competition.
- Marketing Strategy. Your marketing strategy should address the three P’s: positioning, pricing, and promotion. It should discuss how you plan to position your firm, how much you’ll charge for your services, and how you plan to promote your firm.
- Finances. This section discusses the budgeting and forecasting for your firm, including capital, monthly budgets, cases needed to break even, projected profit, projected loss, and more.
Once complete, your plan will serve as a living and breathing document you and your team will follow when moving forward. Put your plan in writing. Then revisit and update it regularly.
Start with Your Exit Strategy in Mind
A critical part of preparing for your firm’s future is creating a strategy for when you’re no longer there. Even though it might be years away, retirement or difficult situations such as the event of your death can send your family and firm into a downward spiral without proper care. To strategize effectively, start with your exit strategy in mind.
You have many options to consider: a merger, selling your practice, dissolving your practice, or even closing your practice altogether. Regardless of the method you choose, there are some things to consider in the beginning stages of your practice.
- Define your future role. In your law firm’s strategy, outline the future role you wish to have in the firm after your retirement. Define how your leadership team or employees will operate should you exit.
- Evaluate your exit options. As you strategize, define your exit options and which one you believe to be best for you. After all, the way you plan to exit will affect the way you run your firm.
- Stay organized always. It’s easier to try and keep your law firm organized now than to have a mess when it’s time to exit. For example, stay up to date on your finances and go through files annually to remove what you no longer need.
- Delegate to leadership. As you build your firm, continuously delegate leadership tasks to others on your leadership team. This will help them learn how to operate when you decide to exit.
Starting with the end in mind will help you run your firm in preparation for your smooth exit.
Establish Your Firm’s Mission, Vision, and Values
The actions you take and the choices you make depend on the “why” behind your decision to enter the practice of law and start your firm. Defining your mission, vision, and values will help guide you as you create your law firm strategy.
Your law firm’s mission is the reason your firm exists, the ultimate purpose. It helps define what it is your firm does, how you do it, who you do it for and the value you bring to your clients.
To communicate your mission, create a mission statement: a short sentence describing your firm’s purpose and goal. For example, take a look at Google’s mission statement:
“To organize the world’s information and make it universally accessible and useful.”
Keep it simple. If you can’t define what it is you want to do in just a few words, you may not have the clarity you need to move forward just yet. Dig deeper.
Your mission statement defines your firm in the present. Your vision defines where you want your firm to be in the future. By understanding your vision, you’re able to make business decisions based on where you want to be in your business, not where you are. Your vision should inspire and direct your firm’s steps forward.
Communicate your vision by creating a vision statement for your firm. Keep it short and simple to remember, and ensure it covers your firm’s long-term objectives. For example, in contrast to its mission statement, take a look at Google’s vision statement:
“To provide access to the world’s information in one click.”
Although the mission is to make information universally accessible, their long-term objective is to provide access to information in just one click.
There are reasons behind the choices you make and the things you do. Discover the reason you started your firm in the first place within your core values. Your values are the fundamental beliefs of your organization, the foundation you need to perform meaningful and successful work. Some examples of core values include:
Using one word to describe each value is a great place to start. As you learn and grow, you can start creating value statements that describe what each value means for you and your clients.
Place your mission, vision, and values on display where your team and clients can see them, such as on your website or in your office. But don’t consider it done until they are shared to everyone. Constantly refer to them when making decisions and work on practicing them in all of your work and interactions. Eventually they’ll be shared by everyone.
Define Your Ideal Clients
Not every client is the best client for your firm. As you start defining your specific services, you must consider who you want to serve and how to serve them best. By defining who your target client is, you can center your business plan around serving them to the best of your ability.
Create a Client Persona
To define your ideal client, you must create a client persona. A persona is a deep dive into your client: their basic demographics, fears, pain points, needs, and more. To start, answer these questions about your client:
- Where do they live and what is their home life like?
- What are their profession and financial statuses?
- What legal issues do they need help with?
- What are their pain points or concerns surrounding legal help?
- What kind of service do they expect from their attorney?
Some law firms may focus on one client persona, while others may focus on two or three. Once created, use your persona(s) to determine your services, pricing model, intake process, and more depending on your client’s unique needs and desires.
Perform a Competitive Analysis
It’s critical to understand what other firms are doing in your specific niche. By performing a competitive analysis, you’ll discover how to do what they do even better, increasing your competitiveness in the industry. Follow these steps to complete a simple competitive analysis.
- Find your competitors. Start your analysis by conducting a quick online search of attorneys in your area of practice and location. Keep track of the competitors you find by creating a spreadsheet. Remember to use both “lawyer” and “attorney” when you search and try to find around 8-10 competitors for a full analysis.
- Take note of their services. It’s important to understand what each competitor offers specifically to their clients. Add their service offerings to your spreadsheet and discuss how your services compare.
- Discover their strengths and weaknesses. List the competitor’s strengths such as years of experience, client work, etc. Putting yourself in your customer’s shoes, list their weaknesses and discuss what you can do to capitalize on them.
Analyze their strategies and pricing structure. This information, although tricky to obtain, can help you understand the strategy behind a firm’s success and how to price your services to remain competitive in your location. Use the internet, personal visits, online ads, written sources, and clients to learn more about your competitors.
After completing your analysis, decide on your competitive position by defining what you offer that’s unique to your niche.
Set Your Key Performance Indicators (KPIs)
Key performance indicators (KPIs) are the measures you choose to gauge your firm’s performance over time. These measures determine your progress in reaching strategic and financial goals, help you measure competitiveness, and more.
KPIs help you and your team focus on what matters most. They motivate and inspire action when met, pushing your firm towards success. In your law firm strategy, decide which KPIs are best to track for your firm. Some examples of KPIs include:
- Client satisfaction rating
- Operating account balance
- Amount of accounts receivable
- Number of new clients
- Number of new cases
- Number of consults
Remember to choose KPIs that are directly related to your law firm’s goals. Start simple by gathering a few key metrics that are easy to track until you’re ready to analyze more. Finally, revisit your KPIs often. As your firm grows, your metrics will shift as your priorities change.
Build a Strong Leadership Structure
Not every lawyer who opens a law firm has the necessary leadership skills at first. With dedication and practice, you can easily learn how to inspire and lead your team daily.
Hone Your Leadership Skills
To learn how to lead, you must hone your firm leadership skills first. There are many ways you can do this such as:
- Focusing on listening and communicating. These “soft skills” define an effective leader. Focus on practicing your active listening skills and communicate often.
- Practicing being a positive example in all matters. Practice seeing the silver lining. Not only will this help you lead your team in this way, but it may also improve your level of stress.
- Finding a mentor to learn from. Find someone you trust that has done this before. Ask questions and gain their insight about what you can do to improve your leadership skills.
- Staying solution-minded. Actively search for applicable solutions when problems arise. Your firm will continue to grow in the face of adversity when you and your team remain committed to strategic thinking.
- Delegating. You can’t do everything yourself. Delegate tasks to those who do them best.
Rounding Out Your Team with Unique Strengths in Mind
As your firm grows, you’ll need to build your leadership team to help you guide your firm towards success. Round out your team by defining your weaknesses and filling the gap. When you complete your team in this way, each member is critical to the whole, creating the cohesion you need to move your firm forward.
Set Clear Expectations and Train Often
As you build your team, set clear expectations from the outset. Define the responsibilities for each individual on your leadership team. Encourage team members to take advantage of coaching and training programs to help enhance their leadership skills.
Design for Innovation and the Future of Law Practice
To create a sustainable business, you must plan for the future of law practice. Through the technology and science at your disposal, it’s possible to create unforgettable experiences for your clients. By designing your firm for innovation, you’ll stay flexible as client needs evolve.
Adopt a Systematic Approach to Innovation with Design Thinking
Design thinking is an ideology aimed at applying long-established design principles to the way we build our businesses. It’s used to intentionally craft your law firm over time to deliver services simply and functionally. Using design thinking, you can approach innovation and problem-solving in a user-centered, responsive, intentional and experimental way, tolerant of failure.
Design thinking allows you to step outside the chains of perfection and create something your clients want. The process takes you from understanding and sympathizing with your client to creating solutions that enhance their experience. By adopting this approach, you’re able to foster a culture of innovation within your firm that creates loyal clients and new leads.
Take Advantage of Law Firm Technology
Beyond continuous innovation within your firm, take advantage of available technology to move your law firm forward and improve client experience immediately. As you strategize, make room for tools such as:
- Cloud-based software such as file storage
- Backup software
- Practice management software
- Accounting and billing tools and software
Using these tools, all areas of your law firm strategy will benefit from streamlined processes, including your marketing, finances, firm structure and more.
Use Your Firm to Improve Access to Justice
Within the United States and across the globe, there’s a continuing crisis: the need for access to justice. Individuals who face legal concerns should have affordable and timely access to the legal assistance they need to receive a fair outcome. Unfortunately, most don’t.
Nearly 70% of all civil cases only have an attorney on one side, usually on the side of the plaintiff.
This is just the beginning of the statistics that show the chasm. The only way to start bridging the gap between legal concern and legal assistance for all is for each firm, both large and small to contribute. There are many ways your firm can contribute such as:
- Donating to organizations focused on access to justice. Organizations such as the Legal Services Corporation and the National Immigration Law Center work to help all individuals receive legal representation.
- Providing all individuals with education and advice. One of the biggest issues in access to justice is this: many individuals don’t know that a legal concern is a concern at all. Use your website and other outlets to educate the public on legal issues and solutions. When clients reach out for advice, do your best to provide the best advice you can give.
Find Support from Mentors, Peer Groups, and Coaches
This isn’t the first time a passionate attorney has opened their own firm. Hundreds have gone before you and many of them offer their advice to help you reach success and avoid failure. Find the support you need by taking advantage of coaches and training, mentors, and peer groups from a wide range of available sources.
For attorneys that have been in business for several years, there’s still plenty of benefits to reaching out for advice. For example, you might want to enhance your client intake or learn how to automate certain daily tasks. Or, you may want to know how to hire your first employee. Whatever the case may be, there’s plenty of insight to go around.
Learn from Books, Conferences, and Podcasts
If you’re one who enjoys seeking advice on your own, there’s plenty of resources available from print to legal podcasts. If you enjoy reading and carrying your advice with you, there’s plenty of management books available tailored to the legal industry.
If you’re interested in learning from leaders within the legal industry, conferences are a great tool for both insight and networking. With the wealth of knowledge available to you, it’s simple to find the information you need to create a sound strategy for your firm.
Defining a law firm strategy places you in a position of power. You’ll remain flexible as the legal industry changes, stand out from the sea of competitors, and continue to provide superb service to your clients, a winning recipe for law firm success.
Strategize and Build a Strong Firm with Lawyerist
Even the passion you have for the law isn’t enough to create a successful solo or small firm. To create a sustainable firm, you must strategize for both the present and the future. If you’d like help with creating a business strategy, updating an existing law firm strategy, or simply some kind advice, look to other lawyers who have come through on the other side. Become a Lawyerist Insider today.