Actionable tips on How to manage your law firm in 2021

In this competitive era, all businesses need legal services help, and that’s why law firms and lawyers are intensely occupied with a massive workload. In this situation, law firms and attorneys do not have the ability to manage and handle their tasks efficiently. They need to have a strategy and a plan in place to manage their work and stay prepared in times of uncertainty. We created this article to give you actionable tips on how to manage your law firm in 2021.

For sure, It is not an easy task to manage your law firm in 2021. If you have a law firm, you are dealing with the ongoing challenges of acquiring clients.  You are obliged  also to handle many financial, administrative, ethical and strategic demands to keep your law firm running effectively and stably.

In short, effective law firm management is crucial to achieving longevity and profitability. Without this, essential tasks and duties can go unnoticed. This can also lead to a wide range of managerial and financial challenges.

This article highlights some useful and actionable tips on how to manage your law firm in 2021 and ensure stability and efficiency.

1- Efficient leadership and management 

In most cases, success comes from the top down. Every member at a law firm keeps his eyes to his management to get guidance on conducting themselves when handling business matters. To manage your law firm in 2021, Law Firm leaders need to give an optimistic outlook to the associates and all staff members. Whether managing a staff meeting or speaking with customers, law firm leaders are continually being observed and emulated.

Clear vision 

According to the leadership process model proposed in 1989 by Jon Pierce and Randall Dunham, thriving leaders are characterized by having a clear vision. That is to say they tend to assess the situation before taking any action so they can get positive results.  On the other hand, influential leaders tend to control and direct their teams according to established policies and procedures. They ensure that day-to-day operations flow smoothly. Sitting down and aping out a clear vision is so important and sharing it with all colleagues means that everyone understands the direction the firm is heading.  Plans can change but keep everyone in line with your visions at all times.

Adapt to change

When market and business conditions change, effective managers recognize the necessity for adjusting regular business practices. By taking risks and promoting innovative strategies, they make it possible for their law firms and businesses to capitalize on strengths and opportunities and alleviate or eradicate risks and threats. Managers tend to excel at maintaining operations, not changing them.  Take advice from colleagues and trusted team members, change can be daunting but it also can represent massive opportunities.  These changes can often come from the most unlikely sources so remember to always listen.

2- Financial Management

Ask a law firm owner for his client list, and in most cases, they will not be able to inform you about where to find it.  This kind of data should be at the fingertips of any Partner. Many law firms don’t work to a fixed budget. Moreover, they don’t make revenue forecasts for the practice as a whole or individual practice areas. To clarify, the ability to make such predictions is hindered by the challenge that law firm does not have a good handle on the total revenue numbers or an idea of the revenues per practice area. This also makes it hard for firms to spot trends. For instance, If you can’t identify which practice areas are rising and falling, you may be losing your revenue, without understanding the main reason that causes this to happen.

To sum up, here is the list of top Financial KPIs that you need to take into account

• Revenue billed monthly
• Realization rate; the money billed as a proportion of the number of billable hours worked)
• Revenue collected every month
• Amount of law firm debt; lines of credit, credit cards, loans, etc.)
• Amount of accounts receivable
• Expected annual costs (including the total amount of expected annual costs of salaries, for a year, based on the last three month’s costs)

• Operating account balance
• Age of accounts receivable
• Net income as a percentage of revenue

3- An effective marketing plan 

Marketing is a significant indicator of any successful law firm. How can you get more clients if they do not know that you are there and what your law firm offers? Therefore, effective legal practice management must have a marketing strategy that will grow your law firm or at the very least maintain your profitability level. That is to say that a well-balanced marketing plan ensures a web and social media presence. You need to know where your ideal customer would likely look for a Lawyer and make sure you are there.

Here are some of the marketing KPIs to take into account:

• Number of marketing actions undertaken
• Marketing budget share (the share of the total marketing activities to the total fees billed)
• Cost per client (the rate of the total marketing spent to the number of clients billed)
• Law firm website traffic
• Email marketing performance
• Website landing page conversions
• Linkedin and social media strategy
• Client acquisition KPIs

4- Develop accurate and useful Key Performance Indicators that can help you measure your performance 

Measuring the performance of the essential aspects of your law firm can help you increase revenues and growth. Certainly, KPIs provide you with the knowledge needed to make decisions. In short. an effective KPI must be:

• Well-defined and quantifiable.
• Leads to achieve your goals
• Communicated throughout your Law firm
• Applicable to your team

Client KPIs

• Client Lifetime Value (CLV): 

  CLV helps you look at the value your law firm is getting from a long-term client relationship. To clarify, CLV helps to narrow down which channel enables you to gain the best cleats for the best rate.

• Client Acquisition Cost (CAC):

   Divide your total acquisition costs by the number of new customers in the time frame you’re examining.

• Customer Satisfaction & Retention:

   This can be seen through the number of referrals you get or how long the clients will continue to be your clients. Law firms can measure this through client satisfaction scores and surveys.

• Number Of Clients:

   Similar to profit, this indicator is obvious. By defining the number of clients you’ve gained and lost, you can understand whether or not you are meeting your clients’ needs.

Productivity and Individuals KPIs

• Number of billable hours and unbilled days
• Operation rate (the number of billable hours worked divided by the number of hours in the workday)
• Realization cost (the number of billable hours invoiced divided by the number of billable hours worked)
• Collection rate (the number of hours collected divided by the number of hours invoiced)

• Monthly expenses and average work rate
• Number of matters opened, and revenue referred to your law firm
• Number of tasks completed

5- Take advantage of technology and collaboration & case management tools

One annulling issue for law firms and legal teams is that their data and documents remain scattered.  For example, ask any lawyer where their documents and data are stored. Subsequently, you will receive a number of different answers. Mostly, in my emails or in the filing cabinet or even on my desk.  Well, it’s no wonder then that law firms have difficulty collecting and handling data. Therefore, it would be more helpful to have a solution as one source of truth. It makes it easy for you to access all data, tasks, and documents from one place.

Mobility to work form anywhere 

In 2021, most law firms adopt working form home options due to the pandemic. As a result, maintaining the same efficiency and collaboration level are most common challenges law firms face in 2021. The ultimate solution to keep everyone up to speed is to take advantage of case management solutions and collaboration tools. Instead of managing legal matters and cases through Excel spreadsheet or a paper calendar, use legal case management software like Lexzur. It is very effective to manage and keep track of legal cases, documents, essential tasks, hearing sessions and deadlines.

Here are the top benefits legal case management solutions can help you to achieve:

• Increased productivity and higher profitability

When you adopt a law practice management software, you invest in the future. Law firms that use law practice management solutions achieve higher profitability and productivity. Case management systems streamline a myriad of tasks, freeing up valuable time for you to serve your clients.

• Protection against the loss of data

With everything in a single place, your team knows where to find matter-related data without having to reach a colleague to send the file over. Everyone knows that if he/she navigates to that legal matter, they will be able to get the data they’re looking for.

• Maintain client satisfaction

Client satisfaction is crucial for word-of-mouth referrals and law firm reputation. The right law practice management software like Lexzur prevents any client communications, deadlines, or tasks from falling through the cracks, guaranteeing that your clients have a great experience every time.

• Measure KPIs and generate accurate reports 

Legal practice management software like Lexzur  can help law firms drive performance, get insightful and detailed reports, analyze workflow performance, and share the time tracking data.

Interested to know more! Book a free Legal Tech consultation with one of our experts and find out how we can make the difference.