You became a lawyer by completing challenging years in college, studying relentlessly, and eventually passing the dreaded bar exam. All those years prepared you to be an amazing lawyer, but not a single class taught you how to run the business side of your law firm. Whether you realize it or not, your firm is a business and requires financial and operational management as much as it needs clients.
In this blog, we highlight 3 Mistakes Law Firm Owners make that can be keeping you from having the business of your dreams.
Having the Wrong Mindset
Are you taking on new challenges to get your practice where you want it to be, or is there a voice inside your head not allowing you? There might be stressful external factors such as financial uncertainty when first starting a law firm, but what might be really preventing you from taking your practice to the next level is the critic that lives within you.
You don’t have to work yourself to the bone to be successful. It is a fact that hard work plays an essential part, but your mindset plays a more important one. Having limiting beliefs will hold you back and keep you in your comfort zone. The key is to get out of your head and take action. By shifting your mindset, every self-limiting belief you ever had will become an opportunity to challenge yourself and support your growth. For example, instead of thinking people will prefer bigger law firms or won’t pay your price, ask yourself how you can offer added value to differentiate your practice. By shifting your mindset in this way, you will start creating solutions instead of problems.
You choose how you think and act, so stop holding yourself back and start working on achieving your fullest potential. Otherwise, your negative beliefs will become your reality.
You will only reach the level of success you believe you deserve. Start working on your mindset by:
Identifying your self-limiting beliefs.
Challenging why you consider them to be valid.
Developing more self-supporting beliefs.
Setting a Poor Pricing Strategy
Your pricing affects your potential and existing clients’ perception of your firm and the value you offer, so are you satisfied with it? If you are not in 2021, why would you continue with it in 2022? Just because your current pricing seems to work, it doesn’t mean you shouldn’t review the effects of changing it. Also, imitating the fees and models that work for other firms will not necessarily fit yours. Still, you must be aware of how your pricing compares to others.
For your structure to be effective, it should be reasonable to both you and your clients, considering the value you offer. When it comes to your ideal pricing model - either hourly, flat, or contingency - it depends on your desired revenue, estimated expenses, and budget for next year.
A good pricing strategy takes into account:
Your practice area and experience level.
The complexity and type of case.
The time you will need to invest in each case.
Overlooking Financial and Operational Performance Metrics
A lot of people start caring about their finances only at the end of the year or tax season - by that time, you can only look backward. You should analyze your performance frequently so that you are able to make strategic decisions that impact your future growth.
It is a must that you understand your numbers and what affects your profits so you can be more intentional with your money instead of wondering where it went. Continuously analyzing your performance will help you identify opportunities to implement strategies that support your short- and long-term goals.
Avoid making the mistake of not tracking your progress with relevant Key Performance Indicators (KPIs). Otherwise, you will find yourself in 2022 still wondering how you’ve performed and how you can improve.
To understand how you’ve done and where you need to go, you should:
Identify what metrics are relevant to your practice.
Determine how you will track the information.
Set time aside to review your KPIs.
What Are You Doing to Avoid Making These Mistakes?
As a law firm owner, you probably feel like you must do everything on your own and have difficulties asking for help. However, avoiding these mistakes can be challenging without guidance, and trying to overcome them through trial and error can quickly become expensive.
As 2021 comes to an end and we plan for a new year, the timing is just right to learn how to run your firm as a business. If this sounds overwhelming, remember you don’t have to do everything on your own. Just like when you became a lawyer, transforming your firm into a sustainable business won’t occur overnight, so give yourself some grace and invest in getting the proper support.
A Business Advisor/Virtual CFO can help you address those problems and make the process of preparing both from an operational and financial perspective smoother for your firm.
Having a Business Advisor/Virtual CFO like the DesCPA Team can help you:
Develop a growth mindset, define your goals, and create strategies to achieve them.
Discover opportunities to improve your firm and minimize risks.
Take your business to the next level in efficiency, growth, profitability, and cash flow.
Prepare your firm for future developments and different stages of growth.
If you want to hear more about how to set yourself apart from other attorneys who are making these mistakes schedule an introduction meeting. Let’s make 2022 the start of the business of your dreams.