12 ■ For The Defense ■ July 2017

L A W P R A C T I C E M A N A G E M E N T

■ Pamela W. Carter is the founder of Carter Law Group LLC in New Orleans. She focuses on personal injury litigation, with an emphasis on trucking and transportation, premises liability, insurance defense, and product liability. Ms. Carter also litigates wrongful death, slip and fall, lead paint, and food contamination matters. She is a former chair of the DRI Diversity and Inclusion Committee and a member of the DRI Board of Directors.

The Solo or Small Firm Counselor Strategies to

Improve the Operation and Profitability of Your Law Firm

making money, only to find that operat-ing a successful law firm requires a lot of hard work. My most important recom-mendation is that you should do every-thing that you can to put the odds in your favor (e.g., make sure that you have a strong launch, choose the right team members, among other things). You can avoid many of the pitfalls by reevaluating your busi-ness often, by revising and improving your model, and by taking your time to plan out all the necessary steps that you need to achieve success.

Suffice it to say that even with more than 15 years of experience and extensive legal training under my belt, I learned some hard lessons deep in the trenches of a small legal practice.

I opened my own shop, and so far, it has been terrifying, exciting, and most of all, extremely rewarding. Here are some things

that I learned, surprises that I experienced, and what I wish I had known before start-ing my own business.

Know Your Practice Focus and ExpertiseAfter working with hundreds of clients over the past 20 years, I realize how much the legal profession has evolved. In the past few years, I’ve learned that we can’t service every client in the same way, nor do they need to be serviced in the same way. Under-standing what clients want and what they are trying to achieve in each case is very important. Take note of your client’s pref-erences and learn your client’s business early to ensure that your business model satisfies the needs of the market. Lawyers often believe that they should do every-thing on their own. However, that mindset will cause you to waste a lot of time try-

By Pamela W. Carter

Here are some things that I’ve learned since starting a small defense law firm. To succeed as a business owner today, you need to be flex-

ible and have good planning and organizational skills. Many people start a law firm thinking that they’ll turn on their computers or open their doors and instantly start

© 2017 DRI. All rights reserved.

For The Defense ■ July 2017 ■ 13

ing to do tedious tasks that someone else could do better and faster. Look for ways that you can automate tasks first, and then consider outsourcing. Look to technology as a method to become a better focused and more effective law firm.

Production Plan: Ask for Referrals and Conflict CasesCasting a wide net is also important. It took many years to realize the value of asking for referrals from existing clients, friends, and colleagues. It never occurred to me that everyone assumed that I had all the cases that I could handle. This was far from the truth, so I had to set aside my pride and ask for new assignments and referrals. I also joined local business organizations, law-yer referral groups, and information serv-ices. For example, states such as New York have services to refer cases to lawyers. (See http://www.nysba.org/joinlr and add your name to the list of attorneys receiving referrals from the state bar association.) If people don’t know about your firm, then you may have a problem remaining viable. In the age of digital media, it’s just silly not to have an online presence.

See the Forest and the TreesAcknowledge your biases. It took me a lit-tle time to understand the risks and the rewards of the small defense practice. I learned that taking calculated risks was essential to success and helped my business grow. When faced with a risky decision, a good first question to ask is, “What’s the downside?” If you can answer this ques-tion, then you know what the worst-case scenario is. This knowledge will allow you to take the kinds of calculated risks that can generate tremendous rewards. Also, be sure to evaluate your business thought-fully. Because you have invested time in your legal practice, you likely think that your law firm is better than it is, and care for it more than you should. This is called the “IKEA effect” for our tendency to over-value our IKEA furniture simply because we assembled it. You need to request and accept feedback from others. When some-one tells you that your baby isn’t pretty, you don’t have to agree, but you need to take it seriously.

When you’re starting your law firm, your goal is to be in tune with every detail.

14 ■ For The Defense ■ July 2017

L A W P R A C T I C E M A N A G E M E N T

I checked every letter delivered and revised all proposals that went out at least 10 times. I was aware of every piece of silverware and cup we had in the kitchen, and every copy-paper order that was sent out. However, the details become so overwhelming that I missed the big picture. As an entrepreneur, I needed to reevaluate my time. I worked with a business coach to define a reasonable

amount of time for me to spend on work, on administration, and on business develop-ment. My priority was the practice of law, not the needs of running a business. Yet I was also determined not to miss important family moments. The advice that I received was that it was key to think about the type of life that I wanted. So I set business and family priorities for myself and outlined in concrete steps my goals for the matters assigned and the overall goals for the firm.

To run a business, you need to be able to see the business both at the micro level and the macro level. The ability to analyze simultaneously the big picture and the individual pieces that make up your busi-ness is no easy task. That is why I hired a business coach and office manager to help me navigate it all efficiently. I had a hard time pulling myself out of everyday practice tasks, but the coaches kept me on point with client objectives and firm operational goals, and that allowed me to make the changes that have propelled my firm forward.

Strategy for Your SuccessSet yourself up for success by looking at your law firm from the top and from within. You’ll discover a lot that will help you both to run your law firm and to grow it successfully. As an entrepreneur, you’ll go through a lot of ups and downs. That means that you will have to hear a lot of “noes” before you will hear any “yeses” in your business development. A great mar-keting idea may turn out to be not such a great idea. Add to that the changes in your practice niche and the challenges of run-ning a business, and you’ll see why these burdens can prove cumbersome.

People ask me how I learned about practicing efficiently, incorporated social media, achieved business development, obtained mentors, and marketed the firm. I tell them that I was forced to learn all the aspects, otherwise I wouldn’t survive. I was forced to learn these skills the same way that I was forced to learn how to balance a budget, how to negotiate my building pur-chase, and countless other skills that law school does not teach because my survival depended on it. While developing new skills can be tough and takes time, it can pay off in spades. These skills are invalu-able throughout your life and are impor-tant to your growth.

Increase ProfitabilityEverybody wants to make more money. For small law firm owners, this is espe-cially important since the longer a busi-ness stays viable, the longer it can keep the doors open, retain staff, and be successful. But aside from a rate increase, there are other ways that a small firm can increase its profits. Here are five simple ways to increase profitability.

Go PaperlessGoing paperless reduces your business’s reliance on paper and makes things a lot cheaper. Cutting down on paper helps the environment and reduces the costs associ-ated with paper, toner, and maintenance, as well as things such as binders and stor-age cabinets.

Switch to a Secure Electronic Forms and Filing SystemThink of the savings you would see if you were to start e- mailing invoices to clients

and vendors, or simply taking electronic payments. You could implement an inven-tory management system and cut back on postage fees, envelope costs, paper costs, and more. An electronic system would also cut back on administrative duties, allowing your employees time to do work that more directly affects your bottom line.

Streamline Management CostsHow efficient are your employees? How much are you owed in accounts receiv-able? Getting the answers to these ques-tions can be critical, and to do so you need to automate your business. Create a system for employees to access and add data con-tinually, keep all information updated and your billing system synchronized, and be sure to build in back-office administrative time (to manage your accounts and your business) into your hourly rates or ongoing charges. Automation will allow your firm to run smoothly, and it will help a scaled-down workforce show more savings to cli-ents, increase firm profit, and accomplish more back-office work.

Enhance Your Current Marketing EffortsMaybe it’s time to revisit your market-ing materials and your pitch. Based on the market and your client demands, your social media brand could be stale, and your marketing materials might be outdated. Adding a fresh spin, even to just the lan-guage, might open up new opportunities. Does your online brand complete your written materials? Are you an all- inclusive law firm reflective of your clients’ cus-tomer bases?

In truth, increasing your revenue often involves a combination of lowering expenses and increasing sales. However, you can make slight adjustments in many different aspects of your business to effect positive change.

Prioritize Your StrategiesOnce you have chosen strategies to make your business more profitable, you should prioritize them. It’s a good idea to write down your goals, the corresponding strat-egies to achieve them, and also how you plan to implement your strategies. Focus on your more profitable items. Your serv-ices with the highest gross profit mar-gin are the most important to your firm

To run a business, you

need to be able to see

the business both at the

micro level and the macro

level. The ability to analyze

simultaneously the big

picture and the individual

pieces that make up your

business is no easy task.

For The Defense ■ July 2017 ■ 15

because they generate more money. Once you have identified your most profitable cli-ents, or your referrals with the most poten-tial, you should concentrate on targeted business development. This may require you to rethink aspects of your firm or to devise strategies for improvement. Con-sider using a business coach to help you with accountability, focus, and execution. I retained a business coach eight years ago, and I am certain that he is the reason why my firm has been profitable every year since inception.

Your business model does not have to reinvent the wheel; you can always copy best practices from other defense lawyers, especially from inside your DRI commu-nity. Find out what’s working for your col-leagues or other defense law firms of your size, and implement those best practices in your business. There is nothing wrong with having a business model that works well, even if it is similar to another law firm. Don’t be afraid to take excellent ideas and strategically mold them to fit your law firm.

Know the “Why”Here are a few things that you should ask yourself as you grow your small or mid-size law firm:• What kind of firm do I want? Who is my

ideal client?• Am I prepared to spend the time and

money needed to get my firm started? To grow my firm?

• What differentiates my ideas and serv-ices from others in the market?

• What referral options are available?• How will I align the firm to be effective

for clients and make a profit? Who is my competition?

• How will I manage, market, and adver-tise my business?

• How will I best use the practice resources provided by the DRI Law Practice Man-agement Committee and tools for my practice that can save time and money?

• How will I get the filing and billing sys-tems butter-smooth now so that there are no administrative, management, or production nightmares? There are systems that have been recommended by other DRI defense firms that have already made your journey, and those DRI members are willing to share their recommendations with you through

the DRI Small Law Firm Network Com-munity page. You need not tackle your small- or mid-size firm challenges alone.

Position Yourself as a Thought LeaderSmall- and mid-size firms can attract big clients by expressing a smart or unexpected point of view on subjects of interest to pro-spective clients. When my firm was still in an embryonic stage, I pitched a potential client by joining forces with a very large firm that had a strong banking and finance niche. My angle was simple, but unique: I would partner and align my brand with a premiere law firm that had a stellar reputa-tion in a particular niche so that we did not conflict in our efforts to win the client over.

I began to think outside the box and conducted interviews with the large firm after we agreed to terms should we be rewarded the work; and we were. Spend-ing time with ambitious people who were not like me and who did not run in my normal circle of friends expanded my network and helped me to shape new business development paths. I looked for opportunities to meet new develop-ers, designers, entrepreneurs, and people within my community who established different kinds of startup businesses. I simply cast a wider net for better overall business success.

Know that Business Development Is a Long GameI know a great lawyer. She gets 65 per-cent of her cases through referrals from past clients. In fact, DRI members obtain more than 50 percent of their cases from member- to- member referral sources. Such a business model takes years to build. However, it is worth every networking effort that you make. Just stay focused and remember the old saying, “Rome was not built in a day.” That saying applies here.

Be patient. No lawyer wakes up and says, “Girl, I really feel like rainmaking today!” I’d venture a guess that like me, just about any other lawyer would rather spend his or her days, afternoons, and occasional eve-nings and weekends being an actual, prac-ticing lawyer. But this is what growing a law firm really all is about: building a sus-tainable business model while delivering high-quality legal services to those who can pay your hourly rate.

Do Find Good MentorsMentors are sounding boards and connec-tors. It is important to have someone in your corner that you can depend on and trust. Operating a law firm is challeng-ing enough, so if you can skip doing things the hard way, why wouldn’t you? A mentor is someone with valuable knowledge that he or she is willing to share. Mentors have

been there, right where you are, and they have made numerous mistakes that they can now use as a basis for helping you to avoid the missteps. Seek out a mentor and remember that it is a two-way relationship. Don’t take your mentor’s time, efforts, and willingness to help you for granted.

Don’t Be Afraid to Take on Contract WorkThis tip is for folks like me: people with large monthly obligations (loans, families, mortgages,) that will leave them financially crippled or homeless if they don’t “pay the man” every month. Contract work can be your savior. I have known attorneys who have substantially boosted their income by helping other lawyers with their overload of work or research. One caveat: don’t get too lost in the contract world unless you want to end up a full-time contract lawyer.

Be Lean, but Don’t Be Penny-Wise and Pound-FoolishThere are so many things to spend money on when operating a small- or mid-size law

Spending time with

ambitious people who

were not like me and who

did not run in my normal

circle of friends expanded

my network and helped

me to shape new business

development paths.

Strategies , continued on page 21

For The Defense ■ July 2017 ■ 21

firm: furniture, office space, legal research, bar dues, malpractice insurance. What should you buy now, and what should you wait to purchase after your business is booming? Before any big purchase, ask yourself, “Do I need this?” If it doesn’t improve the quality or cost of your services, and if it isn’t absolutely necessary to show-ing a client that you are, indeed, an actual lawyer, you probably don’t need it.

The foundation of solid business record-keeping is learning to track your expenses effectively. It’s a crucial step that allows you to monitor the growth of your business, build financial statements, keep track of deductible expenses, prepare tax returns, and support what you report on your tax return. Accounting is a high-level pro-cess that looks at business progress and makes sense of the data compiled by the bookkeeper by building financial state-ments. As a business owner, you’ll need to determine which effective and economical bookkeeping methods to use. Right from the beginning, consider Paychex or Quick-Books. Also, you should establish a system for organizing receipts and other impor-tant records in case of an emergency (hur-ricane or office fire, for example).

TechnologyTechnology isn’t a luxury—it’s a necessity for delivering quality legal services at a rea-sonable cost to the client. Don’t be afraid of the cloud. It can help you more than you think. As small- or mid-size law firm, your reliance on technology will grow. Also, the need to secure and to protect sensitive information will become even more criti-cal. Again, you have no need to feel over-whelmed. While cybersecurity is a major challenge, there are plenty of resources and solutions offered by the DRI Law Practice Management Committee to help you to stay on top of technology so that you run your small-sized or mid-sized firm in an effec-tive and efficient way.

What I Wish I’d KnownHere are some of the things that I wish I had known from the beginning about starting my defense firm.

I wish I’d known that working smarter, not harder, is essential to survival and to success. You can get by working hard in

the corporate world, but you won’t last long in business ownership without work-ing smart. Focus on building the core legal business, and then get out there and network, speak as a leader in the indus-try, and publish! Clients can’t call you for help if they don’t know you. No business can survive without talented employees, supportive clients, reliable suppliers, and supportive stakeholders and communi-ties. It’s all about relationships at the end of the day.

Expect change and embrace the pro-cess; every business changes, but it’s mostly how you adapt to change that determines success. Be fluid, ready, and willing to embrace change as your firm adapts and grows.

Finally, know that you will make mis-takes. Embrace the fact that you made the mistake, learn from it, move on, and never repeat it.

Key TakeawaysThe finances are terrifying, the client devel-opment is frightening, and the marketing is questionable at best. But if you really love being a lawyer, there’s nothing quite as fun or as rewarding as digging out the author-ity that answers a client’s “life or death” issue, or that crushes a plaintiffs’ attorney’s petulant arguments.

I think the real key to success in oper-ating a small- or mid-size law firm is min-imizing the time and the effort required for administrative and business tasks. Important tools are the ones that help you with calendar management, accounting, communications, meetings, client com-munications, marketing, file storage and sharing, social media, and productivity. One of the greatest influences on your suc-cess is the team around you. If you don’t have the right team assembled, failure is practically a guarantee. Understand, accept, and be prepared to make sacrifices in the growth and development of strong client relationships, business growth, and profitability for your firm’s viability and overall business success. Putting the right tools in place will help you to become prof-itable, and they will leave you more time to help your clients and community—and most importantly, enjoy life—which, in the end, is what we all really want.

Strategies , from page 15