Lawyers spend a lot of time in school, 7 years or more of higher education. They also must participate in annual continuing legal education in order to stay abreast of the latest legal concepts and court rulings in terms of their implications upon their various practice specialization. They are taught how to do research and practice law. They may even be taught about using software to manage their client information and handle billing. But what most law schools and don't teach, and what is rarely taught in continuing education, is how to run 'the business' of a law practice.
Lawyers practice law, and for most of them, that is what they want to do, practice law, they have little interest in the 'business of their law practice.' But the reality is that for lawyers in a small firm or with their own firm, they are also running a business, and most of them have not been taught how to run a business.
There's a lot of talk among accountants and Proadvisors about becoming a Trusted Advisor. Despite all the jokes, lawyers are in fact trusted advisors to their clients. Yet they also have a need for a trusted advisor to help them run their business.
If you are interested in working with law firms, this is an important role you can provide. If you understand the "business of law" you can help them to grow and practice safely.
What does understanding the "business of law" as it relates to a law firm really mean?
- It means understanding the importance of trust accounting and IOLTA requirements, as well as other requirements imposed by the state bar association and/or state judiciary, as to how to do the accounting correctly. There can be a substantial difference, an extra requirements, in some states than in others.
- It means understanding how the firm performs their billing, including alternative fee arrangements, and making sure they are using a solution that helps them perform billing efficiently and effectively. Develop an expertise in multiple billing solutions that provide different billing alternatives.
- It means understanding the way the firm needs to track and account for advanced client costs and the difference between hard costs and soft costs. A criminal law firm might very well 'cover' the expense of costs associated with court transcripts or similar court costs as simply an expense associated with their lump-sum fee. On the other hand a civil plaintiff's firm may bare the cost of expenses associated with depositions and transcripts, but then deduct those costs from any settlement or judgement prior to calculating their 'fee split' as part of the recovery.
- It means understanding the measurements that are important to the firm including how they choose to compensate the members of the firm (both lawyers and staff). Some firm members may be paid a salary, some maybe paid a draw against earnings, and some paid an hourly wage.
- It also means understanding how they 'manage' the firm in terms of case load, scheduling, staff assignments, etc. You need to develop an expertise in a variety of legal case management software products that meet the needs of not only differing sized law firms, but law firms with differing work flows.
In the remaining installments of this multi-part series, we will explore the details of each of the key points above in greater detail. In the mean time, just know, that law firms need trusted advisors. Also know that law firms that recognize that need indeed understand the value of such advisors. So if you are wanting to specialize your advisor practice, then serving as a trusted advisor to law firms in your area maybe just the niche you are looking for.
This series is geared at helping you start down the path of such a specialization. In the mean time you may want to spend time getting to know the market in you area. You may find you not only have a lot to offer, but that there are a lot of potential law firm and solo practice lawyer clients who are looking for a "trusted advisor just like you."