The Seven Essential Law Firm Business Processesaderantuser
by Stephanie Erbesfield, Marketing Content and Research Manager
In his bestselling book, The E-Myth: Why Most Businesses Don’t Work and What to Do About It, author Michael E. Gerber lays out what he considers the three essential processes every business must possess: lead generation, lead conversion and client fulfillment.
He acknowledges there are other systems to business, human resources and finance for example, but in calling out just those three, he is zoning in on the essence of business. If a business cannot attract, convert and meet the needs of clients, then it’s not really a business.
Gerber’s exercise in mulling over exactly what processes make a business run can be a useful exercise for law firms too. After all, law firms are businesses centered in a competitive industry that’s been experiencing a great deal of change.
Change demands process improvement. Processes can only be improved if they’re well defined. To that end, I was reminded of a Legal Business Report we created a few years ago, and despite the rapid pace of change in the legal world, it’s fascinating to see how relevant these seven essential law firm business processes remain.
1) Law firm strategy and planning
This process includes market and competitive research to understand client needs, levels of demand, and how the competition is striving to meet those needs. It also includes research into legal sector trends where key issues like technology or pricing are examined. Finally, this process counts strategic and business planning to set a vision for where the firm will be in the future.
2) Managing finances
A law firm can book deals in one month and still go bankrupt the next for lack of cash flow. Cash flow is a key function of the process of managing finances. Budgeting, accounts payable, accounts receivable, expense management and financial controls and reporting are included in this category.
3) Managing matters
Arguably legal pricing could be a function of finance, but we categorize it as practicing “matter economics.” Matter economics and being a good steward of your client’s budget are part of the overall process of managing client matters, which also includes time entry, managing work-in-progress (WIP), and billing and invoicing.
4) Managing clients
It’s often said the legal business is a relationship business and relationships thrive best under active management. Naturally, the customer relationship management (CRM) function is part of this process here alongside client intake, communication and account planning.
5) Business development
The process of law firm business development has been dramatically reinvigorated over the last few years as competition has grown fierce. Client analysis, brand and campaign management all fall into this process category. New product identification and development, which has been the center of the legal service innovation discussion of late, fall into this category as well.
6) Managing people
In the bestselling book, Good to Great, author Jim Collins writes people are not the most valuable business resource – the right people are. Indeed, managing people entails career planning, training, and internal communications. Communications, some would argue, is a function of leadership which in turn plays a pivotal role in this process.
Execution is how legal work gets done inside a law firm. Of all the processes listed, this is the one that probably has felt the impact of technology the most. Planning legal processes and executing legal transactions can be made simpler with the right technology solution.
Though mentally taxing and at times uncomfortable, process improvement is essential in a dynamic market. In fact, process improvement itself may well become an essential law firm process in the near future as firms look to take the leap beyond existing status quos.
Or to quote the still relevant executive summary, “Fortunately for firms ready to examine their processes and make improvements, the technology now exists to make this less painful. Legal process management applications, for example, allow both firms and clients to view data in real time and track matters using various metrics.”
- The Legal Intelligencer: Why Your Law Firm Should Consider Lean Six Sigma
- Legal Business Report: Improve WIP to Cash
- Think Tank: Can You Boost Your Practice Through Process Improvement?