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by Sheila Gutterman
Law Week Colorado (Online), July 26, 2011

The fundamental techniques of building and operating a successful family law practice are much the same in a bad economy as they are in a good economy. However, to attract and secure clients in a bad economy, you must not only have outstanding business practices, but also do something that adds value to the service you provide and gives you a competitive edge.

William G. Johnston wrote a thoughtful article, “Anatomy of Law Firm Failures – A Look at U.S. Law Firm Dissolutions from 1998-2004” in which he noted that there are three primary characteristics of failed firms:

  • Below average financial performance
  • Internal dynamics
  • External dynamics
A. Financial Responsibility

Watch your costs and don’t spend more than you have.

Fiscal responsibility creates more wealth, even if it seems austere at first. This aversion to debt and commitment to fiscal conservatism will foster an environment in which everyone will appreciate the value of the firm’s revenues.

It’s critical to talk to potential clients about money and keep your collection rate high. Give no guarantees about any outcome. If a client owes you money and has difficulty paying, try to work with the client to avoid a formal grievance or prolonged dispute.

A few additional financial practice tips are:

  • Use information technology support.
  • Purchase programs that better protect client information and increase efficiency.
  • Purchase state-of-the-art office equipment and computers. These investments are worth the expense because they will increase productivity.
  • Extend your technology replacement cycle.
  • Use online services, such as an Internet postage company, to save money.
  • Look hard at your space needs and lease terms.
  • Consider inexpensive or free legal research alternatives. Members of the Colorado Bar Association have free access to ‘Casemaker’, a program which gives complete access to all state cases.
B. Internal Dynamics

Healthy, happy and effective staff and attorneys make for a more successful firm in terms of the service you can provide your clients, and thus, in terms of your revenue and daily office contentment. The payoffs in terms of recruiting, retaining, and training the best staff possible are well worth the investment.

Remember that it’s much less costly to retain an employee than hire a new one. Laying off associates is probably shortsighted for the future of the firm. If you recognize talent in an associate, it is far better to nurture and strengthen that talent than to throw it away to save the expense of his or her salary, if at all possible.

However, if an employee is not living up to expectations, document her or his performance carefully. If, after a reasonable period of time and a reasonable amount of assistance, the employee hasn’t been able to meet the expected standard, the best alternative for all may be termination. Have an employment and malpractice counsel available at all times – and call at the first hint of trouble.

A few other tips to include:

  • Have clear job descriptions.
  • Monitor your employees
  • Never let internal problems affect the integrity of your practice, your standard of ethics or your absolute commitment to your clients’ interests.
C. External Dynamics

Word-of-mouth referrals are a great way to keep your business alive during a recession. When people are in need of legal assistance, they turn to the lawyer they know best.

Don’t take on more work than you can handle. Remember that our job is to ensure that our clients’ needs are well met – which means we should refer them to someone else if we aren’t the ones best suited to meet those needs. Even if a case falls into your area of expertise, you might want to decline it if you are short-staffed or you’re having difficulty meeting your current work-load.

A few other tips to include:

  • Make it easy for new clients to find you online, and include content on your site that is useful for both new and existing clients.
  • In addition to creating a strong website, include your firm’s information in an online legal directory, such as Lawyers.com or Martindale.com.
  • Write articles and get them published or present them as lectures for an organization made up of members who are target clients.
  • Highlight awards you have received.

Remember that while you cannot control the economy, you can control how you view it. Avoid becoming fearful, because if you are nervous and uncertain about the market, your clients will pick up on that attitude and become anxious about hiring you. The challenges of a down economy can give you and your firm the opportunity to emerge stronger once the economy improves.

In this economy, only those who maintain their integrity and seek out proactive solutions will survive. Your practice will thrive if you accept the “new normal” and move forward.

William G. Johnston, An Anatomy of Law Firm Failures: A Look at U.S. Law Firm Dissolutions from 1998 – 2004, HILDEBRANDT, Mar. 2004, at 1, available at http://www.hildebrandt.com/The-Anatomy-of-Law-Firm-Failures.

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