Has your law firm evolved? That is, has your business model changed? We’re not talking about mass torts firms that regularly change their areas of law. This is a question for all firms: What fields do you focus on, and how do you market to them? Have the fields changed? Has the law changed? Do you roll with the changes or do you fight them?
As we all know, the law changes. Often. Sometimes it changes by legislation, sometimes by judicial decision. One Texas client had a successful DUI practice for 30 years until a change in state law made it easy for first offenders to avoid his services – his bread and butter up to that point. Now his client pipeline has dried up and he must contemplate whether to end his law career or do a complete reboot of his practice. What would you do? Do you have the mental flexibility to change? Do you have alternate experience to fall back on?
The answer starts with another question, what could you afford to do? Have you prepared for the future? Could you financially handle a sudden retirement, as one client was faced with after a mini-stroke blinded him in one eye? I’ve seen other clients with an amazing ability to make money but even more amazing ability to spend it – with a net result that an attorney with a mansion and Rolls Royces now lives and works out of a cheap motel and rides the bus to the courthouse. Even that was possible only after several years of bar suspension for mishandling of accounts.
Most attorneys are not numbers people: That’s an observation, not a judgement. They love law. If they loved numbers they would have gone into accounting or statistics, as I have done. Sometimes, caught up in the excitement of a good case, the bigger picture is lost; without due care a case that wins at trial can still lose at the bank.
That’s where I come in. I passed on the opportunity to attend law school on the state’s (Texas) dime when I was a young man, but never lost interest in the field. I had spent two years at the LBJ School of Public Affairs and wasn’t ready for another two years (due to a special offer) in law school.
That said, I’ve worked with law firms for the better part of two decades now – handling the Schedule C tax filings for more than 200 partners at one prominent firm; handling the tobacco settlement payout at one of the largest; handling a $439 million fen-phen payout at another, and more than a thousand mesothelioma payouts; running case and document management systems; and creating financial models for weighing potential settlement payouts by class. In more than one case my financial/IT skills have been used in financial investigations or litigation, including Enron in 2001.
What’s left to be done? I see plenty of attorneys without a plan for their financial future. I’ve yet to see a single law firm that manages its advertising costs well, though I’m sure they exist somewhere. What do you pay to get the word out, and what is your return on that investment? I saw one firm waste $700,000 on a single case in an area of law that was widely known in mass torts circles to be a dog. Can you afford to do that? If you have outside backers, would they allow you to do that? On non-hourly cases, how do you know when to cut your losses?
The solution for each firm will vary, but a data-based approach to riding herd on costs, including staff work, will often pay you better than a good P.I. case. Think about it before you commit your funds again, and give me a shout. Maybe you need a financial advisor or bookkeeper or consultant, or maybe you just need a shoulder to cry on, but no matter you must meet the future head-on to assure your success. It's never too late to fail, and it's never too soon to succeed.