Avoid These Mistakes Immediately for Your Law Firm’s Growth: A Comprehensive Guide

December 3, 2023
image of female lawyer overwhelmed in her law firm by people

Now, what aspects of your practice don’t contribute to lawyer burnout?

Automated processes remain burnout-free zones. Similarly, working with a consultant usually doesn’t lead to exhaustion. Only a couple of meetings a month, that’s hardly a recipe for burnout, right?

Just imagine this. You’re tussling with your finances, battling the blurred lines between marketing expenses and contractor costs for maybe a couple of months while tax season looms. Might it push your stress levels a notch higher? Absolutely. But fast forward to the end of the year, when the fog of uncertainty has cleared. Can we really label it as burnout? I’d say no! These fiscal hurdles are seasonal, they’re mile-markers on your calendar and, the silver lining? You can prepare for them. They may break a sweat but they won’t break your spirit for the long haul. However, if we pivot to the realm of marketing, the potential for overwhelm does exist.

Now, imagine juggling multiple networking groups, while feeling trapped by the relentless rhythm of the social media algorithm, hopping between multiple platforms, and knocking out posts not once, not twice, but thrice daily! Could this marketing activity cause burnout? Possibly. But is it a universal experience for all? Probably not.

image of law firm organization structure

What does your law firm organizational structure look like? And does everyone report to you.

Consider this, it all boils down to the individuals involved. Thus, while you’re tuning into this episode, I’d love for you to engage in a little endeavor. You can either visualize it in your mind or scribble it down on a scrap of paper. Personally, I tend to employ the use of ‘Whimsical’ while consulting with my clients. Now, it’s about time you settled down and drafted your organizational chart. Picture it, what’s the scenario at your firm? What’s the structure of your law firm? Isn’t it that you’re at the helm? And then, if there’s another attorney in the mix, wouldn’t that person be accountable to you? If you’ve got a call team, paralegal, office manager, and admin personnel all reporting to you, you may think you’re orchestrating a symphony of success.

Now, if you’re planning to scale your law firm and add more and more people to this ensemble, and they all keep looking to you for directions, well… that’s not harmonious, it’s downright cacophonous.

This is the hushed secret of law firm growth. While they’ll steadfastly encourage you to hire more folks, the reality is, they will, by design or default, end up reporting to you. Think about it, if you expand your call team or paralegal team, unless you recruit seasoned seniors who can manage their teams without your constant input, or invest resources and time in training an existing employee, you’re essentially growing the number of direct reports to you. And let’s be real, that’s not scalable, it’s a shortcut to burnout city.

Consequently, if every player in your team depends solely on you, scaling up won’t make your life easier, rather it’s a recipe for disaster. So, what do I suggest? Don’t stack up your ensemble all at once. A harmonious orchestra isn’t built overnight, after all.

Have you ever noticed those in the legal profession who decide to rapidly expand by hiring three or four additional staff in just a couple of weeks? How do you think that’s working out for them? Well, from my experience, the answer is usually ‘not so well.’ The process of onboarding new hires, a crucial but often underestimated task, requires time and commitment, things many busy lawyers may underestimate. It’s common to imagine your new hire hitting the ground running from day two—it’s a utopian scenario, but let’s be real, that hardly ever happens.

Transitioning new members to a stage where they’re self-sufficient, where you can comfortably sit back without worrying over excessive supervision or follow-ups, does demand concerted effort. So, what’s the way out? Well,  I’d recommend a far more manageable hiring rate – say, one to two people a quarter. Sounds better than three in a month, right?

In an organizational structure where these new hires are directly reporting to you, it’s not just about onboarding and training. The nitty-gritty of managing the increased number of workers also adds to your plate. You know, basic, yet essential stuff like getting their payroll set, ensuring timely payments, dealing with tax services, making sure they’ve signed the employee handbook and more. These tasks may sound small, but boy do they add up! The point? Balancing sustainable scaling with your sanity is key. Best to avoid speeding through hires and opt for a slow and steady expansion over time, don’t you think?

image of arrows pointing up towards increase in revenue for law firms

How do law firm owners increase their law firm revenue?

So you’re eager to ramp up your revenue. Naturally, this doesn’t only involve expanding your team, but also your earnings. Let’s look at two paths you can take to accomplish this. On one hand, you can amp up your fees. Imagine you currently have 50 clients, and instead of billing $1,000, you increase your fees to $2,000. Simple, right? Your revenue jumps from $50,000 to $100,000.

The other way to boost your revenue is by increasing your client list. Maintain your $1,000 rate per client, but surge from 50 to 100 clients. So your revenue acceleration hinges on either one of two things: charging more (say, rising from $1,000 to $2,000) or broadening your client base (for example, from 50 to 100 clients). 

While these two strategies can be pursued simultaneously, economics 101 dictates typically higher rates result in fewer clients, with only a few exceptions.

If I were to impart a single word of advice, it would be this: moderation is key when scaling your team. It’s not often that you hear advice against rapid growth, right? But here’s the thing – leaping from $200,000 to $400,000, or from $1,000,000 to $2,000,000 for that matter, isn’t the wisest move.

The best way for law firms to scale sustainably is by increasing their fees first, not by increasing their client roster

Now, this is where my insider tip comes in. Ready for it? Start by increasing your fees. You may not have come across this approach before, and it might not sound like the obvious first step, but think about it. Let it sink in. Once it clicks, I assure you, it’s going to revolutionize how you strategize for your law firm’s future.

The more you charge, the less clients you will have. And the less clients you have, the less team members you’re going to need to have because there’s less clients to service. The less team members you have, the more profitability you can keep for yourself. I don’t want you to grow your team first. I want you to increase your rates first. 

lawyer with calculator

Why are law firm owners scared to increse their rates first? 

At this point, I often encounter resistance. You may say, “But I’ve got 40 clients on hold, and I really need to bring someone on board right now. We just won’t survive otherwise.” Absolutely, your concern is legitimate. However, my rebuttal to this line of thought usually takes the following form: “Hang on a second. Would it be feasible for you to weather the storm for another two to three months? Consider this, you shouldn’t increase your payroll just to handle a mad rush that lasts for a couple of months. Otherwise, you will end up with an extra person on your payroll for the remainder of what could be a slower year. You may not have that extensive client list or backlog anymore, due to your diligent work. Trust me, you aren’t alone in this. Law firms face this dilemma quite often.”

Experiencing a sudden influx of new clients often leads law firm owners to believe they require fresh team members to cater to the boosted clientele. This expansion, albeit appearing advantageous at first, often wreaks havoc on profitability. The reason? Well, the usual culprit is excessive growth, particularly with staff, leading to escalated operational expenses. Now, this is what keeps them awake at night, fretting over the financial strain of the rapid growth that turned out to be counterproductive. Are you identifying with this scenario? Bear with me here.  —

It’s time to take a step back, breathe, and reevaluate your approach. The key is scaling your law firm sustainably and in phases. Now think, hypothetically, your first goal is to reach a revenue of 200,000 or 300,000 dollars. This is your initial milestone, not the finish line. Remember, it’s not a sprint, it’s a marathon. You got it, right? Let’s forge ahead.

What’s the magic strategy? First, push up your rates until you hit that desired revenue line. Once you’ve aced that, expand your team. Remember, you’re trying to maneuver one control at a time – not messing with everything all at once. That’s just a one-way ticket to Burnoutsville, population: you. It’s a surefire way to hamper your successful, effective scaling efforts.

Scaling a business sustainably doesn’t mean throwing all your darts at the board in one go; it calls for one strategic move at a time. Just imagine a scenario where everyone in your organization chart looks to you, and you suddenly feel compelled to amp up both your clients and team size in the same breath, let’s say, within the same quarter.

What would be the outcome? Exhaustion. Burnout. Those dreamy vacation plans? Gone with the wind. You’ll be left at your desk, wrestling with the nagging thought…why on earth I did do this to myself? When will a vacation ever be on the cards again? This kind of pressure will inevitably bleed over from your professional sphere into your personal universe, making life, frankly, quite hard to get on with for those around you.

Here’s a nugget of advice from my own experience – tackle one thing at a time. Sure, you’ve been told to raise your fees, and that’s great. But right after that, consider increasing the size of your team. Me? I recommend a staggered approach – let’s say, a three or six-month gap between each significant shift. Why? Because it gives everyone, including you, a comfortable timeframe to adjust. Let’s chew on this: what happens when a team member departs suddenly? There’s typically a 30 or 60-day phase of panic, right? But sooner or later, everyone adjusts and life goes on. That’s adaptation in action, folks.

Does that not ring true with other facets in life? Take fasting intermittently, for example. The initial days might feel like a doomsday countdown – but by the fourth day, your body adjusts. Adaptation is in our DNA, and the same goes for your team. So let’s not panic when changes shake up the first 30 or 60 days. Expect clients to grumble when you increase your rates. Expect some clients to look for frugal options. And that’s okay.

Here’s the deal – weather through that discomfort, adjust, and give it a spin for 30 or 60 days. Extend it to 90 days if you must. Gauge your client base after the price hike. And then, if you feel the need to expand your team to cater to your clients, go ahead with it. But remember, don’t rush to supersize your team prematurely.

Why profitability matters most when it comes to scaling your law firm

Here’s the real deal: sustainable scaling is not about bulking up your team size, increasing your revenue, or expanding your client directory. What matters the most? Profitability. It should always be in the spotlight when you ponder about scaling sustainably. You’re playing a long game here. Thinking about practicing law for decades? Craving success and recognition in your community? The key lies in maintaining sustainable growth.

You want to strike a balance between a fulfilling lifestyle and a prosperous career. And to do that sustainably, you’ll eventually reach a point where enhancing your rates feels like the only logical progression. Sure, some clients may back out, and you may face a little backlash over price hikes.  But hey, a thicker skin is part of the game, isn’t it? Once you’ve acclimated to the raised prices and can confidently say, “Yep, I charge $10,000 for that,” it’s time to recalibrate your team dynamics.

What’s next on the scale bar? Do you bring on an Executive Assistant who can take care of errands and gifting, allowing you to focus more on the legal grind? Or perhaps you need a paralegal to lighten your legal workload so you can dedicate more time to marketing? These are critical considerations you need to bear in mind to scale and grow your business sustainably.

In conclusion, let’s not forget why we’re here. The goal isn’t just to survive, but to thrive – for years, decades, without burning out. That’s the game of sustainable growth, my friends.

It’s commonplace to see attorney posts in Facebook groups, week in and week out, expressing feelings of burnout, overwhelm, and exhaustion. It almost seems as if being a lawyer is interchangeable with being overwhelmed. But let me assure you, I don’t want that for you. Construct a sustainable business foundation. Scale your practice in a manner that prioritizes longevity. It’s more than achievable. Take the time to really immerse yourself in this episode, perhaps even listen to it multiple times. Share it with your colleagues, especially those feeling the heat of burnout. Challenge them with the question, did you try to expand your team and clientele simultaneously? Or did you adopt a sequential approach? Did you strategically increase your prices? Sadly, too frequently, I see people augmenting their team size and marketing spend, concurrently, in a bid to grow.

a plant that sprouted in human hands