We’re one-third of the way to your better law firm. We’ve made several changes so far. Let’s use this post to check in and see how things are going. Also, let’s discuss why these changes are mandatory for those not wanting to be left behind by the “new” legal profession.
Being a business person (you became a business person the instant you hung out your shingle) means understanding the world your business exists in. Lawyers relying on outdated business models will be closing their doors because they are trying to run their practice in the world they want to live in and not the world that exists. So you understand why the changes we’ve made so far are important, let’s understand why your law degree is worthless worth less when compared to the expectations of many attorneys. As you read this article you may begin to feel like this guy:
But by implementing the steps we’re taking this month you can start to look like this guy:
Let’s take a look at changes to the legal profession that will require you to build a better law firm.
Lawyers often fail to understand fundamental changes in the legal profession
Let’s make one thing clear. Lawyers have made money in spite of themselves. Legal practices are traditionally inefficient businesses with horrible customer service. Few businesses make it with that style of approach. Lawyers have been following this model since before the U.S. was a country and have made money, in part, for reasons not discussed in the “our profession is going to hell” type articles – the decreasing information gap between attorney and client, the disappearance of practice areas, and fundamental changes to the U.S. economy.
The gap of knowledge between lawyers and the general public has narrowed. People once had to schedule consultations with lawyers to obtain even basic information and determine whether they needed legal services and/or what their options were. In the last 25 years the average American has gone from having no access to information (outside of scheduling a consultation) to having complete access to all of the world’s information. People are now in a better position to determine if they even need a lawyer. This reduction of the “information and knowledge gap” between lawyer and potential client reduces society’s need for attorneys and, in turn, reduces your law degree’s value along with one of your justifications for higher rates.
Another factor reducing society’s need for attorneys is the decline of practice areas. Fewer practice areas means fewer potential clients for attorneys and fewer law jobs. The 40-year “tort reform” movement, for example, has reduced the amount of work available for personal injury lawyers. This reduction of practice areas is accelerating. Marijuana’s march towards legalization reduces the number of available cases for private attorneys and will then reduce the need for prosecutors and public defenders. A U.S. citizen was arrested every 42 seconds in 2012 for marijuana related offenses[i]; that’s a large number of cases that are going away. Also, over the next ten years driverless technology will dramatically reduce car accidents. Consider how many personal injury cases will be taken out of the system as a result. High fees simply can’t be justified when you have decreasing demand for legal services while increasing the number of lawyers.
The U.S. wage gap also reduces your ability to charge high rates. U.S. wages have stagnated for most people since the 1970’s[ii]. When inflation is considered then the average person’s purchasing power has gone down. This means that people can’t pay large retainers anymore. If you owned a restaurant and the average wage in your neighborhood went down you would have to reduce prices or you would go out of business. In spite of this simple fact, attorneys are still clinging to their old models and trying to charge high rates while running inefficient businesses.
Modern lawyers will profit by charging less and increasing efficiency
Depressed about the things mentioned above? The good news is that the overwhelming majority of lawyers, including recent graduates, are going to get left behind in the modern practice of law. By understanding that you can’t charge what you once did you’ll open yourself up to new clients you’re currently not getting. Through efficiency gains you’ll reduce your profit-depleting administrative time and be able to handle a larger number of cases without working more hours. As a result, your revenue will grow. You’ll be able to keep overhead low by investing in your firm rather than spending money on it – something we’ve stressed in the last few posts.
Given that the practice of law has changed, and most attorneys are choosing to blatantly ignore the changes, we are in an era of increased opportunity for your firm even though many professionals feel the sky is falling down on legal practices.
Day 10 follow up for attorneys who want to increase profits
By now you should have implemented the better conversion policies we stressed on Day 1 and Day 2 of our challenge. This means you should be checking on your staff and making sure that they’re confirming appointments (mostly be text) and that they are using your new phone pitch when potential clients call. You should already be leveraging free advertising on Craigslist and be including a nice banner in your ads. A good graphic artist should have had the ad ready for you in a few days.
You should at least be beginning to implement the lower cost structure we discussed on day 4 and finding other ways to make your services affordable, as discussed on day 5. Your IT professional should also have a plan/time-frame for the switch over to Google Apps as we discussed on day 6.
Tomorrow we’ll look at steps you can take to increase conversions even further.
[i] Police Made One Marijuana Arrest Every 42 Seconds in 2012, U.S. News, http://www.usnews.com/news/articles/2013/09/16/police-made-one-marijuana-arrest-every-42-seconds-in-2012
[ii] Wage’s aren’t stagnating, they’re plummeting, Washingtonpost.com, http://www.washingtonpost.com/blogs/wonkblog/wp/2012/07/31/wages-arent-stagnating-theyre-plummeting/