Red Cave Law Firm Consulting's Technology Blog Series (from CEO Jared D. Correia, Esq.)
Quarter 2 2021
06/28/2021: Fresh Start: Three Things to Do Before You Start a Law Firm
Lawyers start their own law firms for any number of reasons. There isn’t a wrong one.
Despite that, most lawyers starting law firms tend to make the same mistakes.
So, if it’s time for you to start your own law firm, good for you. And, these are three things you should figure out now, so you don’t get caught short resolving them later.
Create a Niche. It’s really hard to market a law firm if you’re trying to sell ‘general practice’ legal services. You can’t sell everything. So focus down, create a niche, and build on it. In a hypercompetitive environment, like small law, you need every single edge you can get; and, the most obvious differentiation point for a law firm is to drill down to specific practice areas. This process also has the added benefit of opening you up to referrals from law firms focused on complementary practice areas.
Decide What to Charge. If you decide that your pricing will be ad hoc, you’re dead in the water. In the first place, patchwork pricing is difficult to manage. It’s also likely that you will negotiate down every time you have a potential client who challenges you on your rate -- which means that you’re gonna be charging even less than most startup lawyers charge (which is already way too low). And, once word gets around that you’re willing and able to discount your services, everybody you talk to is going to expect cut-rate legal services. Create (and sitck to) a price sheet.
Figure Out Where You’re Going to Work. Whether or not you utilize office space is going to set the edge of your budget. Whether you require an office lease or a virtual office arrangement, that will likely be the most expensive recurring outlay you make as a new business owner. So, it’s important to decide where you want to work, even if it’s a home office -- because you can’t set a budget without that information. And, if you can’t set a budget, it’s difficult to establish pricing, and to create revenue projections from there.
06/21/2021: Net Benefit: How to Improve Your Law Firm’s Net Promoter Score
Last week in this space, we addressed the fact that law firms have really low net promoter scores, with an NPS equal to about the average airline provider. As we discussed, that means that your clients like you about as much as they like Spirit Airlines. You can do better.
Figuring out your net promoter score is step one. Step two is improving your net promoter score. And, the answer to improving your net promoter score comes from the question: ‘how can I make it more likely that my clients will refer business to me’? Here are at least a few ways:
Ask for Referrals. It’s funny: some attorneys don’t ask for referrals. But, how are your clients supposed to know that you want referrals, if you don’t address the elephant in the room? So, be sure to tell your clients that you want referrals, and that your business thrives on them. If they know, they’re more likely to provide them, if they like you, in order to help you out. Supplement the process by asking for online reviews, and make it easier for people to point directly to their support of you.
Communicate Regularly. Clients love lawyers who talk to them, especially outside the context of their substantive legal issue. You didn’t hear this from me; but, you can get away with a lot as a businessperson, if you’re a good communicator. A good rule of thumb here is to contact your clients every six weeks, regardless of whether there is a case update to be had. Just stay in touch. Likeability is one of the underlying causes for referral-marking. So, just be yourself -- unless you’re a jerk.
Stay Top of Mind. If you don’t have an email list for former clients and for existing clients, you’re not doing it right. Sometimes a referral is merely about being in the right place at the right time. And, sometimes, that ‘place’ is someone’s inbox. You never know when someone is going to be in need of legal services again; and, you never know who they will seek that referral from. Making sure you’re top of mind for referrals from your existing clients is a great way to pimp your NPS.
06/14/2021: Net Loss: Law Firms Have Really Poor Net Promoter Scores
Did you know that law firms have a really poor not promoter score?
Wait, wait. Let’s backtrack for a second. Do you know what a ‘net promoter score’ is? Essentially, it’s a KPI (key performance indicator), that attempts to determine how likely your clients are to recommend you. The higher your net promotor score, the more likely your clients are to recommend you. The lower your net promoter score, the less likely your clients are to recommend you.
Unfortunately for law firms, their average net promoter score is 25. That’s on par with wireless carriers. What does that mean? Well, it means that, the way you feel about Verizon, is how your clients feel about you. In other words, your clients don’t like you.
But, just because an average exists, doesn’t mean your law firm hits it.
So, take the time to figure out your net promoter score, and see where you land on the spectrum of customer loyalty.
06/10/2021: Cue, Card: Change Your Business Card, for the Better
As in-person networking begins to make a comeback, business cards are returning to the fore, as well.
For lawyers, business cards remain the coin of the realm. Even so, everybody’s business cards look the same. Y’all went to Staples, too, right?
But, in a massively competitive environment like that occupied by solo and small firm attorneys, it pays (literally) to access every possible advantage that you can. So, why don’t you tweak your business cards, too? Making those even the slightest bit more unique and interesting, may provide the sliver of an advantage that you need to convert a client.
So, here are five ways you can improve your business cards, lawyers:
- Picture This. Stop with the text-based business cards. Nothing forms a more visceral connection than an image. So, put your headshot on your business card. (Make sure your logo’s on there, too.)
- Social Science. Add your social account information, to offer people more avenues to connect with you. Especially now, it’s hard to guess after what someone’s preferred contact method would be.
- Color My World. Everything lawyers do is shrouded in shades of blue and gray. It’s like Pleasantville up in here. Go for a different color scheme, and stand out.
- Baby Got Back. Your business card has a back, too. Use it! (Especially if you run out of space on the front.)
- Call Tracking. Utilize a specific number for your business card, so you’ll know exactly how many calls you get from passing it around, as well as how those calls directly affect your revenue.
05/31/2021: Flatlining: How to Immediately Reduce Your Law Firm Overhead
If you haven’t examined your budget lately, I bet I can nevertheless predict how you can eliminate a good deal of your overhead. And, it’s a pretty simple solution: Convert to cloud services wherever you can.
Look, nothing blows up a law firm budget like an unexpected technology expense. And, one of the biggest big ticket expenses is replacing a busted server. Of course, that doesn’t even touch the consistent overpays law firms make by continuing to maintain a server, housed in valuable office space, that they need to pay to keep cool and which needs to be tended to by expensive IT personnel. You can cut those costs tomorrow by eliminating your server, and switching to cloud technology. I guarantee you: everything you need a server for now, could be accessed by a terminal server, that someone else pays for for you.
Because that’s all the cloud is: You’re renting server space from a vendor who’s in turn renting server space from another vendor. But, in addition to the cloud offering you the opportunity to offload hardware and maintenance costs, cloud services also flatten your costs. Because cloud technology is paid for by monthly subscription, you’ll know exactly what your technology costs will be each month.
Not only will that allow you to save money in the abstract, you’ll now have more predictable overhead. And, you can start using that money in other places . . . like marketing for more clients, so you can make even more money.
See that, I just fixed your budget.
05/24/2021: Fast Forward: Prepare Now to Make Money Later
Lawyers are often so head-down on substantive work that they spend very little time considering their ‘sales cycle’, which every business has. Whereas software companies consider metrics like ‘cost of acquisition’, law firms merely send out cadres of attorneys to network, with the fervent hope that that activity generates business, at some undetermined point in the future.
I remember having a conversation with a lawyer who told me that his marketing goal was to have lunch with another business professional every day. I asked him to track how many referrals he got from that. A month later, I asked him how things were going, and he said, ‘Well, I guess I was just having lunch.’
The point is that, while marketing seems inscrutable, the results of your efforts are predictable, to a large degree. If you track your intake, you too can figure out your own cost of acquisition, best sources for referrals and ‘net promoter score’, among other things. You’ll also be able to figure out how long it takes you to convert a client, from initial contact to placing their signature on a fee agreement. In that way, you’ll be able to effectively predict your revenue going forward, with a truer sense of what your efforts in July mean for your law firm’s bottom line in September or January.
You’ll also be able to determine when and how you lose a potential client. Once you know that, you can act against it happening, by adding engagement options, becoming more responsive and locking down new clients before they forget about you, or your forget about them.
05/17/2021: Streaming Service: When Professional Development Gets Disguised as Marketing
Most people (me included) will tell you to get on social media because it’s great for marketing your law firm. Well, it is: that’s still true. But, there are also ancillary benefits to that.
One of the primary additional benefits of being professionally active on social media services is the wide opportunity to meet other professionals. You’ll want to get to know other professionals on social media because it’s a great way to drive referrals to your law practice from complementary businesses, including other law firms. But, meeting and interacting with other professionals on social media is also a great way to advance your professional development.
Traditional law practices are hyperlocal (in their reach, of course, because law firms are fenced in by jurisdictional boundaries), both with respect to in-person referral marketing (their chief business funnel) and with respect to the world in which law firm lawyers meet other law firm professionals. And, for lawyers who are mostly out marketing for referral business, they won’t find tons of opportunity to meet with colleagues who share their focus, in part because they’re concerned about losing business to those folks. For most attorneys, it truly is a small world, after all.
Now, imagine professional networking online, via social media. You could talk with, share advice with, learn from, literally any lawyer in the world who also has a social media account — and, that includes lawyers practicing in your area of expertise, even those with the same niche focus, and with the same experience level. And, you can actually talk to them — because you’re not afraid of losing business to an attorney thousands of miles away from your home office. This is a freeing proposition for most attorneys who are meaningfully active on social media, and who engage with other professionals online. This is also a great way to generate local referrals from around the country.
But, the point is that, by expanding your net on the internet, you’re not only likely to generate more business, you’ll become a better lawyer, too — by seeing and hearing what top-shelf practitioners in every field of law are saying, all over the country, and all over the world.
05/10/2021: Niche Practice Area: How to Amplify Your Geographic Connection
When most lawyers think about niche practice, their notion is that of a practice limited to one, or a few, practice areas. And, that’s one of the chief reasons that attorneys approach the notion of a niche practice with some combination of trepidation and dread. Because selling out on one or a few practice areas brings with it risk. It could work out famously -- or, not so much -- which would necessitate a shift in the entire practice to resolve. Of course, that’s not the only way to get niched.
If you work in a community with comparatively few lawyers -- not necessarily a ‘rural’ practice. just a practice operating as the sole, or one of a few providers in, a local community -- you can effectively create a niche as ‘the local attorney’. Now, the nature of that locality is almost entirely dependent on whether you can generate enough clients from it to support a practice. Even so, the options are perhaps wider than you imagine. If you’re located in a metropolitan area, you could potentially derive the majority of your clients from a particular section of the city, or even a single neighborhood. If you live in a town, there are plenty of opportunities to become active in community events, including the opportunity to drive some of those events yourself. You can focus on a region, instead of an entire state. And, if you live in a small enough locale, you can become the lawyer on the ‘town square’, as it were.
Getting small may seem like a comedown; but, law firms are already fenced in by jurisdictional requirements. And, it’s true that more focused businesses tend to be more likely to succeed in competitive environments, while businesses with overbroad message usually don’t have the wide appeal hoped for.
So, if you want to niche up, without committing to one or a few practice areas, just look outside your office door.
05/03/2021: Onward: It’s Time to Think About How Your Business Operate, Not Just That It Does
The legendary business book ‘The E Myth’ discusses the difference between working ‘in’ a business, and working ‘on’ a business. It turns out that subtle prepositional shift means a whole lot.
Those who work ‘in’ a business focus on moving the day-to-day operations of that business forward. You’re getting out the paperwork. You’re tracking and billing for time. You’re discussing a particular case issue with a staffperson.
Those who work ‘on’ a business are focused on moving the business forward in a fundamental way. You’re trying to get after what your best long-term marketing tactics are. You’re thinking about the best categories of employees to complete your optimal staff arrangement. You’re figuring out your BHAG, and trying to approach it.
The thrust of the proposition is that those business owners who focus on ways to improve their businesses are more likely to actually improve their businesses. That’s common sense, as effort usually yields results. Of course, it’s impossible for most small business owners to focus on business management all of the time -- you need to do all of the little things to keep your business running. But, even if you set aside a small amount of time to consider the larger workings of your business, you’re well beyond what your colleagues are doing -- and, that’s a huge competitive advantage.
Setting aside the time to better manage your business operations is not easy; but, if you can even assess an extra hour a week, it will inure to your benefit.
04/26/2021: Less Is More: Why Targeted Marketing Is So Important for Law Firms
Let me be clear: your job as a lawyer is NOT to be the next Andrew Carnegie. That’s in part because law firms are inherently geographically-limited businesses -- in the main. What’s to stop Walmart from opening another location across the state line? Essentially nothing. What’s to stop a law firm from doing the same thing? Well, another bar exam passage (or waive-in process), for one. For another, there may be restrictive rules relating to physical office space requirements for law firms, as well as a host of other protectionist measures to keep out-of-state lawyers, well . . . out of state. Then there’s the practical difficulty of managing various ethics rules regimes, for each state you locate an office (virtual or otherwise) in.
Because most law firms are still referral-based businesses, they rely heavily on local connections. Usually the big kahuna at a law firm is going to be out and about, shaking hands and kissing babies (metaphorically speaking), drumming up business. It’s damn near impossible to clone managing partners, such that most law firms are effectively limited in their marketing by the sheer success of the founding partner in being able to market herself locally. But, even for law firms that can expand, there’s still a choice as to whether or not they should expand; and, given all the things that hamper law firm expansion, the better choice may be to blow out your local opportunity. And, even if you are already marketing online effectively, note that your understanding of and comfort in your local market can remain an advantage, since targeted marketing tactics are easier to draw upon than ever before.
It’s axiomatically true that local SEO is most effective. And, you can market in such a granular way on social media that you could theoretically target a physical block of addresses, if you wanted. More generally, you can design your content to apply to a specific geographic region. You can also include in your law firm logo reference to a geographic area. There’s so much you can do, as a lawyer, to tighten your marketing, and to better focus your efforts on where (physically) your clients are; and, it’s probably the most cost-effective way to market a law firm.
4/20/2021: Going Down? How to Love Your Elevator Pitch
What would you say if you randomly came upon someone asking you what you do for work? Will you stumble across your words, or have something coherent to say instead, that even serves to drive new business? If it’s the former, it’s time to develop your elevator pitch.
You know what this is: It’s your thirty second business pitch, theoretically offered up on a short elevator trip, during which you’re compelled to access a new business opportunity. Now, that’s kind of silly, of course: you’re almost never going to secure a business transaction in that short a time frame -- and, if you do, it probably won’t be a good one. But, elevator pitches are important for laying down the seeds of potential business relationships, including client acquisition and referral arrangements.
And, if you’re going to try to construct an elevator pitch that works, here are some tips:
-Eliminate nonverbals so you can get to the point. What are nonverbals? You know: the ums, ahs and crutch phrases that you use to prop up conversations, which are nonetheless adding nothing to those conversations. It takes some work to eliminate these.
-Stick to a unique sales proposition. You’re only trying to sell one idea or concept. Anything else in this time frame is going to confuse your listener.
-Develop a good hook. You know how seminal rock songs have an unforgettable hook? Your elevator pitch needs one of those, too. Something that really resonates. Something that is short and pithy, and carries forward the essence of what you do.
-Deliver on a call to action. Because you’re not really going to be converting business in thirty seconds, you’ll need to take another step. So, leave your new contact with a ‘call to action’: something that happens next, something that you control. Even something as simple as ‘I’ll reach out so we can schedule a time to get lunch’. It matters less what something you do next, so much as it matters that you do something next. From here on out, you need to stay top of mind.
4/13/2021: Public Trust: Stay Away from Open Wifi Networks
In a final season episode of ‘Game of Thrones’, a stray Starbucks cup showed up on a table in a medieval castle. This, among other things, negatively affected Game of Thrones’ critical reception in its last season. But, that’s nothing compared to the personal hit that your reputation could take if you rely on Starbucks wifi to access confidential client materials online.
At this point, every state has a data security law of some type on the books, and law firm ethics continue to move toward a national consensus of data competency, including with respect to data security management. Lawyers who have a minimum level of competency respecting technology and its uses in the practice of law are not using free, open wifi networks to access client data. And, that’s because it’s staggeringly easy for even mildly motivated hackers to gain access to your client information systems.
Of course, as an attorney, you’re not only trying to protect your personal data -- you’re also required to secure your clients’ confidential data (of which you are the steward) and your own business data, including financial accounts. So, while it may not even be possible in the modern world to avoid Starbucks, you can (and should) avoid the Starbucks wireless network.
4/6/2021: Tracking Shot: How Do You Manage Your Law Firm Expenses?
You know that to effectively manage your law firm finances that you need to create revenue projections, to establish goals for what you want to make. You also understand that in order to establish revenue projections in a coherent way, you have to establish a figure for your overhead, i.e. — the costs that go into running your law firm. Of course, you are acutely aware that your costs to operate equal business expenses, and that some of those business expenses, the larger ones (like malpractice insurance and your office rent) are easier to keep track of than others. But, what if you treat somebody to lunch? Or, you gas up a rental car?
Tracking business expenses admits of the same issue as tracking time spent on client matters: If you’re not diligent, you may miss out on some items, especially the smaller items. It’s also a good idea to contemporaneously track business expenses, just as you would contemporaneously track time on the client matters you’re working in; and, the reasoning is the same: it’s easier to capture the data right away, than to expect to build a faithful reconstruction after the fact.
Fortunately, there are a number of expense tracking apps that allow you to construct a contemporaneous record of your expense logs, right from your smartphone. Take a picture of a paper receipt, categorize it and get rid of the paper. In this way, expensing apps are a necessary, if often overlooked, component of the paperless law office.
Some options to consider are: Expensify, Wally and Marcus. And, that’s the short list. But, whatever option you use, start recording a higher percentage of your expenses (like all of them), and don’t miss out on a single deduction come tax time.