Running an injury law firm is a rewarding job that supports your community. But beneath the surface, legal professionals are so busy with cases that they can lose sight of one very important metric: law firm profitability.
Your team members will have excellent knowledge of the law, but how are they on human resources, project management, or marketing? Of course, it is unrealistic to expect your attorneys and paralegals to have intricate knowledge of other industries in addition to law. Nevertheless, some simple training, management software, or the use of legal support services could make an enormous improvement to your law firm’s profitability.
Let’s look at some of the common challenges law firms experience and how to turn them into profitable solutions.
What factors can restrict profitability?
Poor systems and HR management
If your tasks and processes aren’t well defined and clear to the team, this can lead to duplicated work, missing the next step in the process, not knowing how to access information or who is handling what, increased case timelines, and decreased client satisfaction. When staff members have clearly delegated duties and areas of responsibility and know how their work fits into the big picture, productivity will inherently increase, as will the team’s focus on doing things efficiently, helping profitability.
Lack of teamwork and collaboration in practice areas
Having every team member on the same page is essential for any firm to ensure that cases are attended to properly. However, when you’re simultaneously dealing with multiple clients, judges, third parties, and other professionals along with piles of paperwork, it’s easy to lose track: one slip up could derail a case, causing massive problems, opening you to liability and disrupting cash flow.
Ineffective marketing plans
Your firm may take on several new clients every year, but there are important factors to know beyond how many new clients you gained. Do you know what type of marketing has generated these leads? Do you know the number of leads versus the number of secured clients? Do you know the cost associated with obtaining each new client? Many law firms fail to monitor which marketing channels are most effective for them. Without this analysis, firms may be spending money on advertising sources that don’t result in new clients, resulting in lost profits.
How to improve profitability?
Improve organizational communication
Keep everyone updated and informed on the best ways to communicate with different team members. Find online portals that allow internal communication amongst staff, separate team chats, and case-specific communications, as well as third-party portals for seamless collaboration with clients, contractors, and experts.
Assess financial management systems
Often, law firms’ profitability is measured by comparing profits from last year with the current year. However, this doesn’t consider where money could have been saved or how it could be saved in the future. Because you’re busy running the firm, you may want to consult an external specialist who can help you analyze your past profits and wastage while assessing potential savings and profit margins for the year ahead.
Opt for litigation outsourcing services
Your on-site staff is already juggling a million things simultaneously. Why waste their high-value time on standard administrative tasks that could easily be outsourced to a legal outsourcing company? Offload your team’s time-consuming but necessary tasks to such services and provide your firm with access to experienced legal professionals. These companies save you time and money while reducing team stress and increasing team focus on managing cases and taking on more clients.
Choose an effective legal case management system
Most companies have transitioned to run at least partially online, accelerating the quality of online systems. The software has been specifically designed to help lawyers and law firms to operate from anywhere with collaborative tools that keep everyone in sync.
The right legal case management system for you should offer an entire working office from anywhere you and your staff find yourself. Features for everyone to access can include:
- Firm-wide calendar
- Interactive dashboard and notes
- Matter-specific task updates and progress
- Fully integrated communication via email, text, or internal messaging
- Document organizer and editor
- Digital archiver
- Workflow manager
- iOS and Android mobile applications
Individually, these features might not seem groundbreaking, but when coordinated together among your team, communication improves immediately with shared information and easy-to-access updates.
Perform automated processes
With the right tools in place, many time-consuming daily duties disappear through automated processes that you only must set up once. After that, any workflows you create can collect, store, and process data for future projects with familiar formatting. For example, with the click of a button, you can create and assign all tasks, calendar entries, reminders, and alerts associated with new case intake, saving you and your team numerous hours every week.
Advance cases more quickly
Just one late deadline or one missing document can delay the progress of a case, keeping it on your books for another month, which increases carrying costs and decreases profits. But there’s no need to worry about delays with the right tools and services ticking away in the background. Don’t worry about chasing deadlines or documents – feel confident that they’re being taken care of so you can focus on successfully closing cases.
Make an effective marketing plan
There is no single universal marketing plan that works for everyone. Each law firm is in a different location and generates demand from a diverse demographic who respond to different marketing techniques. It’s important to explore these techniques, whether it’s billboards and posters or online ads, to diversify the pool of people who see your firm.
Once your firm starts tracking marketing metrics, you can analyze which channels generate the newest clients. You can focus on and invest in the most effective marketing channels when you have this information. This will save money and eliminate marketing channels that don’t produce results. It will allow you to invest more in those that do, increasing the number of new clients secured year on year.