June 4, 2012
Your law firm is not just a convenient place for you to practice your profession – it is a business that provides opportunity, financial wealth and satisfaction to you and your employees.
As such, you need a business plan that envisions the firm’s future so you can properly operate your business to reach your goals.
Components of a good plan
A good business plan contains certain key components. It should:
- Focus your firm’s future opportunities
- Outline your firm’s specific goals
- Specify the methods to be used to accomplish your goals
- Define time frames to accomplish your goals
Your plan should be in writing and communicated so that every member of the firm can see it, identify with it, and move in accordance with its direction. It forms the framework for marshaling your people and financial resources to move the firm toward meeting its goals.
Focus your firm’s future opportunities
Your law firm, like every other business, has the freedom and opportunity to change its course of direction every day of its existence. Because your business has nearly unlimited possibilities, the following two items are key points you must decide on and commit to in your business plan.
1. Type of practice – Too often, law firms enter an area of law defensively, when an important client demands services the firm does not offer. The most basic component of your plan should define which areas of law your firm will develop and which areas will be referred out to strategic partners or alliances.
2. Size of practice – Regardless of which fields of law your firm decides to practice, you must also decide how large the firm should be. This will depend upon the capability of your firm’s people and your financial resources. How should the firm be structured internally? How many office locations are desired or necessary? Where will the money and time come from to build and manage the practice size right for your firm? Ideally, these decisions are made up front and documented in a well thought out plan.
Outline your firm’s specific goals
For example, let’s say your firm has dabbled in construction litigation and decides to develop a department servicing this field. At the same time, you are overflowing your present office space, but your lease is not up for three years. Lastly, the founding partner of the firm is nearing retirement and no succession plan is in place.
These three situations may seem completely separate at first glance. However, all three can be related to one or both of the two previous issues – type of practice and size of practice. All three affect the firm’s partners, employees and financial resources and should be dealt with in the business plan.
Specify the methods to be used to accomplish your goals
Once goals have been identified, steps must be taken to accomplish them. Who will staff the new department? Who takes over for the founding partner? Are new lawyers or support staff employees necessary? How much money will the people and facilities cost?
Define time frames to accomplish your goals
The planning process should identify time frames for action to accomplish each goal. The new construction litigation department may be desirable but may be deferred for six months. However, the office space and lease issues will not go away and demand immediate attention. The founding partner may have a goal for retirement that allows the firm to work out a plan over the next two years.
All of these goals must be prioritized and put on a timeline so that the firm’s resources are used efficiently.
Your first step toward planning for your law firm’s future is to develop your business plan. Then, revisit it at least annually to rethink and reset your firm’s goals. Refer to the plan often, modify it as needed, and use it as one of your firm’s most important management tools.
Business plans can be adapted to suit the needs of large or small firms, but it is important that every firm have one.
This article was originally posted on June 4, 2012 and the information may no longer be current. For questions, please contact GRF CPAs & Advisors at firstname.lastname@example.org.