Page 25 - Strategic Planning for Law Firms

Strategic Planning for Law Firms
Does the Firm Understand its Financials?
How often do we hear the refrain – I went to law school to practice law, not run a business? Many lawyers joke they had to go to law school because they were terrible with numbers. There are many lawyers who don’t understand their firm’s financials. An office manager or the managing partner is tasked with that responsibility and many lawyers at the firm don’t know the numbers (and some, frankly, don’t care, as long as they get paid their fair share and get paid on time).
It’s not uncommon for a firm to be struggling because its lawyers simply don’t understand its financials. They don’t know where the money is coming from, when and how much, and they don’t know how the money is going out, for what and how much. They’re looking at the wrong numbers, or factors or issues to determine the firm’s financial health and viability. They don’t know, for example, the cost per lawyer to operate the firm, the cost per square foot for their lease, soft costs (marketing, travel, lunches, gifts, etc), and what each lawyer is contributing to and taking out of the overall pot. A given lawyer may seem productive because he’s employing five associates, but his and their lower hourly rate, may be adversely affecting the firm. Understanding a firm’s financials is key to productive strategic planning. In most instances,
a detailed examination of the firm’s financials will be an important starting point for strategic planning.
©2021 Federation of Defense & Corporate Counsel
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SECTION 03 BARRIERS TO STRATEGIC PLANNING