Managing Your Law Firm Career with a Business Mindset
Lawyers can be great legal experts, handling tough questions of law and complicated evidentiary issues. But lawyers also need to be adept at business issues, and managing their legal careers with a business mindset, whether they are solo practitioners or in a large law firm. It’s not enough to be a great legal mind. You also have to be able to get business, make sure it’s profitable business, and understand the financial realities and goals of your firm.
If the law firm that you are part of is falling short on its business plan, the firm leaders may look to make changes. And if your personal contribution to the firm’s business priorities doesn’t meet the firm’s financial needs, you are probably going to need to make some changes too. So, if you’re not paying attention to the business of your firm, you’re not thinking about how that business may affect your career progression, your salary, your job security, or your individual professional goals.
How do you cultivate a business mindset in your law firm life? It doesn’t take an MBA degree, but you need to be focused on a few key things:
Ask what your firm requires to meet its business goals
Make efforts early on at your firm to understand how the firm is managed financially and what variables are important to that financial management. Even as a junior associate, you should ask partners and firm leaders what metrics they are looking at when they evaluate your financial value to the firm. Don’t assume that billing hours is enough – your profit margin, the amount of your time written-off, client discounts, billing rates, and whether the type of clients/industries you work with fit within the firm’s strategic priorities are all some of the factors that likely matter.
And don’t just rely on partners - ask others in the firm to help you learn the business of the firm as well. Billing supervisors and analysts, associate development professionals, and office managers are all tremendous resources for increasing your understanding the terms and tools that law firms use to measure and manage their businesses.
Take on responsibilities to increase your practical business knowledge
Many lawyers view administrative, non-billable tasks—e.g., reviewing bills before they go out, or checking whether associates are billing efficiently—as tedious and avoid taking them on. But this work also helps you to understand the impact of write-offs and the failure to efficiently perform work, two examples of metrics that law firms look at quite keenly to evaluate individual attorneys. And if clients are asking about deducting certain charges on bills or seeking to change fee arrangements (e.g., moving from hourly billable rates to a flat or fixed fee), volunteering to work with your finance or pricing department on possible responses is a good way to appreciate what must be considered from a fiscal standpoint for the firm.
Drafting the firm’s reply to an RFP or RFI is another opportunity to learn how to scope work and provide a cost estimate for clients. As a result, you will learn how to balance the firm’s profit needs against other factors that might counsel in favor of a discount or special terms, such as securing a first engagement with a sought-after client or being awarded work in a new area of strategic importance for the firm. Understanding the terms of contractual arrangements with clients is also important in order to minimize the chance for disputes over charges or and potential reductions in fees.
Learn more about the business of your clients
If you aren’t familiar with the specific business issues that are impacting your clients, your potential clients, and their industries, you can’t expect to know what business opportunities you should be seeking from them. Having legal knowledge about areas that are generally of interest to certain industries is great, but if you don’t know whether that legal knowledge is specifically needed and how it is needed, it’s not as helpful. For example, a company may be operating in a sector that is under scrutiny for its data privacy practices, but only doing business in a limited number of markets where fluency in the local language and familiarity with local laws is critical. Estimating potential revenue or new engagements based on a client or market strategy that isn’t grounded in reality can backfire with your firm when you fail to meet projections.
You should also be regularly reading about the industries and clients that you are focused on – if your client just laid off 10% of its workforce, knowledge of that fact will help you anticipate any cuts to or pushback on outside counsel fees. You want to be aware of how your client’s business issues may affect your ability to get business from them. Indeed, talking frequently with your clients helps you learn where their stresses and challenges are. Even when those issues aren’t directly legal ones, being attune to the overall business picture at the client’s company and sensitive to how that may affect your client can go a long way in building relationships.
Be willing to pivot and make changes when needed
Did you know that Starbucks started out selling coffee beans and espresso makers, not as a café where you could purchase and drink all kinds of coffee beverages? When a new owner took over the company, he saw that the demand for a modern coffee shop model was a more profitable and scalable business opportunity. In law firm life, you may also need to recognize when it’s time to change gears, perhaps because unexpected events shift demand for certain types of work or simply because evolving market technologies and services generate new issues that need legal analysis. For example, in light of the COVID pandemic, the need for lawyers to address vaccine mandates, disability and medical leave, and tax implications for remote work caused rapid, unanticipated growth in those practices. On the other hand, practice areas focused on cryptocurrency and cannabis have expanded more in response to longer term developments in those industries. Many lawyers have seized the chance to change their practice to meet these needs and to claim new clients as a result.
But there are also times when certain practice areas lose favor in a law firm – such as when they command lower billable rates, or are centered in geographic locations where the firm has decided to close offices. Or you might be realizing for other reasons – such as firm culture or changing leadership – that it’s time to think about doing something different. Periodically examining your practice and how it fits with the law firm’s business priorities will help you better evaluate what you need to consider from your individual business perspective.
When you think from a business perspective, you can anticipate changes in the market, so that you can develop a strategy to increase the demand for your services. This could mean changing law firms to one that offers support for and values your current area of expertise, and your way of working. Or it could mean staying at your firm but developing new legal skills and expertise that you can market and leverage to meet the metrics the firm examines. From a business standpoint, the key thing is to be proactive about where you and your practice stand with your firm and how that aligns with your career goals. Developing a strong business mindset will give you the change agility to direct and better control your own professional path.
If I can be of assistance to you with building a business mindset around your career, or other professional work life issues, please reach out to me to discuss how coaching with me may be helpful.