Do you ever wonder how to make more money as a lawyer? I’m sure every lawyer wonders that at some point. The answer is surprisingly simple: Change.
I have friends who work 80 hours per week and have plenty of clients, but they don’t get paid (enough). Or maybe they spend eighty hours at the office, but only half of those hours are billable.
Others burn money on frivolous office equipment, unjustifiable marketing expenses, or memberships to organizations that they don’t use because “lawyers have to network.”
To make more money as a lawyer, you need to change the way you think. Here are eight ways to start doing that.
1. Stop wasting time with the wrong clients
You already know who this client is. This is the one who calls you a hundred times per week and has a case that needs more manpower than a Big Law firm could provide, yet they pay all of their bills late, if at all. At this point, you’re so far in the hole on the case that you don’t want to drop out now and never get that payday that’ll surely come if you can somehow salvage a positive outcome. Plus, you’re emotionally invested in the case.
Stop it. We care about our clients’ lives. That makes us good lawyers, but it can make us bad businesspeople.
2. Spend time getting better clients
How do you get good clients? It’s all about marketing.
You’ve done good work for past clients. Nag them to leave you reviews on Google, Yelp, and Facebook—the majority of consumers, and 81% of millennials, say that they’re more likely to hire a lawyer with positive reviews.
Spend the money to get a decent website going. Pay Per Click (PPC) ads are a great, albeit typically expensive, way to get client leads quickly. And consider hiring a reputable agency to manage all of that for you, as you’ll be too busy lawyering.
The bottom line is this: Marketing means more calls coming in from prospective clients, which means you can become choosy about your clients.
3. Work smarter, not longer
Like I said before, I know a lot of lawyers who work 80-hour weeks. They aren’t successful.
Why? The issue is not always bad clients. Sometimes it’s bad business and recordkeeping.
Billable hours may get lost to missing paper logs. Alternatively, lawyers may spend hours trying to forensically recreate billable hours from a day of hearings and settlement conferences off-site so they can prepare an invoice in Excel, each accompanied by a unique letter to a client.
Stop it. I know technology can be a bit overwhelming. But modern solutions to law office management, including Clio, are built to be as intuitive as your smartphone fitness app. Track hours there, and auto-generate invoices and form letters. Clio will even provide training resources for you and your staff. Leave the law office management to your software, and you’ll save at least a few hours per month.
4. Spend less money
I worked with one law firm a while back, and they were paying a mom-and-pop marketing agency to run all of their online marketing efforts — for one county.
They had a second agency handling another county because they couldn’t commit to a single company. I audited the server logs and neither company had even logged in to the firm’s websites in months.
The same firm was spending around $50,000 per month on pay-per-click Google ads, and, by fixing one obvious mistake, I cut their cost by around $5,000 per month.
The craziest part of all of that? This firm had no tracking set up, so they couldn’t even tell if the ads or websites they were paying for were bringing in clients!
That is not rare, sadly. I see this about once per month—firms trusting marketing “wizards” or “pros” only to find out they’ve been sold snake oil. Here is an absurdly important fact: Real marketers can track their successes—they can even tell how many calls or emails came from each ad campaign or website.
I’m obviously a proponent of marketing. But here’s my motto: “What gets measured gets funds.”
The same goes for other law firm expenses—do your due diligence, and think long and hard about what your firm really needs and what will work best.
Beyond marketing, the biggest expenses vary from firm to firm. One firm I know of bought new computers every year—Nice ones! Mid-range computers are good enough for office software and most computers will last at least a few years if not abused.
Tip: Remember to backup your firm data or use cloud storage to make sure you’re covered in case something goes wrong.
Another firm I know used billing and calendaring software from the 1990s that required expensive networking infrastructure, a contract with an IT company to maintain the network, and tons of support staff to handle the time entries and billing because it was too complicated for the attorneys to handle.
Modern cloud-based law practice management software (yes, I do mean Clio) is absurdly better than the ‘90s stuff that many firms are still using. Try it, and don’t worry about re-training your staff, as the time they’ll save day-to-day, and the money you’ll save on staff and infrastructure will be worth it.
5. Improve your client intake process
Client intake, the first stage of your firm’s work with a client, can be an incredibly time-consuming process. It’s also not usually billable.
To save your firm time and money, streamline this process as much as possible. Use online forms or specialized client intake tools, and integrate these tools with your practice management software to do away with duplicate data entry.
Also, make pre-screening part of your intake process. Lawyers love to help, but not every problem or person will be a match for your firm—and a bad fit could end up costing you in time, resources, and reputation in the end.
Learn more about improving client intake with 4 Ways to Improve Your Client Intake Process.
6. Accept credit card payments to get paid faster
What’s the most important part of making money? Getting paid!
Unfortunately, lawyers wait three months on average to get paid—and that’s on top of the two months that many lawyers wait before actually sending out a bill to clients. Also, according to the Legal Trends Report, lawyers only actually collect on about 86% of what they bill, leaving 14% of invoiced amounts on the table.
Accepting credit cards can help address this problem. Law firms that accept credit cards get paid 35% faster than firms that use check-based payments, meaning you’ll spend less time chasing down clients for payment, and have more time to focus on billable work.
Learn more in our post, How to Collect Legal Fees 35% Faster.
7. Hire staff or use cost-effective services
Hiring staff might seem like an extra expense, but in some cases, not having help could mean leaving money on the table. In her post, How to Write a Law Firm Business Plan, Chelsea Lambert explains:
A difficult truth of running a law firm is that you need to ‘fire’ yourself from the jobs that rob your law firm of revenue. For example, when you decide to do the work of a paralegal, who can be paid $30 per hour, and your billable rate is $200, you are robbing your law firm of $170 per hour.
Don’t spend time on administrative tasks when you could be spending time on billable work. If you think you can’t afford to hire staff, do the math, and consider how many billable hours you’re losing to administrative tasks. And if you really can’t hire anyone, consider more affordable solutions such as Ruby Receptionist.
8. Use technology to streamline your day
If you’re still managing your practice using spreadsheets alone, you’re missing out. There are plenty of apps and digital services that can help streamline your day-to-day tasks, saving your law firm time and money.
Some apps, such as Box, Evernote, or Skype, are useful for any small business, but there are lots of lawyer-specific apps as well. For example, AgileLaw lets you run paperless depositions.
On top of that, many popular apps have both desktop and mobile versions, allowing you to take your practice with you wherever you go. For example, the Clio mobile app lets you track time, view client information, create new matters and contacts, and more.
Change is easy to talk about, but hard to do
It’s hard to cut the clients that only have a slim chance of paying, especially when they’re desperate for help and you’ve already invested time and emotion in the case.
It’s also hard to change the way you work. You have to learn new habits, new workflows, and how to use new tools. You’ll have to take a long, hard look at what you’ve spent on marketing your firm so far, and admit that some of your expenditures haven’t worked out as you’d hoped.
All of this is tough. But good business always is.
So take the first step. Say no to the client who never pays. Call your website designer and ask her some hard questions. And set aside an hour to assess investments that might help you manage your practice better. In the end, it’ll all be worth it when you’re making more money—without the need to work 80-hour weeks.
Want to see how technology can change the way you practice? Try Clio for free today.
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Categorized in: Business