October 17, 2016
Editor’s note: This is the first in a series of articles about the recent State of U.S. Small Law Firms Study, undertaken by Thomson Reuters small law firm business and examining patterns in building a successful small law firm.
As our editor noted, this opens a handful of articles regarding the State of U.S. Small Law Firms study that Thomson Reuters recently completed. In this study we took a look at how small law firms are challenged with and succeeding in the rapidly evolving legal marketplace. While many insights into the legal market for small firms come simply from looking at your own month-over-month bottom line, it’s also valuable to take note of common challenges. And, as I’ll note in this article, one thing that is essential in building a successful small law firm.
In the survey and several follow-up interviews, small law firms revealed their firm priorities, the operating habits and definitions of success. This enabled us to see those firms that identify themselves as “very successful” do differently than other firms. As you might guess, there are some key priorities and operational choices that these firms note that are key to their success.
How do firm’s define success? As you will see in the study report, most firms define success using a set of very common criteria including client satisfaction, repeat business, profits, work life balance and revenues. Yet when firms are asked to pick just one metric to define their success, there is wide variation in what attorneys choose. This reinforces a key insight that, every firm should take the time to set business priorities—and be willing to make critical choices that align daily operations with those priorities.
In my experience talking with law firms, the reality is that the time to articulate your priorities is too often at the bottom of an attorney’s to-do list. Here’s why you should set aside the time.
Your business priorities, or strategies, are essential to differentiating your firm from the one next door. I’ll talk more about this in a later article, but for now, know that our survey shows that competitive pressure is increasing. Most firms say their clients are increasingly asking for “more for less,” and putting pressure on rates (while your costs rise). Take, for example, these two new realities in the small market: One, our study shows that pressure is increasing. And two, small law firm opportunity is being squeezed at both ends. Solo work is slowly slipping to a growing set of DIY legal offerings, while larger small firms are increasingly competing with medium and large firms for business clients. Defining your firm simply by practice area (“I’m a New York personal injury attorney”) and personal recommendations will not be sufficient to acquire and retain clients. Business priorities help you make decisions on how to truly differentiate your firm.
For more about which priorities set successful firms apart from their peers, please read the full State of U.S. Small Law Firms study report, just released.