Stuck in Neutral: Five Reasons Firms Fail to Scale

Stacks of papers being sorted on a desk next to a laptop and potted plant
It’s often hard to pinpoint one reason why a firm seems to be stuck in neutral, cruising along but not accelerating.

Has your firm’s growth stalled? Are you struggling to scale your operations or your team?

It’s often hard to pinpoint one reason why a firm seems to be stuck in neutral, cruising along but not accelerating. The cause is often a combination of things ranging from ineffective teams and poor processes to inadequate systems and subpar reporting. While restructuring your teams and bringing in fresh talent may not be an easy fix, correcting the processes and systems that are holding your practice back can be an easier feat to tackle; one that will yield immediate results and ultimately help you hit the gas on growth.

In considering where to start, it’s important to understand the most common issues that impact law firms:

Timekeeping is too manual. How many of your timekeepers still keep time on a spreadsheet (often retroactively)? If the answer is even one, that’s one too many. Timekeeping must be done in real-time in a timekeeping or matter management platform; there can be absolutely no leeway when it comes to this critical task. With a plethora of timekeeping applications that allow you to easily run timers for just about every function or create time entries in a few seconds flat, there is no reason for delayed entries where time can easily be forgotten or lost.

Timekeepers should also have the ability to access their logged time for any given month, so they begin realtime tracking, checking in on their progress at least once a week, not just at the end of the month when they’re forced to play catch-up.

You don’t have a project management system in place. If you told your team that you wanted to increase the firm’s current caseload by 4X, what would their reaction be? Enthusiasm? Maybe, but the more common response is likely to be one of doubt – “there is just no way we can do that with our current bandwidth.” And, without the right project management systems in place, your team’s concern is probably warranted.

Over the past five years, we’ve worked with countless firms who share in this struggle. When you drill into their perceived bandwidth deficit, it often stems from a lack of project management tools and no defined (and monitored) firm-wide workflows. Without the right systems or processes in place, inefficiencies run abound.

You’re not leveraging document automation software. Many firms use the same standard documents for dozens, or sometimes even hundreds, of cases each year. The process of manually customizing each document can be time-consuming and error-prone. To be able to adequately support more cases, automation is key. Document automation tools for the legal industry have come a long way, and many now integrate with the firm’s legal practice management application, removing data entry and human error from the document assembly process.

There has never been more data available to law firms than there is today, but far too many firms still don’t have a centralized system to store it.

It’s taking you too long to bill and collect payment. We often hear from firms that it takes far too long to get the bills out and way too much time to receive payment. Both of these problems are separate, but there are technology solutions to help firms tackle both with greater efficiency. In assessing your billing workflow, take note of the steps that have to be done manually. Does each invoice have to be generated one by one then approved through a pre-billing process before coming back to the billing group? Is that team then tasked with determining the best billing contact and preferred billing method for each invoice before it is sent? If you answered yes, your billing process could likely be seriously improved by investing in solutions that allow for bulk billing.

Studies have shown that the longer it takes for you to send an invoice after work is completed, the harder it is to collect on, so efficient billing should be a top priority for any firm that wants to scale. Other relatively simple things you can do to speed up client payments: 1. Make your invoices easier to understand, 2) Accept credit card payments and 3) Send direct payment links to your clients via email.

You’re not harnessing the data (or you don’t have the right tools to make sense of it). There has never been more data available to law firms than there is today, but far too many firms still don’t have a centralized system to store it and, ultimately, make sense of it all. For example, can you answer the following questions without running reports from several different systems:

  1. Who/what was your greatest referral source in the past three months? What about the past 12?
  2. If you handle flat-fee matters, how many of your cases did you lose money on (because they simply took far more time than you had anticipated)?
  3. Who in your practice billed the most in Q3? What was his/her realization rate?
  4. What is the expected revenue from PNCs sitting in your pipeline with at least a 50% probability of closing?
  5. Which attorney brought in the most matrimonial cases in H1 of 2020? Who brought in the most estate planning matters?

While these questions won’t help you scale, the data will allow you to identify areas of opportunity and growth. By adopting a powerful matter management system that also features legal billing, legal accounting and reporting, your firm will have a single source of truth through which you can assess efficiency, productivity and profitability – three fundamental requirements for sustained growth.

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