Is it possibile to build "the perfect legal business”?

Abstract
It is incredible that many lawyers – possibly even most lawyers – cannot explain the difference between profit and cash in a law firm. It is also incredible how profit plays little or no part in the lives of lawyers, as everyone works for the cruel and misleading master that is turnover. It is also incredible how law firms all look alike, and how they are typically addicted to chasing the dragon of new clients all the time, while the gold mine full of existing clients is ignored. It is incredible how clients bounce off law firms – most adults have used a lawyer, but not many have got a lawyer. I’ve interviewed Simon McCrum, the author of “The Perfect Legal Business” book to discuss all the above-stated issues.

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What are the main features of Perfect Legal Business?
They include a brand that has clients queuing at its door; central ownership of clients, rather than them being owned by a department or a lawyer; a great service – every lawyer, every time; pride in pricing; making maximum money on every case; getting maximum cases from every client, building up to case .007 for clients instead of always chasing new clients and their .001’s; Team Leaders who drive their part of the business forward; a team culture where everyone is on the same side; a team that drives profit not billing; a firm where nothing but cash is acceptable.

These are just some of the areas that my book brings into the spotlight. It emphasizes how to work in these areas – in a joined-up way – will bring far more sustained, profit-rich and cash-rich growth than merging, opening new offices, bringing in teams from other firms, building new websites etc, could ever achieve. All too often, firms try to grow by rolling out a flawed model, while all the time there is profit-rich and cash-rich growth under their noses.

What is needed to turn a law firm into The Perfect Legal Business?
First, there are what I call “general” requirements. Law firm owners need to listen. Millionaires are not usually very good at listening. And they need to accept that some boring stuff is very interesting. When I start working with law firms, they always want to start with sexy stuff – but once we look at the basic elements of “The Perfect Legal Business” they quickly see that they can achieve their ultimate aim – more profit and cash – in a much easier and more certain way than they had planned.

After that, some specific pieces of a jigsaw are needed to build The Perfect Legal Business. They need a brand – that is, a promise to the market-place, not just a name. What does your law firm promise? In most cases, a law firm can’t actually promise anything, because every case is dealt with in a different way by the different lawyers. Next, the law firm needs to stand out from the crowd – it needs differentiators. If you look at 100 law firms’ websites, you’ll see almost nothing that sets one law firm apart from the others.

Next, it needs to make sure it delivers a great service – every lawyer, every time, and it needs to value not the case but the client whose case it is, as that client will have plenty more cases over the coming years. Most law firms love new cases from new clients. You can get lots of those (I call these Case .001’s) – just quote a cheap price. If you focus instead on getting to Case .007 for every client – by delivering a great service, every lawyer, every time, and by making sure the clients are owned by the whole firm rather than by one lawyer – then the price is not important and you have clients who pay you quickly. Take it from me – .007 is a Licence to Bill.

To make all of this happen, you need a career structure that promotes and rewards all of the above behaviours, and you need Team Leaders who drive their teams as mini-businesses, where they are responsible for delivering a high Gross Margin to the centre. Most lawyers don’t know what Gross Margin is – which is bizarre as it is the universally-recognised way of measuring the profit-making efficiency of a business unit.

So, is it the Management of a law firm that will dictate whether “The Perfect Legal Business” is pie in the sky?
Exactly. COVID is not an obstacle to change here at all. Quite the opposite. I’ve never been busier, working with law firms who want to “come out fighting” while firms around them hunker down. COVID is a time of opportunity – clients still need lawyers, and firms can make sure that they stand out, that they set exacting rules when it comes to accepting new clients, that they charge a high price, that they blow clients away with a great service – every lawyer, every time, that they get all the work that clients have got (over the short, medium, and long terms), and that they are a cash business. There is no finer growth than this.

And once the model is perfected, an unintended consequence of this work is that you will have differentiators that will make you the stand-out, go-to firm. You’ll be a brand, that delivers on your promise every time. And clients will pay handsomely for that guarantee.

So really, whether “perfection” is possible is a question for law firms’ Management. Are you talkers, or do-ers? As ever, it is the do-ers that will thrive. Particularly where you focus on your existing cases and clients instead of always chasing new ones. If you chase lots of rabbits, you’ll never catch any of them.