The Business of Lawyering from a Business Coach for Lawyers
As an occupational therapist working for two decades in personal injury, I was fortunate to work with many lawyers. Through this, I learned about the business of lawyering, and witnessed the challenges of navigating a legal practice.
It’s common knowledge that being a lawyer is difficult and the pressure is immense. Add owning and running a business to that, and it can be overwhelming. It’s uncomfortable to admit you’re good at what you do but lack the confidence to run a business.
I know this first-hand because I’ve been there. My pathway into business was through my healthcare private practice. In my role as a professional, I knew what to do and how to serve my clients. As a business owner, I had a lot to learn. And learn I did! Now with an MBA, a few coaching certifications, and experience scaling and selling my own practice, I’m providing business coaching to help fellow professionals bridge the gap from professional to thriving business owner.
So, lawyers, you are not alone! It turns out therapists, dentists, optometrists, and other professionals face similar problems when going from professional to successful business owner.
If business isn’t your strength, don’t stay stuck, anxious, and unhappy. Be proactive and seek out the knowledge and coaching you need to return to loving what you’re doing.
So much of this comes down to knowledge and practice. When you learn to cook you start to like cooking. When you learn to play tennis, you start to like tennis. When you learn about business as a lawyer, you start to like being in business.
Let’s walk through some of the basics so you can start building up your knowledge and skills as a business owner.
The 3 Key Areas of Business Success as a Private Practice Lawyer
1. Invest in Yourself - Do what it takes to build a good life and business
Instead of always thinking about return on investment(ROI), consider the ROY — that’s “return on yourself!”
It’s no secret that lawyering is hard. It has been studied to be a very challenging profession.
Consider some of these statistics from the National Study on Psychological Health Determinants of Legal Professionals in Canada (2022):
59.4% of lawyers have observed psychological distress.
24% of lawyers have had suicidal thoughts since entering the profession.
56% report work-related burnout.
Only 45% seek the help of a professional (massage, psychology, and physician rank the highest). Coaching was 8%.
Private Practice had the highest level of psychological distress and burnout.
31% of women think "often to always" of leaving the profession.
One way to deal with the challenges of the profession is to invest in yourself. You might choose to invest in counseling, fitness, time off, or additional education.
This might even include finding a business coach to lighten the load of running a private practice while helping you create the life you envisioned when you went into lawyering. This will make you a stronger business owner and keep career-busting burnout at bay.
Not convinced about investing in yourself with coaching? You’re not alone…
This struggle to embrace the value of coaching isn’t new. Back in 2014, the Canadian Bar Association talked about how coaching can benefit lawyers. The article went on to talk about the return on the investment of coaching in terms of return on YOURSELF.
Notably, the article brilliantly highlights the excuses lawyers have when deciding NOT to proceed with coaching. I’ve noticed the same patterns in my conversations with lawyers. See if you identify with any of the common barriers lawyers have around engaging with a coach.
Common Excuses (with rebuttals😉):
1. Feelings of personal inadequacy. Hiring a coach feels like you're admitting weakness or failure.
Instead, think of it this way. If you were good at business you would have a business degree. You don’t. You have a law degree so that’s what you’re best at. You hire accountants, financial advisors, and even other lawyers who know things you don’t.
Why is admitting you need advice in your business so difficult? Get out of your own way here.
2. “It’s too expensive.” Hiring a coach feels like an unnecessary extra expense.
Yes, coaching is an investment, but it doesn’t feel so heavy when you start to feel better - about yourself, your practice, your future, and your finances.
Think about it this way: if you give 1% of your investment income to your financial planner but that planner increases your investments by 5% a year, it’s a “no-brainer.”
Coaching is the same. Increase the profitability of your business and coaching pays for itself.
But beyond money, there is increased confidence, improved task and people management, better balance, and the reduction in psychological stress that comes from addressing your lingering work concerns.
3. “I can’t commit the time.” You’re already busy and don’t want to add another commitment.
Another way to think about it: time use is about priority management. If your business and wellness are important to you, you’ll find the time for coaching. Coaching can ultimately help you get back time because you’ll stop spending time on the wrong things. You’ll finally get off the hamster wheel by managing your tasks better and spending your time on the right tasks.
4. “Coaches try to intimidate.” You’ve got enough people telling you what to do.
I would hope not. A good coach should be able to spark your emotional and practical drive to be better at something. Any coach who uses intimidation is not the coach for you. Shop around to find someone who aligns with your style and goals.
5. “I can’t take direction from someone I don’t know.”
Trust and rapport are essential in a coaching relationship and will grow over time.
Like lawyering, you have clients who don’t know you well and you presumably do great work for them, yes? Similarly, a coach you’re just getting to know can still provide you with value, expertise, and new insight.
With excuses out of the way, think carefully about the value of investing in yourself by working with a business coach.
The right business coach can mean a powerful return on investment in terms of business growth, career longevity, and overall quality of life.
So here’s your encouragement to add coaching to your budget and make it happen this year.
Speaking of your budget, let’s dive into the costs of doing business as a lawyer.
2. Know Your Expenses - Smart Expenses and the Cost of Doing Business as a Lawyer
I’ve been fortunate to have some deep conversations with a number of personal injury lawyers. What I’ve noticed is that many lawyers are not paying enough attention to the expenses and cash flow nuances of running a practice.
It’s common for a lawyer’s practice to “work in the red” while waiting for settlements. This happens out of necessity because it’s so common for legal practices to work on contingency and extend credit lines for disbursements until the file is resolved. Often, this is many years later.
Further, many law practices just accept the fees for case-related work, not having the time or acumen to challenge if what they are paying (on behalf of their client) is reasonable.
When cash is flowing well, it can be easy to ignore expenses. But when cash flow slows down, it can be hard to pivot without harming your practice.
And whether cash is flowing smoothly into your practice or not, I’m sure you don’t want to leave cash on the table. After all, cash is king (and queen!) and it’s the key to investing in yourself and your business.
Here are questions to ask related to common expenses of a law practice.
1. Bricks and mortar. Is that office in that location necessary? Is that office, at that size, necessary? Does location bring in business? Does visible signage or storefront bring in business? Location can be everything, or totally irrelevant, but it is important to analyze this closely.
2. Marketing. Has this been budgeted? What marketing is working, what is not working? Are marketing dollars going to the right places and generating the right results?
3. Operations. Technology, equipment, service contracts for phones and fax machines, copiers and scanners. When was the last time these vendor contracts were reviewed? Equipment updated? Have technology programs been recently assessed to ensure they continue to meet the needs? Insurance contracts reviewed? Have you audited your expenses to see how these are trending over time?
4. Vendors. Do you regularly review your vendors list? What are they charging? Have you thought of the cost efficiencies or risks of trying a new vendor? Are you paying reasonable fees for the information you are receiving (i.e. medical records)? Volume usually comes with discounts, have you (re)negotiated this?
5. Staff. Assuming you are operating efficiently, and you need the staff you have, how “well” are they at your organization? Are the right people in the right seats doing jobs they excel at? Are they likely to stay, or looking to leave? Is anyone too valuable that losing them would impact your ability to operate your practice? Are you meeting their needs by paying market rates, providing incentives, development opportunities, and personal time?
I realize there are other costs too, but these five are the biggest buckets when operating a firm. The work you put into understanding and managing your expenses can make a big impact on the success of your business.
And if your head is reeling and you’re feeling a little overwhelmed by this work. That’s because assessing your expenses and managing your budget shouldn’t be something you tackle on your own.
Getting Outside Help to Better Understand Your Numbers
Set your private practice up for success by working with an accountant and business coach. This is how you most efficiently streamline your expenses into understandable metrics that will be easy to track.
Yes, you can attempt to do all this analysis on your own. But if you want structure, speed, and accountability — working with financial professionals and a business coach will make a big difference. You’ll get where you want to go faster.
Imagine the impact of spending a few months with a coach to bring comfort and calm to your business practices. How will you feel when this is better managed and best optimized?
I’m here to help you do this through coaching or consulting. My coaching and consulting clients tell me it’s a “big relief” to finally feel confident about their metrics and numbers. They start to find joy in their work again.
3. Understand How to Drive Profit in Your Law Practice
A healthy business brings in more money than it spends. That means you must know how much money your business needs to bring in. And more importantly, you need a plan for bringing in that revenue.
In the interest of clarity, let’s look at your law practice revenue generation in simple terms:
Your CLIENTS are formed from the leads you get, how well you convert them from lead to client, and if you retain them as a client (assuming you want to retain them, of course!)
Your REVENUE is the price you charge them and the volume of work you do for each customer.
Your PROFIT is how much it costs you to deliver the service and to pay others to work with you.
Simple, right? Well, not really.
Client, revenue and profit are the outcome of many thoughtful decisions. To get started, think about the following:
Where do your leads come from?
How are you reaching people?
What is working for bringing in leads? What is not?
What new actions should you try to reach new client segments?
What are your competitors up to?
Are there strategic partnerships that will help with lead generation?
To help clients start to answer these questions, I pull from the Way to Business Success Formula to work through all the variables that contribute to generating clients, revenue, and profit.
Specific to Lawyers, Your Leads Become Revenue Generating Client Files
As a lawyer, it’s valuable to take an extra step and think about revenue in terms of your client files. This is a concept that was shared with me by my lawyer friend Roger Foisy in a paper he presented to the Ontario Trial Lawyers Association.
As a lawyer, you need to turn your leads into a bank of business. For many firms, this becomes your book of client files that represent ongoing revenue potential. This is similar to how other businesses think about their inventory.
Instead of inventory in goods like Walmart or Canadian Tire, your inventory is the files you have. You need to consider what this “inventory” of client files is worth and how long you think you will keep them until they generate revenue.
Now, let’s take this concept and start applying it to the business of lawyering.
Do you know your file carrying costs by month? This requires you to look closely at your expenses and the number of files you have.
Do you know what your file break-even point is? This requires you to analyze your estimated settlement claim values by type of file. You also need to include your contingency fees and file carrying costs. With this, you can understand the costs to run files before you open them, to analyze if a particular file has enough value to pay your bills.
If you are concerned about a file providing enough value for your firm, you have two choices: build the file value, or shorten the time to settlement. The longer you carry files, the more they cost you in “inventory.”
If you are not thinking about your business in terms of costs, time, and inventory, how can you know what files to say “yes” to? What files to pursue? What leads to market? Yes, there are other ways to think about your practice, but if this is truly a “business” then knowing your numbers and how your files are tracked as inventory will be factors that determine your success.
When you go through the process of answering the right questions, you start having the information you need to make good “business” decisions.
Business coaching is exactly this process. It helps you to really and truly understand your business so you can make intentional, strategic, and impactful decisions that benefit you, your family, and the people that you work with and serve.
Understanding How Business Coaching Helps Lawyers
We’ve talked about investing in yourself, understanding your costs, and some basics about driving profit by reflecting on how to obtain clients and generate revenue. Now let’s talk a little about why more lawyers in private practice should hire a business coach.
As we’ve seen, running a business is a lot. And can feel lonely. And that’s on top of an already challenging career. Like learning a new sport, business success will require time and attention to do the reps to build the business skillset. And like an athlete, a good coach can make a big difference.
The benefits of having a business coach as a lawyer:
1. Accountability — having coaching on the calendar keeps you moving forward with your goals. This is essential for success.
2. Authenticity — Your business might be like other law practices, but it is still YOURS and you get to do it your way. A coach ensures your business represents you, because in a service business YOU, your values, and what you believe in and know, ARE the value proposition.
3. Perspective — When someone provides perspective and challenges your biases and assumptions about your business, you can grow and succeed more quickly.
4. Pivot—Good pivots come from exploring the options and weighing the impacts with someone who may know about business better than you do.
5. Innovation — Thinking ahead requires retrospection and introspection plus market and industry analyses. Let’s be honest, most lawyers are too busy being lawyers to do this work. Having that coaching appointment on the calendar, and some structured new ways to think help you evolve your practice and stay current.
Find a Business Coach That Works For You and Your Law Practice
There is an intense amount of pressure on lawyers to perform, and perform perfectly, for their clients and colleagues. Lawyering is all about winning. Like in sports, the pressure to “win all the time” is not sustainable.
Therefore, my style of coaching reflects a belief that “wins” need to be defined with balance. I build my client’s knowledge and skills to :
Find the right clients through appropriate lead generation.
Make the right partnerships.
Measure success in ways more than just numbers.
When I coach lawyers, I witness a transformative experience where they start to like their job again. This is because I coach with intention around who they are and how they want to show up authentically in their practice.
Want to market? Let’s build that strategic marketing plan!
Don’t want a website? Let’s talk about alternatives.
Let’s chart a course that works for you. This will make you feel better and reduce the distractions that come from trying to keep up with others.
Ready to work with a coach? I offer coaching and consulting to help professional business owners gain clarity and business skills to move forward without doubt and overwhelm. Get in touch and I’ll reach out to schedule a time to talk about working together.