The United States deficit is approximately $8,251,010,735,507 (that’s over 8 trillion dollars, in case you’re counting.) The estimated population of the U.S. is 298,585,990 so each citizen's share of this debt is about $27,633.62.

Being the glass-half-full kind of person that I am though, I choose to focus on the positive aspects of this horrific situation. Specifically, that as the owner of a small law firm, you are in one of the most profitable businesses around – if you manage it right.

Seriously, the owners of just about any other kind of business would kill to have the kinds of high-margins, low capital requirements, low fixed overhead and a mechanism to eliminate accounts receivables that you have in a small law firm! But too many lawyers squander these inherent economic advantages because they don’t understand the fundamental business of their law firms.

So, to help you maximize the value you create for yourself and your family this tax year, I’m going to tell you the answer to a question that more than 6,000 other lawyers have gotten wrong! The question is this:

What’s The Business of a Law Firm?

I have addressed this question to over 6,000 lawyers during the past seven years. Do you know how many have answered correctly? As of April 9, 2006 I have received exactly fourteen correct answers.

Some of the wrong answers I commonly receive include: “Serving my clients”; and “Protecting people’s rights” and “Making my clients happy.” Every once in awhile, someone will raise his or her hand in one of my seminars after hearing a few of the incorrect answers and say something like, “Making Money!” The only entity in The United States that “makes money” is the U.S. Mint. Every other business generates a profit as a natural result of delivering value and managing its operations properly. Even “non-profit” companies generate a profit this way. They simply convert the “profit” into additional services which they deliver to their constituents.

The Business Of A Law Firm Is NOT The Same Thing As The Job Of A Lawyer

So. . . what is the business of a law firm?

The correct answer is: “Selling Legal Services.”

That’s right, your law firm, my law firm & every other law firm is a business that sells legal services. And if your law firm is not selling its services efficiently, then it’s only a matter of time until it is going to cease to be of much service to anyone.

Some lawyers are threatened by the notion that their law firm is a business. They think it’s somehow “unprofessional,” to acknowledge the reality of today’s legal industry; that recognizing or addressing the facts will cast some sort of negative shadow on the noble profession of law.

The Reality Of The Legal Industry Today

California, New York, Texas & Florida are the 4 largest State Bars in the Country with a combined total of more than 280,000 lawyers. Disciplinary statistics concerning Florida’s 70,000 lawyers reveal that over the past five years, nearly half of disciplinary cases opened by Bar prosecutors had as their root, a problem with the management of the business of the law firm, not the lawyers’ substantive understanding of the law or a failure of an attorney to recognize or care about the ideals we lawyers hold sacred.

The reality of today’s legal industry is that as members of a learned profession we have a duty to uphold the highest ethical standards if we are to consider ourselves to be true professionals. The reality of today’s legal industry is also that as individuals who must earn a living through the sale of our services to clients, we have a duty to our families, our clients and ourselves to implement the most efficient and professional business standards in the delivery of our valuable services.

So, what’s the up-shot of this point?

Well, to begin with, ask yourself if you’d allow one of your clients to invest in a business that operates like yours does. Is there a business plan including a marketing plan and budget? Does the business depend on the memory & goodwill of employees, or are key business procedures documented? Is there any formal training or resources available for the firm’s Manager and/or Rainmaker, or are they just “winging it”?

WEEKLY CALL TO ACTION

Ask your bookkeeper to prepare a list of all client bills past 90 days and call three of them to ask if you did anything to upset them, or if they need to discuss payment terms to bring their account current. Then, even if they can only afford $100, agree that if they bring it in today and agree to a payment plan, their account will remain current as long as they stick to the plan.

And with services like Accept by Phone, you could even offer them the option of paying past due bills with their credit card. You'll be surprised by their receptiveness to this method.

QUOTE OF THE WEEK

“Better to light a single candle than curse the darkness.” – Anon.

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RJon Robins - acclaimed author, lawyer and law practice management consultant - has a challenge for you:

If your law office looks like a GHOST TOWN, and if you're absolutely going insane trying to figure out how to bill enough hours to stay above water, then go to HowToMakeItRain.com right now to discover a whole new world of doing business as a solo lawyer.

It's time to start working smarter - not harder. It's time to make it rain. Make this year your year...

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