Lawyers report experiencing burnout in their jobs more than half the time. And plenty of law firms struggle to find their footing or close their doors entirely.
Yale Law professor John Morley notes that unlike other businesses owned by investors, the partner-ownership model of law firms makes owners "unusually sensitive to decline." That decline turns into a negative loop: as profit margins drop and frustrations grow, law firm partners mentally check out.
So, how do you create a law firm that grows and protects your work-life balance?
You need the proper law firm business plan for that. The good news is that there are plenty of models with examples of thriving lawyers for each. Deciding what works best for you depends on your personality and your vision.
The Dynamics and Challenges of Traditional Partnership Models
The most straightforward legal industry business model is also the most popular of the legal profession: partnership. In these cases, a few partners will start the firm and may also practice law. These partners hire associates, and then the partners take home profit from the work billed. With experience and good results, associates may be offered partner roles with the firm and potentially an equity stake in the firm.
Partnership models are top-rated and very popular in small and medium-sized firms because the incentive of becoming a partner helps attract and motivate associates to make a name for themselves. Those associates can either go out and get cases themselves or manage work handed to them by senior partners.
In most cases, partners "buy in" to the firm with a financial stake in exchange for their partner status, equity holding, and authority to make decisions.
Although this model is one of the most prominent in America's law firms today, it's not always the right choice. Promoting lawyers from within doesn't always correspond with actual results and may not be the best for the firm. While associates could be incentivized to earn their keep so they hit the partner track; this model leaves out the long-term motivation for other staff. That could lead to burnout and turnover. Finally, too much attention to "making partners partner" can create an unnecessarily competitive workplace.
Embracing Autonomy and Versatility in Solo Legal Practices
More than 45,000 attorneys hang a shingle by starting their practice and intentionally keeping their firm small. A solo practice gives you maximum decision-making authority. However, it also means that most new attorneys in this practice model wear many hats, such as accounting, managing client needs, finding new clients, doing legal work, developing referral pipelines, deciding fee structures, and more.
It can be hard to sustain a firm like this or grow it without relying on administrative support and outside experts like a marketing agency. Nevertheless, a solo law firm's flexibility can appeal to people who want to do things their own way and maintain total control over the cases they do and don't work on within the practice.
Full-Service vs. Niched Law Firms
Full-service firms have multiple practice areas, often with one or more attorneys focused on specific legal services. Those practice areas are sometimes related, like real estate law and business law. But other times, full-service law firms may cover a much broader range, such as estate planning, criminal defense, and family law, under one roof.
Niched law firms, however, build their brand based on one or a few closely connected practice areas. For example, personal injury companies firms may also niche in workers' comp, disability, or medical malpractice. Specialization can make it easier to stand out in the legal market by highlighting a level of experience and expertise potential clients may not see in a full-service firm.
Someone who primarily practices class actions is likelier to earn a big case than a full-service firm that only takes one of these cases every few years.
It can be challenging to market a full-service firm since there are likely multiple possible client and messages.
Corporate Structure in Law Firms
Some lawyers borrow from traditional corporate structures when establishing their new business model. In most cases, one managing partner is at the top of the hierarchy, and other senior partners may also work with this person to help spearhead business decisions. Small law firms often don't need the firm management of both senior partners and a managing associate partner, usually selecting one or the other.
Firms with this model may provide promotion opportunities to non-equity and equity partners. These individual lawyers will still be responsible for cases and business development but must also report to the higher-up partners.
Associates, paralegals, receptionists, and office managers also staff these firms.
Corporate structure will vary from one law firm to another but typically appears more formal and with less of a personal touch felt by clients.
The High Stakes of Adopting a Contingency Fee Model
Most personal injury law firms operate on a contingency fee model, which means they only get paid when a case is successfully settled or resolved in court. Instead of quoting an hourly rate or flat fee arrangement, contingency fee lawyers get paid a percentage of the final award, which is agreed to upfront.
This model only works in litigation-style cases and can be tricky to sell in contract disputes or other business law cases.
The contingency fee model is high-risk, high-reward. But it requires a solid ability to determine what makes a strong case. Although you will get reimbursed for expenses like copies or postage, if you're unable to resolve a case, you won't get paid. Plenty of personal injury contingency fee cases take a lot of time and effort. It can work well if you're comfortable handling cases that may not pay off for years.
Emphasizing Alternative Dispute Resolution with Collaborative Law Practices
Collaborative law is distinct from a litigation-focused practice since lawyers in these firms will explore alternative dispute resolution methods. The attorneys may charge flat fees or use hourly arrangements in these cases.
Mediation and negotiation outside the courtroom as a focus is one way to niche a firm and does appeal to a particular set of clients concerned about the negative aspects of traditional litigation.
Usually, collaborative lawyers charge a flat fee after assessing the case upfront. In a divorce, for example, if both parties are willing to work together to minimize the expense, hassle, and time to end their marriage, it may be easier to pinpoint your expected time commitment.
Adapting Law Practices to Remote and Hybrid Working Models
Some law firms lend themselves to remote operations more easily than others, such as those where in-client meetings are rare and office space is optional. These firms must pay special attention to advanced security, robust communication tools, and delivering a personal experience even if they're not face-to-face with clients.
Most large or corporate law firms haven't stayed fully remote post-pandemic. Still, solo, small, and even medium firms in certain practice areas have plenty of opportunities to adopt a hybrid model or stay completely virtual.
Exploring the Emerging Trend of Subscription-Based Legal Services
Most lawyers are familiar with the three main models for getting paid -: hourly, flat fee, and contingency. However, an increasing number of attorneys may choose to leverage a subscription model that requires monthly or annual payments for set services or support. Over 63% of law firms explore alternative fee arrangements.
For example, a business lawyer may offer a monthly subscription for up to 5 hours of document and contract review or communications. For a startup, that is a great offering that gives company founders access to legal expertise without paying a massive retainer.
Boosting Efficiency Through Outsourcing Strategies
According to the Clio Legal Trends Report, only 2.5 hours of a lawyer's day is devoted to actual client work. To maximize time use and boost billable hours, some lawyers outsource specific tasks to external firms or professionals, such as marketing, intake, or even reception. This can help law firms remain flexible and client-focused, especially if the firm can hire someone other than in-house.
Continuous Improvement and Adaptation
You may still need to evolve as you grow, no matter which model you choose. You might shift your pricing or your practice area focus. Or you may seek out ways to optimize and improve client service using software, automation, or other legal technology.
You can already find plenty of examples of lawyers tapping into emerging trends, such as integrating artificial intelligence, offering cross-disciplinary services, and building global networks.