By Glenn Finch, Senior Practice Advisor
A “reactive” response to the poor economy can wreak havoc on a law practice and the attorney’s well-being. In addition to making financial decisions to accommodate the current economy, attorneys should be aware of mental and emotional reactions that are natural but counter to the entrepreneurial spirit. These reactions can lead to poor management decisions and add unnecessary stress to the professional’s life.
Factors out of One’s Control
For attorneys who are trained to control the outcome of their clients’ matters, it’s natural to feel the frustration of a declining economy. However, it’s always best to gain an understanding of the things one cannot control. For example, lawyers cannot control the emotional stress that the weak economy and media coverage place on the client. While they may clearly need your representation in matters beyond their control, the tendency is to hang on to cash for crises they think they can manage. The tightening of purse strings is a natural response, especially when many clients view your services as a luxury they cannot afford.
It’s not necessary to take a pen and paper to write down all of the things you and your clients cannot control, but making a mental note is a first step to positively responding to changes in your practice and clients’ lives. In any given situation, one should ask the question, “Can I control the factors in this situation?” If the answer is yes, then make the necessary changes for an improved outcome; if not, it’s time to come up with a new strategy.
Modifiable Economic Behaviors
Inside your practice, knee-jerk reactions to the changing economy are common. However, the entrepreneur will confront reality, analyze the facts and paint a realistic picture of the legal business in the same way he or she would weigh a client’s case. What are the facts? What are my real numbers? Am I over leveraged? What are my profitability indicators? Many lawyers find they are in much better shape than they thought when they look at key indicators in the business. Therefore, focus on the business systems you can control.
Start with a thorough analysis of your numbers. For example, this is a great time to assess your average value per file, the quality of your referral sources and your personnel margin compared to your profit margin. Implementing systems to track these indicators is an excellent economic behavior that counters gut reactions. Any downturn in the number of intakes provides an excellent opportunity to maximize your marketing plan and build rapport with referral sources that will influence the future of your practice.
Glenn Gutek, another Senior Practice Advisor at Atticus®, recently wrote an article on Strategies for the New Economy and outlined 4 more economic behaviors entrepreneurial attorneys can control:
- Rigorously eliminate debt
- Rigorously eliminate dead weight
- Diversify the breadth of your referral sources
- Diversify the breadth of your value in the marketplace
Together, these behaviors focus on those things you can control in order to solidify your practice and lean forward in addressing the felt needs of your clients.
Differentiating Controllable and Uncontrollable Factors
People tend to become sick with stress and fear when they confuse the factors they can control, with those they cannot. Knowing the difference is the key to navigating this weakening economy. You cannot control the tightened purse strings of the client, but a proactive attorney can address the client’s felt needs and earn the trust to provide services the client really needs.
Just because the word on the street is “bailout,” doesn’t mean you need one. Take the opportunity our economy is providing to examine your systems with greater scrutiny for tracking numbers, referral sources and production. If you would like assistance in establishing a system to execute this process let me encourage you to begin the new year by taking the Atticus® Diagnostic Tool. This tool involves an assessment of the systems operating within your practice currently and a one hour phone consultation with the Atticus® client service manager.
In the end, you will feel better controlling the things you can. Your practice will be better for it. And your clients will have the benefit of a professional who can navigate emotional reactions to emerging problems in light of differentiating between the controllable and uncontrollable events with which we encounter every day.