The 5 Things Every Lawyer Should Have in their Law Firm

I was asked the other day if I have a formal business plan. Something written down with fancy charts and graphics. With terms like ROI and market projections. While all those things are important in their own place, they aren’t in my formal business plan because I don’t have one. Instead of spending tons of time writing something formal, I focused more on what was essential to call myself a business.

Josh Kaufman does a fantastic job distilling the essential elements of a business into the “Five Parts of Every Business” in his book The Personal MBA. Below I’ve taken his five elements and filtered them through the lens of a law practice.

1. Value Creation – Identifying what prospective clients in your practice areas need or want in a lawyer and developing ways to provide it.
2. Marketing – Attracting prospective clients who need legal services and building demand for the value you provide as a lawyer.
3. Sales – Engaging prospective clients into actual, paying ones.
4. Value Delivery – Providing clients the help and value you explained you would deliver and ensuring that, when you do, they are satisfied with it.
5. Finance – Earning enough revenue to keep the lights on and pay yourself.

In addition to knowing the five essentials, it’s also critical to understand a business must have all of them. That’s why they are essential. You can’t have three out of five or four out of five; you must have all five, because…

“Take away any one of these five parts, and it’s not a business.”

Josh Kaufman

The two things I love most about Josh’s list is the heavy focus on value and the fact that money is last.

We as lawyers have gotten so focused on the billable hour, we’ve forgotten what we’re really selling: the value we bring to the table. What value do we provide clients? Why should they buy from us rather than the lawyer down the street or no lawyer at all? What we sell is our value, not our time. When a majority of the essential elements of a business are about value, we need to pay attention. While two of the five speak directly to value and how it’s created and delivered, I’d argue that a third – marketing – is also about value and how it’s communicated to prospective clients. If we can’t articulate what our value is as a lawyer or as a practice, our business is in trouble.

What the five elements also remind us of is that the money (the finances) is last. There are no finances if we aren’t creating value, communicating it clearly, and delivering it in a satisfactory way. (On the flip side, if there is value provided but it’s not being valued by its price, there’s not going to be enough finance either. We as lawyers, however, don’t seem to have a problem with valuing our time.) As a whole, we as lawyers are so focused on the finances (See billable hour requirements), we wonder why only a small fraction of our time is ever realized. We complain about clients not paying us but we don’t stop to realize that issue a symptom of a bigger problem. If the client understood and received the value in a satisfactory way, many of the collections and billing issues would disappear. As Josh said, “take away any one of these five parts, and it’s not a business.” We must focus on value. Because if we don’t create, communicate, and deliver it, law practices as they exist today will become obsolete.

Although they may sound good, lawyers don’t need a fancy, formal business plan. We need to focus on delivering value. If writing a formal business plan helps you identify your value and how to deliver it, great! I can’t wait to read it. But if you don’t need to complete that exercise to identify the value you and your practice provide to clients, even better. You can spend the extra time delivering exceptional value to your clients.

What value do you provide clients? Be specific. How can you better deliver it? How can you focus more on value and less on time?