Small Firms and the Small-Business Challenge

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It has become conventional wisdom in this country that small businesses are the real engine of economic growth and job creation. Typical examples: the tech startup that becomes a global giant, or the small-service provider that ultimately franchises too many locations.

Yet one of this country's most successful and pervasive small-business sectors is one many people (often including those who are in it) don't even think of as a business: the solo practitioner. Of the 1.25 million lawyers in the U.S. today, half of them, according to the American Bar Foundation, are solos, while another 15 percent work in firms with two to five lawyers.

These firms provide the bulk of the legal work for the "other 99 percent" of the population. This large, underserved customer group includes individuals, families and smaller companies that can't afford big law firms and don't fit their skill set. Those customers offer a lot of work to solo firms with the legal knowledge and business skill to make a living doing wills, documenting real estate purchases, handling family law concerns and advising on taxes.

That is what successful small businesses do: find a market niche and fill it.

Still, the image of a law firm as a small business is one that too many attorneys continue to be uncomfortable with. Too often lawyers do not recognize that building a better practice that better serves clients is the same challenge faced by their favorite restaurant or dry cleaner. Just as in those service sectors, the concepts of professional practice and business tactics are not mutually exclusive.

Lawyers who can make the leap between the two concepts will better assess the value they provide to their customers and create new ways to provide more of it.

Attorneys at small firms typically come out of law school with little practical understanding of the business of law, and the entire concept of continuing legal education does little to support greater understanding. The business skills that lawyers most need to run a practice either are not covered or actively eliminated as legitimate MCLE credits. They also happen to be skills that few, if any, law school faculty offer.

But whatever makes a better lawyer benefits both the firm and its clients, whether it falls under a traditional CLE banner or not.

The issue here is one of business competency: running a law firm in a business-like way that improves the professionalism of the practice of law. The purpose is not simply to get more money for the lawyer; a well-run law practice also benefits the client.

Small-firm attorneys who understand business competency can better assess the value they provide and better reflect it in their bills. They begin to think in business terms: anticipated technology purchases, staffing plans and expense reductions that can be applied to their office leases. They develop an appreciation of those areas where costs can be controlled and where costs are inherent.

In short, they become cost-effective small businesses and value-added resources to their clients.

The firms whose lawyers understand such issues in the context of business competency will ensure their long-term future and success and reinforce their roles as true economic contributors.

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