Law: Getting Down to Business
Law is a business; and when the practice of law is approached in this way, everyone benefits.
Running a law firm in a businesslike way improves the professionalism of the practice of law. The purpose is not simply to get more money for the lawyer; it also benefits the client. A profitable law practice is much more likely to avoid such ethical problems as dipping into client trust accounts, either as direct fraud or as a stopgap “loan.” Moreover, a law firm run as a business will approach client service more efficiently—returning phone calls promptly, creating and adhering to a budget, providing sufficient details on clients' invoices, etc. You can't truly be a professional service business until you understand the business of law.
All organizations, large and small, law firms and nonlaw firms, have one thing in common: a finite limit to discretionary spending.
Nondiscretionary (mandatory) spending is that spending required by your current structure and by law: debt obligations, insurance, Social Security, and federal income tax payments.
Adjustable spending is that spending that is important but can be modified (such as lease terms and staffing).
Discretionary spending is that spending that could be prevented if you had to.
What is unique to law firms is the impact that so many individuals have directly on spending. In many law firms, individual partners, even lawyers generally, have the ability to direct discretionary resource consumption, from purchasing new office furniture to charging the firm for personal meals and travel. Instilling business competency is a way to control this spending, run the firm more professionally, and make it more financially successful.
All law firms must provide value to their clients. And they must be profitable in order to open their doors the following day. The firms whose attorneys understand these two truths in the context of business competency will ensure their long-term future and success.
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