Large law firms have deep pockets and big teams; here’s how your small firm can protect itself against risk when operating on tight financial margins.

By Richard Hugo-Hamman, Practice Advisor

Threats facing family law firms

Without the resources of large firms, owners of small family law firms must be versatile and resourceful. Apart from meeting client needs, they need to be financial controllers, HR managers, and IT specialists all rolled into one.

Even though a small firm’s biggest threats are likely to be factors within their control, here are three possible big threats facing your small law firm, and the ways you can meet them head-on.

Not Getting Paid

There are a number of practical things you can do to minimize the time and anxiety expended on accounts receivable. Here is a checklist:

  • Provide your clients with flexible and easy payment options. The more options you provide, the quicker you will collect.
  • Get a trust fund deposit before you start work. You should also set a trust fund retainer limit, and regularly and routinely get it topped up.
  • Set fee and cost estimates and know when you are approaching the limits.
  • Keep a close eye on debtors and unbilled WIP and disbursements.
  • Produce regular, easy-to-understand bills for smaller amounts. As you know, a big bill at the end of a matter will create an unhappy client – and likely a discount.
  • Apply your own payment terms with discipline – stop work if you are not properly instructed!

Increased Competition

You can compete more effectively and hold up your value in the market by using one or more of these strategies:

  • Lower your cost base by doing more work with fewer people; this gives you the flexibility to lower your rates but retain your profit margin.
  • Minimize non-productive administrative time by automating as much data processing and bookkeeping as possible.
  • Respond to your client’s queries when he/she calls because you have all information about each matter in one place.
  • Work more efficiently. Clients notice promptness, particularly when expecting a document or email.
  • Provide a broader range of services and cross-sell effectively – stop referring work away.
  • Attract new clients with a great, optimized website (most small firms don’t have one).

Communication Breakdowns

430_4393538When you are running a small law firm, you tend to put urgent client interests first. So the busier you are, the easier it is to overlook routine communication, conducting regular file reviews, and keeping your clients informed. This can get you into trouble. Follow these steps to avoid these communication breakdowns:

  • Use an Electronic Matter file and keep all information, incoming and outgoing correspondence including emails and other documents, in one secure place.
  • Make fast, contemporaneous notes in the timesheet so that you have an irrefutable audit trail of all client and case conversations.
  • Have standard templates and emails set up so that you spend minimal time on routine reports to clients.
  • Set critical dates so that you don’t miss anything that you will need to explain to a client.
  • Create workflows to prompt you to create important documents at the right time.
  • Have good client engagement letter in all the areas of law you practice.


Richard Hugo-Hamman is the Executive Chairman of LEAP Legal Software. He has thought about the challenges facing small law firms for more than 25 years and has visited thousands of law firms on three continents. www.leap.us

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