Do I Need a Lawyer Business Plan?

Lawyer Business Plan

Who might think about preparing a lawyer business plan? Probably a lawyer, yes. But not every lawyer. Primarily, it will be those attorneys who have their own private practice or are planning to start a new law firm. But other practicing lawyers might consider a personal business plan as well.

Here we’ll take a look at whether you, as a lawyer, should create a business plan and, if so, what it might include.

Not One-Size-Fits-All

The key difference between this article and most others is that I’m not going to tell you to assume you need a business plan and then give you a specific format to use in creating one. If that’s what you’re looking for, you can find it elsewhere.

I’m starting from the premise that you should only prepare a lawyer business plan if it will provide some benefit to you in your particular situation. Thus, the contents of your business plan should also suit your circumstances.

When You Need a Business Plan

You only time a lawyer must have a business plan for their practice is when someone else requires them to have it. I can think of two common scenarios.

First, you may need a formal business plan to raise money. Since most ethics rules prevent non-attorney ownership of law practices, this comes down to getting law partners and obtaining loans. Some potential partners might want to see that you’ve actually thought through how you (and they) will make money.

Second, you could be working in a firm (or seeking employment/partnership) with a firm that directs you to prepare a personal (or firm) business plan. Then your options are to do what you’re told or suffer the consequences. In this situation, the firm might provide the specific format they want you to use, and you might be stuck using it. But keep reading to see how you might make the assignment work best for you.

When You Might Want a Business Plan

Leaving aside those limited scenarios where someone else requires a business plan, you might choose to prepare one on your own.

The most likely reason you’re reading this is that you’re planning to start a new law firm. Perhaps you just believe that every new business needs a business plan. That’s a logical thought, but it may not always be the correct conclusion.

As with many forms of business documentation, a formally prepared business plan becomes more important, on average, as the firm’s size increases. But that’s certainly not the only factor. It is possible to have a relatively large and profitable company without ever writing down a business plan. It’s just unusual.

Often, the primary purpose of a business plan is to get organized and stay on task. Can you do that without putting pen to paper? If so, great. If not, or if you have other constituents who need to see it to believe it, then a business plan may be the answer.

What Your Lawyer Business Plan Might Include

There are no rules on what any business plan must include. That goes whether you’re a lawyer or in another line of business. But here are some of the standard components:

Executive Summary

Usually the first section of the business plan. It’s where you can briefly explain what your firm is all about. Think of it as the only section some people will ever read. And a place you can refer back to quickly to make sure you’re on the right track.

Firm Description

Include the history of your firm or, especially for new firms, its attorneys’ experience.

Include pertinent details like office locations and geographic and practice areas served.

Organizational StructureLawyer Business Plan Organizational Chart

Focus on the people in the firm. Lawyers and non-attorneys. What do they do? What’s the reporting structure?

Here’s an opportunity to clarify roles and responsibilities. That’s not to say there can’t be some overlap, blending, and sharing of tasks. But generally, you (and everyone in the firm) should know who reports to whom.

Practice Area Analysis

What areas of law does the firm practice? Do you represent companies or individuals? Criminal law or civil?

Do you try to address any legal issue that comes in the door? Or do you specialize and refer out the work you don’t do.

Consider both what your firm does well and who your closest competitors are. What areas are likely to grow and which may contract? Can you remain viable given the anticipated trends for your and other firms?

Lawyer Business Plan Practice Areas

Marketing Strategy

Whether you have a business plan or not, you probably should have a written marketing plan if you’re looking to grow. If you do have a business plan, then incorporate the marketing plan, or at least summarize primary aspects.

Your marketing plan should identify advertising and other business development channels. How much are you spending on each? Who is responsible for which components? What practice areas are targeted with which marketing activities?

Revenue Model

Putting together some of the items above, how does your firm make money? Does it rely primarily on traditional hourly billing, or have you shifted to alternative billing methods?

Does the firm depend on maintaining long-term clients or constantly bringing in new ones? Think about how much revenue a new client is likely to bring into the firm.  Are there any clients that account for significant recurring fees? Perhaps they should be identified specifically.

Financial Projections

Law Firm Business Plan Revenue Graph

 

 

 

 

 

 

 

 

Why bother with a business plan if you’re not looking ahead? Perhaps a bank or prospective partner will require you to show future money estimates. Or maybe you’re just planning for you and your existing colleagues.

You can get fancy here or stick to the basics. At a minimum, carefully evaluate projected costs and revenues, along with the timing of each.

Consider at least the next 12 months and usually at least the next five years, unless you happen to have a shorter exit strategy (sale, dissolution, or retirement).

Customize Your Lawyer Business Plan

Whether writing it for yourself or your firm of multiple attorneys, any lawyer business plan should be personalized. This focus will maximize its usefulness given that no two attorneys or firms are exactly alike.

If it suits you, get creative. Just brainstorm everything you can imagine anyone would want to know about your practice and put it down on paper (or electronically). The format, at least initially, isn’t the important part. If you must conform to a particular layout or make it appear more “professional” for an intended audience, you can do so later.

If you need more structure, then you can find sample business plans anywhere. Just start filling in the information suggested and see where it takes you. If you don’t need loans to support your practice then leave out the “debt financing” section. If your firm relies on a small number of large clients, you may not need to address an advertising budget. (Though, hopefully, you still engage in marketing and business development to at least maintain your existing work.)

Most importantly, use your lawyer business plan as a living document. Don’t just prepare it once and forget about it. Be intentional about reviewing and revising it periodically. Practice areas change. Lawyers come and go. Most firms aim to grow. Make sure your business plan grows with you.

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