Managing Your Contingency Fee Law Firm: What They Didn’t Teach You In Law School

Law school may have taught you the fundamentals of governing law and case litigation. What they probably didn’t teach you is how to run a thriving contingency fee law firm from the ground up.

Because of this, firms are at a roadblock, unable to operate to their full potential due to inexperience in managing cash flow and case inventory. Too many lawyers assume that more cases equal more dollars, overwhelming teams and creating systematic dysfunction. This leaves employees burnt out with too many cases to balance, too few resources at their disposal which ultimately affects client results and law firm revenue.

Read on to learn about the key challenges contingency fee law firms face and what you can do to achieve sustainable growth. 

Little to No Financial and Accounting Knowledge 

Too often, firms have difficulty managing their cash flow or optimizing the utilization of their cash flow. Lawyers hire part-time, external accountants and financial specialists to manage their expense records—or try to tackle this on their own. 

You must invest in the right people, partners, and tools to track and manage your financial accounting. Hire a full-time business manager with experience in finance and accounting and have them manage your company cash flow analysis, financial and case inventory forecasting to ensure sustainable financial viability and growth.

You may have also started out self-financing cases to avoid debt, but in doing this, you’re likely running a tax inefficient business, accrued heavy litigation expenses and risked your firm’s growth potential. You’ve been a counsellor and creditor by providing clients interest-free loans with your own after-tax dollars. 

Law firms are typically better off securing case cost financing. This financing method allows attorneys to receive a master line of credit specifically for their case costs, at a competitive rate, and provides the flexibility to choose the cases to invest heavily into. 

Firms Overlook the Power of Solid Digital Marketing

Attorneys rely too heavily on traditional business marketing tactics, missing opportunities to maximize case acquisition and acquire high value cases. 

Invest in a modern digital marketing strategy for your law firm—one that communicates a relevant promise and unique value proposition to clients. Digital marketing strategies are also cost-effective; they are more affordable than referral-based case acquisition. Top-performing law firms are tapping into digital Google pay-per-click ads, search engine optimization, digital display advertising, paid social media ads, and more.

A strategy isn’t good without a team of marketing masterminds to execute it. Establish an experienced marketing team to push your firm’s awareness. Start with a marketing director or senior marketing manager who overlooks your entire marketing strategy and delegates the appropriate case acquisition tasks to your team of marketing managers and coordinators. In the case of rapid expansion in the marketing department, a marketing director may later transition into a chief marketing officer (CMO) role.

Firms Struggle Implementing Customer Driven Technology

Contingency fee law firms often forget that information technology (IT) solutions are at the crux of case management and excellence in customer service. Customers are more digitally savvy today than ever and they expect a level of customer service that is digitally driven and service-oriented. Law firms lack the IT know-how and skills to implement customer-oriented processes and systems.

Elite firms are embracing the latest digital technologies to adopt customer-first strategies, and drive growth and service excellence by introducing online (and paper-free) documentation management solutions and automated customer notifications. On top of helping improve the customer experience, this improves IT security and data privacy—topics that are much more prevalent to the current times.

To keep up, consider adopting modern case management systems that allow your law firm the ability to track and manage cases and keep customers in the loop on case progression. Integrating cloud technologies and innovative platforms that help employees generate revenue, forecast finances, improve intake processes, and monitor ongoing case efforts is a great place to start. This reduces the burden on local IT teams for server and infrastructure support and spending.

It’s also recommended to implement technologies that align to a pay as you go or subscription model, reducing the up-front spend on IT projects, allowing you to amortize cost over time, and minimizing the risk of failed implementations—a key tactic for growing law firms evolving their business processes over time. 

Firms Lack Quality and Quantity in Their Case Intake Processes 

Modern clients are looking for transparency, comfortability, and guidance on a hassle-free journey to justice. Customer expectations in the new digital era are vastly different than before. Gone are the days where traditional law firms dehumanize their client intake experience, forfeiting their opportunities to represent big-money clients. Happy clients don’t hesitate to refer business to their friends and family. Be quick to react to inquiries (often within minutes of an online inquiry) and take the time to re-examine and optimize your entire intake process. 

Train your intake specialists to understand that when they receive an intake, the person on the other end of the line has been injured and is often in physical, financial and mental duress. Delivering your firm’s brand promise to help injured people in a way that is empathetic and reassuring is paramount to a strong intake process. This can be achieved through standardizing intake scripts and training, optimizing workflow, decision trees, and by implementing other supportive tools to facilitate your intake workflow.

Your intake leader should conduct periodic analyses of your firm’s intake strategy to keep track of successes, failures and provide future recommendations. A constant reassessment and evolution of intake processes drives revenue and long-term sustainability. 

Master The Business of Law Firm Management 

Successful contingency fee law firms view their business functions wholistically. If you don’t begin to invest in your firm’s financing, accounting, marketing, IT, and case intake strategies, you run the risk of being left behind by contending firms. 

Esquire Bank has partnered with some of the most successful trial lawyers in the country and is dedicated to providing you with expert-led insights and financial support to promote your firm’s growth. 

For more insights on how to grow and sustain your contingency fee law firm, create a profile on our content hub, LawyerIQ. You’ll get access to a library of articles, webinars, and videos from your industry peers to help you achieve long-lasting success in the legal space.