Legal Supplier

Meeting the challenges of small and mid-sized law firms

By Jennifer Pritchett, Associate Editor

Small and medium-sized law firms have to be especially nimble and forward thinking in dealing with the challenges of today’s legal services environment, says Mark Dormer, owner and president of Cosgrove Associates Inc.

“Little changes can have a bigger impact on smaller firms,” he tells

“It’s also important to raise your profile to be able to compete with the larger firms for clients. Marketing yourself as being different from those firms is helpful.”

The Toronto legal management consultant says overhead costs are rising and client demands evolving, and it’s important to react to those demands.

“The economy is changing and I think people are more conservative in their spending. They want more certainty in terms of the fees they’re being charged by lawyers,” he says.

“Some clients want to pay fixed fees for the work.”

Law firms not focusing on these economic variances are often happy with billing what they did in previous years, and as a result, they reach a plateau that can be difficult to break through, Dormer adds.

“As expenses rise and revenues stay flat, law firm profits are squeezed and the partners have to act on that proactively,” he says.

While it’s important to manage expenses, don’t target overhead costs as a way to increase profit, Dormer warns.

“Firms need a good infrastructure — good supplies and people — to run effectively and often it's best to discover ways to earn more fees without necessarily cutting expenses,” he says.

“That goes back to the basics of managing your client base: setting goals that are in excess of previous years’ goals, increasing the hourly rates annually to reflect the increase in experience and costs of living and, most importantly, trying to break through a profit plateau to increase income year over year,” he says.

Firms have to deal with the increased demands from clients, Dormer says.

“The delivery of legal services is a fast-paced, competitive environment and people expect quick responses from their lawyers,” he says. “Managing clients is important and lawyers often need to give them an estimate or a range of what a service is going to cost for budget purposes.

“By being aware of the economics of your practice you’re able to give them more of a reasonable fee estimate.”

It’s wise to apply a budget to the cases that clients bring to you, Dormer adds.

Bringing in new clients to grow the firm is essential, he says.

“The traditional ways of bringing in new business, by networking and organic growth, are important,” he says. “But as things move more towards an online presence and on social media, the firm needs to look at new ways to get their name out there and raise their profile.”

Dormer also notes hiring quality people is essential to any successful firm.

“Make sure your hiring processes are strong,” he says. “Sometimes you need to adapt to the marketplace to meet the requirements of new people coming in.”

For example, Dormer says, many of the younger lawyers want more flexible hours and the ability to work remotely.

“Most importantly, once you find someone, you have to make sure they stay for a long period of time,” he says.

Another challenge deals with how law firms have to make sure they are in compliance with all regulatory requirements.

“Just managing that can take time away from the practice of law,” Dormer says. “I suggest hiring consultants such as ourselves to help firms remain compliant.”

There are many distractions that can take lawyers away from the practice of law, and it can be difficult to remain focused and efficient when there are so many demands on your time, he says.

“It’s important to be able to juggle everything and to remain concentrated on the practice of law.”

As well, technological advances are happening constantly and lawyers can be slow adapters of this type of change because of their time spent on client service, Dormer says.

“It can be difficult to take time out to learn new software, but you have to integrate that into the work process,” he says. “It’s important to remain up-to-date in terms of your technology and skills.”

Dormer also suggests it’s vital for firms to incorporate long-term planning into their goals.

“If you’re doing a budget, part of that process should include some long-term planning,” he says. “By setting some goals for the firm you’re more likely to meet them. Developing a long-term plan and bringing in some accountability to make sure you move towards those goals is effective.”

Security is another growing concern for law firms and it’s critical that lawyers ensure they are keeping their data safe, Dormer notes.

“You must keep your client information secure and follow the rules for the protection of that data,” he says. “It’s critical that all lawyers in the firm are up to speed on how to compute safety in a world where there are ongoing cyberthreats.”

Keeping legal skills current and meeting all professional development requirements of the law society are essential considerations, Dormer says.

“It’s helpful to incorporate those requirements into their daily schedules so lawyers aren’t scrambling to meet them — it’s important to attain some of those required credits every month or so,” he says.

Top 10 challenges of small and medium-sized law firms:

  1. Profitability: dealing with rising overhead and stalled billings,
  2. Downward pressure on fees from clients,
  3. Business generation in an increasingly competitive industry,
  4. Finding quality people,
  5. Compliance,
  6. Time management,
  7. Change management — software advances,
  8. Lack of long-term planning,
  9. Security, and
  10. Keeping legal skills current.

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