A Complete Guide to Law Firm Structure & Effective Management

Amidst our rapidly changing legal landscape, effective law office management is an evolving challenge. To manage a big or small law firm successfully, lawyers must cultivate a growth mindset and be willing to break free of tradition—but sometimes, that’s easier said than done.

After hearing from dozens of successful solo attorneys, firm owners, and managing partners, I’ve learned a fair bit about law firm management. Building on themes that arose from those conversations, this guide covers everything you need to know about law firm management. I’ve included steps to follow, as well as best practices. This should make it easy to hone your practice management whether you’re starting your own law firm, or whether you’re a seasoned legal professional.

To make your practice management even more effective, explore Clio Manage, the leading legal practice management software. Book a free demo to get a personalized tour of how it can help you manage your firm more efficiently.

Law office management tips for any firm size

Your particular style of law office management will depend on your location, staff members, practice size, and legal services. That said, here are some basic practices to follow for law practice management. The following steps apply whether you’re a solo or managing partner at a firm of 50 lawyers.

1. Create a law firm business plan

First, if you’re managing a law firm, you need a formal law firm business plan that lays out your goals, financial profits plan, how you differ from the competition, and how you plan to market that difference. Some resources to help you plan:

1. Follow these steps to creating a business plan.
2. Use these tips to craft your law firm budget.
3. Use this guide to create your law firm marketing plan.

Your plan should also include partner and associate attorneys’ compensation structures. Options include the lockstep model, the equal distribution system, the eat-what-you-kill model, and more. This article provides an overview of each compensation model. Even if you’re a solo lawyer, put deliberate thought into how you’ll pay yourself.

Best practice: Get outside help with your business plan if you need it. Someone with financial or marketing expertise could help set your firm up for success.

Kimberly Y. Bennett, Esq., Founder of K Bennett Law LLC, provides a great example of successful planning and an alternative approach with her subscription services model.

2. Create a law office procedures manual

A law office procedures manual clearly communicates how things should be done at your law firm, keeping everything consistent and efficient. This means a more predictable workday for lawyers, paralegals, legal assistants, accountants, and office administrators.

Process manuals also simplify the onboarding process for new staff. This can help your firm grow more quickly, if that is your goal.

Enlist staff where necessary to help build your manual out: They may be the experts! For the example, your receptionist may have good ideas about your new client intake process, while your accounting department will have the best knowledge of your collections process.

You may want to include the following in your office manual:

• Client intake procedures
• Billing processes
• Filing and matter numbering conventions
• Best practices for time tracking and productivity 
• Your collections process 
• Systems for running a paperless law firm

Best practice: Review and revise your law office procedures manual on a regular basis. You may get new tools, for which processes need to be documented. Or your staff may think of better ways to get things done. Or, significant changes across the legal industry may necessitate a change to your approach. 

You can also read our guide on how to keep your law firm organized for more tips!

3. Invest in law firm marketing and branding

Law firm marketing is an essential part of law firm management. Even if you want to spend most of your time practicing law, your brand is your competitive moat. Your brand plays a big part in determining how you stand out to clients compared to competing attorneys.

You can learn about how to create an effective law firm brand from expert Katy Goshtasbi. The key is to get clear on who you are and what you offer to clients. Then, communicate that as clearly as possible.

Best practice: Know what makes your law practice different. What do you offer to clients that no one else can? Make sure this comes through in your brand. Also, measure your marketing efforts. Don’t keep pouring effort into channels that aren’t driving new clients for your firm. Learn more about how to get new clients as a lawyer. 

4. Invest in developing your team

Associates and staff members are the future of your firm. You don’t just need to hire the people with the highest bar association test scores for your firm: You need to help them grow. Invest in the success of your attorneys, paralegals, legal assistants, and office staff, and your firm will thrive in the long term.

Setting your team up for success means investing in professional development, and employee health and wellness as part of any management plan for a law firm.

Professional development might look like having regular 1:1 meetings with more senior members of the firm, providing funding for courses, or sending employees to conferences. This should be part of your law firm business plan.

As for employee health and wellness, this can be a challenge, as burnout and anxiety are rampant in the legal profession. However, if you can combat these while still offering professional development, you can attract top talent. Read our articles on lawyer anxiety, burnout, and the importance of changing the conversation on wellness for more insights:

• Lawyer anxiety article on the Clio Blog
• Lawyer burnout article on the Clio Blog
• Jeena Cho, Mindfulness Educator at The Resilient Lawyer, interviewed on the Daily Matters podcast.
• Paula Davis Laack, Founder & CEO of the Stress & Resilience Institute, interviewed on the Daily Matters podcast.

Best practice: Walk the talk. Don’t just say you care—take action and implement processes that prove you do. This is especially important during times of crisis.

5. Know how your firm is performing

Good law practice management means being able to take an objective look at where your firm is succeeding, and where it needs to improve. Revenue, billable hours, collection rate, new cases, and more, are all examples of key performance indicators (KPIs) you could be tracking.

For example, read this article for a look at how one lawyer tracks productivity at her firm.

To quote Peter Drucker, “What gets measured gets managed.” Keeping an eye on how your law practice areas are performing ensures you stay on top of issues and opportunities for improvement. Then, you can take action to help your firm succeed.

Best practice: Decide on key firm metrics and check them at regular intervals to stay accountable. You don’t need to go overboard. Start small with tracking one or two key things.

Billie Tarascio, owner of Modern Law, and George Psiharis, COO at Clio, speak about the importance of data literacy for law firms on our Matters podcast:

6. Set a high standard for client service

In today’s world, client service is more important than ever before. Companies like Uber, Netflix, and Amazon have raised client expectations in all industries including legal. This means client service needs to be a key consideration in the management of your firm.

This doesn’t mean you need to wow your clients. But you do need to be aware of their journey (i.e., the entirety of their legal experience), know exactly what they want, and deliver that in a way that makes it effortless for them. This is true whether your firm works with individuals or corporations.

You can learn more about what exceptional client service looks like in today’s world in The Client-Centered Law Firm, a bestselling book by legal industry expert and Clio CEO Jack Newton. And, get tips on how to have great, engaging meetings with clients from our interview with master facilitator, Priya Parker.

Best practice: Don’t make assumptions. Talk to your clients about what they want. Ask lots of questions, read between the lines, and get clear on the problems they’re trying to solve. Then, think outside of the box about how you can best solve them.

7. Be ready to lead your law firm through change

Change could mean rapid growth at your firm, or suddenly pivoting to a virtual practice model due to a global pandemic, or something else entirely. Either way, your ability to adapt will be your superpower. The world and the legal industry are changing constantly, so not innovating is not an option.

When it comes to law firm management and innovation or unexpected change, the difficulty can lie in getting your team on board. Change management isn’t easy, but with a bit of investment, you can help your team thrive faster in a new environment and continue to provide your services to clients.

Best practice: Have a clear idea of what you’re trying to solve or improve with any new change, and why you think your chosen solution is best. This will help explain to your team and get them on board.

Effective law firm management

What does it take to be a great leader in legal operations? How do you transform a law firm into a huge legal practice that stays true to your personal values, that’s efficient and profitable, and that is a pleasant place to work at?

That might seem like a tall order, especially with the Cravath system still going strong at many Big Law firms. But it is possible to lead a better law firm in our modern, digital world. It starts with you and the qualities you curate. Here are a few to focus on:

1. Confidence

Confidence is the key to law firm leadership. You’ll need it to build trust with legal clients that you can solve their problems, trust with your team in your leadership abilities, and trust in yourself to make good business decisions. 

2. Adaptability

Was your law firm prepared to work remotely when COVID-19 hit? It’s important to be confident, but it’s also important to watch how the world is changing, remain open to feedback, and act on it. Law firm leaders must be willing to try new ways of serving clients, and to continue iterating and improving internal processes and legal service models.

The firms quickest to rise to the challenges presented by COVID-19 are the ones flourishing now.

3. A client-centered mindset

Today’s legal client expects the same effortless customer experience they get from Uber, Amazon, or Netflix. Effective leaders use a client-centered mindset to guide how they manage their law firms and stand out to clients.

4. Business savvy

Your law firm is also a business, so your business model has to work. If partners are happy with the compensation structure, but that doesn’t lead to behaviors that drive business, you’ve got a problem. It’s also a problem if no one spends time on marketing. Savvy law firm leaders drive both excellence in the practice of law and business success,

5. The ability to rally your staff

You’ve got smart people working for you. You need to access their expertise and put it to work to help your bottom line. For example, you could encourage someone with project management experience to lead implementation of your new billing process.

6. Organization

You can’t do it all. But the ability to make plans, delegate tasks to your office manager and others, and clarify goals will empower your team to succeed. Effective law firm management requires firing yourself from jobs when it makes sense to pass them on. 

7. A data-driven mindset

Make sure there’s data to back up your business decisions, and that you’re looking at data for an accurate view of how your firm is performing. Here are some examples of KPIs to track.

Law firm structures and trends

For many law firms, law firm management structures haven’t changed much over the past 100 years. There is a managing partner and firm partners. There may also potentially be equity partners and non-equity partners. And then there are associates and staff, including legal assistants, paralegals, receptionists, and office managers. Depending on the size of the law firm, there may also be IT managers and an HR department.

This is a strict hierarchy, with equity partners at the top reaping the most rewards for the firm’s success. But it doesn’t have to be that way. 

Think of a way to structure the management of your own law firm in a way that works best for you and your goals. Maybe the managing partner hands off a lot of responsibility to the law firm managers, and compensates them appropriately, for example. 

Even if you’re a solo lawyer or if you’ve got staff, try thinking outside the box in terms of how they’re recognized and compensated.

In terms of law firm business structures, there are pros and cons to structuring your firm as a limited liability partnership (LLP), limited liability company (LLC) or something else. This article provides a good and concise overview of the different options.

Tools for law office management

In the digital age, the technology you use to manage your law firm matters. Any tool you use needs to be secure and easy to use. And, it needs to help keep clients and cases organized and streamline communication for your team.

Tools law firms need will differ. For example, an intellectual property law firm might use docketing software, while a litigation firm might use e-discovery or legal research software. However, here are a few basics to start with.

1. An email provider. Popular choices for law firms include Microsoft Outlook or Gmail.
2. A Word processor, spreadsheet programs, etc. For documents, Microsoft Office 365 appears to be the standard for law firms, aside from a few WordPerfect holdouts.
3. Law Practice Management software. Clio Manage is the most widely used and most recommended software by bar associations and law societies for keeping clients and cases organized. Need help assessing your options? Check out our reviews of the best legal software for small law firms. 
4. Legal client intake software. Clio Grow syncs seamlessly with Clio Manage, and offers public intake forms to simplify onboarding new potential clients.
5. Accounting software. QuickBooks Online or Xero are excellent options for your law firm’s accounting needs.

Read about tech your firm might want to consider in more detail in our article: What Technology Does Your Law Firm Actually Need?

Best practice: Always vet your vendors for security. You have an ethical duty to keep client information confidential, so make sure your chosen vendor can keep info secure. Read more about data security for law firms.

Should you hire a law office manager?

Depending on the size of your firm, it may be prudent to hire firm managers for your offices. This person takes care of all the administrative work involved in running a law office (such as office leases, equipment purchases, utilities, etc.), ensures key policies and procedures are followed, and may manage special projects such as the implementation of new processes. 

If you’re a solo, or your firm has only a few staff members, it may be worth splitting these responsibilities amongst lawyers, legal assistants, and others.

However, the larger your firm gets, the more complex the day-to-day processes for the firm becomes. Once you have about five lawyers plus associated staff, it might make sense to hire an office manager. If your firm is smaller, you might consider rolling other responsibilities such as marketing into the role.

Note: As managing partner of a law practice, you may not handle the day-to-day of each area directly. But a managing partner should be a leader and key decision-maker. For more information, check out our guide to law firm partnership structures. 

Law firm management books and courses

If you want to improve your law firm management skills, there are plenty of resources available. 

Some of our favorite books on law firm management include:

• The E-Myth Attorney: Why Most Legal Practices Don’t Work and What to Do About It, by Michael Gerber
• How to Start & Build a Law Practice, by Jay Foonberg
• Smart Collaboration: How Professionals and Their Firms Succeed by Breaking Down Silos, by Heidi Gardner
• The Client-Centered Law Firm: How to Succeed in an Experience-Driven World, by Jack Newton

In terms of law firm management courses, there are options like this six-day intensive from Harvard Law School. Your bar association also likely has CLE-eligible courses on law firm management available.

Other resources to help sharpen your law firm management skills might include articles, podcasts, webinars or meetups. Our list of the best law firm podcasts can help get you started, and Clio puts out plenty of webinars to help lawyers succeed at the business of law.

Conclusion

Managing a law firm doesn’t have to be hard, and it needn’t take too much time away from client matters. Cultivate confidence, stay open and adaptable, and seek expert help when you need it. Every law practice and every client base will need a different approach, but by following these basics, your legal practice will be set up for success.

Note: The information in this article applies only to Law firm owners based in the United States. This post is provided for informational purposes only. It does not constitute legal, business, or accounting advice.

We published this blog post in June 2020. Last updated: September 16, 2024.

Categorized in: Business