A law firm is typically a group of lawyers who happen to be running a business, not a group of businesspeople who happen to be running a law firm. In other words, law comes first and business comes second. Things like technology, marketing, sales, and finance are afterthoughts at many firms (they never teach you these topics in law school). But they are critical parts of running a business, which is all a law firm is at the end of the day. You simply cannot expect to succeed in today’s highly competitive legal industry without a proper business plan. So we put together this law firm business plan template to help guide you toward success.
5 Parts of a Law Firm Business Plan
I. Executive Summary
The Executive Summary is the first page of a business plan, and typically it’s used by investors who are evaluating a business for a potential investment. In the case of your law firm, it can just be a high level overview of the firm’s business strategy and goals.
Keep in mind that you should actually not work on the Executive Summary at all until you’ve finished the rest of your business plan. It’s usually the last thing you write.
Once you have a solid plan in place, then you go back and encapsulate your overall strategy and goals into a single page, which will become the Executive Summary.
Here are the key pieces of information to incorporate:
- Firm Overview
- A brief overview of your law firm (1-2 sentences)
- A short description of your services and the problems you solve for your clients
- Your goals for the firm – where would you like to be in 1 year? 3 years? 5 years?
- List out the firm’s partners and other leadership roles
- Projected revenues, expenses, and profitability analysis
II. Firm Overview
The Firm Overview section is a deeper dive into your firm’s purpose, objectives, and goals for the future. It’s where you start to define the why for your business.
Think about what your primary motivations were for starting your firm. Try to come up with something specific, whether it’s helping people preserve their wealth, defending underprivileged people against wrongdoers, helping business owners reduce risks and achieve their goals, etc.
Some things will change as your practice grows and evolves with time, but your firm’s purpose should largely stay the same and it should be your core, guiding principle.
Here’s what you should put into your firm overview section:
- Firm Name
- The legal name of your firm
- Legal Structure
- Will it be an LLC, PLLC, Professional Corporation, etc.?
- What practice areas will you cover and what specific types of services will you provide to your clients?
- Who will be the partners and directors of the firm?
- Mission Statement
- The mission statement is a succinct explanation of why your firm exists, how you serve your clients, and what you strive to accomplish. Spend some time really thinking about this because it will guide your staff and shape your decision making process down the road
- What is truly important to you about what you do?
- What are the unifying principles that you and your organization must always strive to adhere to?
- What does your firm aspire to achieve in the future? Growth? Profitability? Expansion into other locations? Being acquired by a larger firm? Set specific goals
- How do you see your firm evolving over time?
III. Market Analysis
A thorough market analysis is one of the most important parts of your business plan. It will help you identify your strengths and weaknesses, and find ways to differentiate yourself from the competition.
Above all, it will inform your marketing strategy, and whether you’re a law firm or an e-commerce store, marketing tends to be one of the biggest challenges you’ll face when running your business.
Here are the key details that should go into the Market Analysis section of your law firm business plan:
- Target Clients
- Describe your ideal clients in as much detail as possible – when you have a clear picture of who your client is in mind, your marketing becomes much easier
- Include things like where they live, how old they are, approximate income levels, what social groups they belong to, etc.
- Take a close look at your competition – identify a list of other firms that are targeting and competing for your target clients
- Think about how you want to position your firm in the market – what will be your unique selling point or competitive edge?
- Pay close attention to how other firms market themselves – this will help you come up with some marketing ideas of your own, and find ways to stand out from the crowd
- Marketing Strategy
- Through which channels will you promote your firm? PPC ads? SEO? Pay per lead services? Offline advertising? Referrals/word of mouth?
- Check out our law firm marketing plan template for more guidance on this step
If the Firm Overview section is the why, the Operations section is the how. It’s where you lay out your gameplan for running your firm on a daily basis.
It describes the various policies and procedures you will implement for common processes like intake and billing. It also defines the roles of any staff members or outsourced support help you will need.
If you intend to grow your practice, having a systematic approach to operations is one of the most important things you can do. So plan this section out carefully, and also consider how your operations will evolve with time as your practice grows.
Here’s what to focus on:
- Intake Process
- Billing and Case Management
- How will you manage your cases, documents, and billing?
- What software and technology will you use for intake, case management, file storage, billing, accounting, email/calendar, VOIP/phone, etc.?
- Check out our guide on the best law firm technology for some ideas
- Staff Roles
- Define roles for your operations – who will be responsible for the various functions at your firm?
- Are you just going to be a sole practitioner? Will you have partners, paralegals, admin assistants, receptionists, etc.? Will you hire outsourced help or virtual receptionists?
Last but certainly not least comes the Financials section. This is probably the area where many lawyers struggle the most, but it’s critical to have a clear plan when it comes to your revenue and expenses. Otherwise, your firm won’t be in business for long.
Think about all the costs required to start up and maintain your firm’s operations. Also, think about your pricing and the average revenue you expect to earn for each case or client.
The goal is to determine a baseline level for the number of clients you’ll need to take on every month in order to maintain profitability.
- Startup Costs
- If you haven’t already started your firm, think about what costs you will incur to get your firm off the ground
- Common startup costs will include office space, computers/printers/scanners, software, website hosting and development, branding/business cards, office supplies, etc.
- Monthly Overhead
- Once your firm is up and running, what ongoing costs will you face on a recurring basis?
- Common monthly expenses will include your lease, software programs, website hosting/maintenance, advertising/promotion, printing costs, etc.
- Projected Revenue
- How many clients and cases do you reasonably expect to take on per month?
- What is the average amount of revenue each client will pay your firm for the services you offer?
- Multiply these two numbers together to get a rough projection for your monthly revenue
- If your monthly expenses are higher than your revenue, you will be losing money and your firm won’t stay in business for long – a basic profitability analysis will help ensure you can sustain your firm
- Based on your projections, determine if your firm will be sustainable and if not, think about either lowering your expenses or finding ways of increasing your revenue
- KPI stands for Key Performance Indicator – these are the metrics you will monitor every single month to ensure you are reaching your goals
- Common law firm KPIs include average cost to acquire a client, number of leads or potential clients captured, conversion rate from a lead to a client, and average revenue per client