The Dangers of Growing Your Law Firm Too Fast

As an entrepreneurial attorney, you naturally want your law firm business to grow—and my own firm is built around providing law firms with the tools and techniques needed to cause tremendous growth. But when those tools and techniques actually start producing results—and they will—are you prepared for the growth? What happens if your business grows at a pace beyond your ability to sustain it?

It is, in fact, possible to grow too quickly. Let’s discuss a few of the pitfalls that may result when law firms grow too fast, and what you can do about them.

Cash Flow Issues

It’s hard for some people to imaging having a cash flow crunch in the middle of a growth spurt because presumably you’re getting a lot of revenue from sales. But there’s also a cost to onboarding new clients, and you generally have to cover those costs up front. All it may take are a few slow-paying clients to put your own accounts in arrears. Many small businesses actually collapse in the midst of tremendous growth because their cash flow dries up.

Solutions: Create a reserve fund before initiating an aggressive marketing/growth strategy for your law firm, so you can weather any cash flow crunches. Make your invoicing/collections policy clear to your incoming clients, and have a system in place to stick to it. When appropriate, collect payment up front.

Inadequate Office Workflow

Your office protocols may be sufficient to handle your current case load, but are they enough to handle a large influx of clients? Quite often, small law firms get overwhelmed by rapid growth simply because they don’t have a streamlined office workflow to accommodate it. In a rush to hire additional staff, you may hire the wrong people who can make things worse. It’s quite easy for financials to get sloppy in that environment, as well as your sales and marketing funnels.

Solutions: Before attempting to scale your law firm, make sure you have an office workflow that is also scalable. Think as though. Clarify job descriptions, even for staff you haven’t hired yet. Take advantage of modern technology and automate any repetitive processes that can be automated.

Decline in Service Quality

When you take on more clients than you’re equipped to handle, inevitably your quality of service goes down. Same goes for your ability to follow up on sales leads. When this happens, exponential growth can be quickly followed by a loss of existing clients, failing to close others, a drop in revenue and, unfortunately, a scar on your firm’s reputation to deliver as promised.

Solutions: Do what you can to streamline processes before taking on a large inflow of clients. Hire additional staff or take on other attorneys as needed to handle the case load. If you find yourself straining to fulfill customer expectations, ease off on marketing and sales until you find a way to scale. Don’t be afraid to decline new clients or refer them to other attorneys if you honestly can’t handle the load.

Growing a law firm too fast is one of those “great problems to have,” but without taking corrective steps, it can actually do damage to your business. If you need help and advice with scaling your firm, call us at (888) 375-2573.

Richard James

As a result of his track record for achieving what most describe as “phenomenal” growth rates for his clients, Richard James, CEO of Automated Business Results, LLC, is quickly gaining a national reputation as “the Legal Systems Expert.” His secret to success is simple. Richard has devised a seven step system for designing and implementing automated marketing systems that grow your business FAST. If you’re looking to develop a practice that supports your lifestyle rather than completely undermining it, call Richard James today.

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