The Year End Is Fast Approaching. Is It Time For Your Firm’s Law Practice Management Review?
Managing your clients and firm is more than a full time job, and things seem to get more hectic every month as your business grows and the year’s end approaches. While you’re busy running the firm, others are making decisions regarding processes, people and systems. Even what may be considered a trivial operational decision could lead to errors that cost time, money, client relationships, reputation, and even your livelihood.
I am always very surprised by firm owners’ reluctance to lift up the hood and checkout what is really going on inside their law firms. Most practice management audits always reveal some unknown process or habits which could create ethical and professional liability. Once the problem is revealed, law firm management is always grateful to know so that the problem can be dealt with and solved. Those owners who choose not to have a practice management review always wish they had done so immediately after a problem arises.
Given that many insurance policies renew in January, it’s time to think about a practice management review (or audit) – like an annual physical exam for your law firm.
The Importance Of An Annual Law Firm Business Practices Review
Even though everything “feels” good, there may be underlying symptoms that things are a bit off track. Something may have happened that, unless detected and corrected, will explode into a liability or disciplinary situation. Here are a few examples of things that seem trivial on the surface, but could end up causing some major problems:
- Commingling funds, and other accounting shortcuts.
- Change in the firm not reflected in business practices or lawyer professional liability (LPL) policy.
- Incorrect storage, calendaring and practice management tools or processes.
- Client relationships and communications not adequately managed and documented.
- No confidential employee feedback mechanism in place.
- Backup systems missing, broken or inadequate.
Good Employees Make Mistakes
As your “weakest link,” your employees may not know that a mistake has been made, or may be afraid to tell you. As your firm evolves, your processes and systems also require proper maintenance and updates, including ongoing employee training and retraining. Small deviations can compound causing big problems over time, and a periodic review can help you avoid business or professional death by a thousand cuts.
A practice management review will uncover ways that your firm can operate more efficiently. You’ll catch problems before grievances, incidents, or claims occur. You might be fortunate enough to uncover a situation that requires proactive reporting to your carrier and claim repair by outside counsel. Some insurance carriers offer a premium discount for this type of practice management audit, so ask your current carrier or use our audit Letter of Completion to apply for new or better coverage from another carrier.
The Best Time To Review Your Practice – Today
There are several ways to accomplish this review. You can do it yourself, although be sure to document your self-audit procedures ahead of time. Some state bars associations also offer two levels of consultations under what is often called their Law Practice Management Program, or you can hire a neutral outside firm to conduct a detailed review of your business systems, policies, and procedures. Here are the best times to do this:
- Several months before insurance renewal – Show a clean bill of health.
- Change in firm management or structure – Start with a clean slate.
- When there’s a problem – Show that this is an isolated situation that you’ve addressed and mitigated.
- Coincide with your annual physical – Let your doctor remind you.
Proactive law practice management is the best policy to detect and deter potential problems. An ounce of prevention truly is worth a pound of cure when it comes to your personal health and the health of your law firm. Stay Healthy and Cheers to a Prosperous 2024!