In today’s episode, I cover the topic of adding a new practice area to your law firm. Covid-19 had various impacts on law firms, both positive and negative. Many legal professions were in retraction. However, many legal firms exploded in growth as a result of the legal ramification of quarantine. So a significant number of lawyers are contemplating seizing upon those opportunities by adding different practice areas, but they simply don’t know where to start.
Tune in and find out about three criteria that law firm owners need to consider before adding a new practice area!
In this episode we discuss:
- The impact covid has had on the legal profession and society, both positive and negative.
- Considering the investment of time, education and dollars necessary when adding a new practice area.
- If and when it’s appropriate to bring in someone else to help cultivate a new practice area.
- Why you want a rising star if you hire someone for your new department.
- The importance of talking about money up front when bringing a person on.
Allison Williams: [00:00:11] Hi everybody, it’s Allison Williams here, your Law Firm Mentor. Law Firm Mentor is a business coaching service for solo and small law firm attorneys. We help you grow your revenues, crush chaos in business and make more money.
Allison Williams: [00:00:24] Hi, everybody, it’s Allison Williams here, your Law Firm Mentor, and today’s episode of the podcast is dedicated to the topic of adding a new practice area to your law firm. So I’ve been really excited to see a lot of lawyers talking about the opportunities that were created by covid. And we know a lot of lawyers did not do well during covid. A lot of the legal profession was in retraction. But a lot of the legal profession actually exploded in growth as a result of the legal ramifications of quarantine and all that it did for our society, both positive and negative. And so now a lot of lawyers are contemplating seizing upon those opportunities by virtue of adding different practice areas. And so now that the world has started to lift the mask mandates across the United States, and because we are starting to see an opening up of our economy, I wanted to give some time and some attention to the topic of adding a new practice area, because a lot of people simply don’t know even where to start before contemplating what to do with adding a new practice area. So there are three criteria that we’re going to talk about today that you need to consider before adding a new practice area to your law firm. All right. So criteria number one is that unless it is your passion and you have ample free time and ample excessive money, meaning ample reserves in your law firm, you really should not do it yourself.
Allison Williams: [00:01:51] OK, that means you should not be the one who goes out and learns how to be America’s next top state planning attorney. If you are a family law attorney or you, the immigration law firm attorney should not suddenly decide, hey, we want to get into real estate and I’ll go learn how to do that. There’s lots of reasons why you shouldn’t do that. So, first of all, we want to make sure that you’re always in a place of creating from what you have. And that doesn’t mean that you have to do the same thing over and over again. You can absolutely grow and be fluid and add different things. But if it’s not your passion and you go put yourself back into the mode of trying to learn something new and you create that something new in the economies of your existing law firm, you create a lot of challenges that are unnecessary. Right. So the first thing you always have to consider is that if you don’t have the time, if you don’t have the ample time to study the practice area, to go to the CLEs, to have the conversations with attorneys in that practice area, to actually start to expand in that area, to learn the systems, to get the retainer and letter of engagement, the letter of disengagement or declining a client.
Allison Williams: [00:03:02] If you don’t know the ethics decisions that that govern this practice area, what tends to happen is there is so much risk created that either you avoid the risk and are never aware of it. So then when something happens, you don’t know that it’s a risk. So God forbid you’re just kind of like bobbing on along and you’re like, oh, crap, I forgot to do that. And poof, you have an ethics issue or you’re aware that it’s a risk and you’re so terrified by it that the quality of what you’re able to do for a client is hamstrung by all of the risk mitigation that you’re putting into that practice area. In other words, you can’t be your best self when you are walking on pins and needles. That’s part of the reason why it tends to be better for someone who’s actually practiced a little bit to start a law firm versus someone who hangs a shingle on day one and immediately has to eat. Right. So nothing wrong with hanging a shingle on day one. But if you’re hanging a shingle and you’ve got to make rent from whatever you sell, you don’t really have the time to become expert enough to give that high level service and to get yourself paid. So it’s kind of the same thing here, right? That’s part of the reason why we say if you don’t have excess money, if you don’t have enough money sitting around, that your primary practice area is groovin’ and cookin’ and it’s doing what it’s doing.
Allison Williams: [00:04:21] And without you changing a single thing, the work comes in, the clients pay the bills, the money is there and you have money left over. Then you can go practice in a new area without being reliant upon what you earn there. Right now, this typically means that you have to have a large enough firm, at least two attorneys. But certainly more than that is typical so that you can stop practicing in the primary area and not lose any productivity in the primary area. Right. So in other words, if I’m a family law attorney and I generate seven hundred thousand dollars a year off of two attorneys, if I suddenly stop practicing family law and I’m the owner of the firm, well, that could cost me three or four hundred thousand dollars. Right. So if I’m over here in estate planning world, yeah, I might enjoy it. I might love it. I might be soaking up the rays of this new practice area, but I have decimated the income of my firm or what is much more common, you don’t stop practicing family law, but instead of producing three or four hundred thousand dollars, maybe you only produce two or three hundred thousand, and you presume that the rest is going to come from estate planning, but then you’re spending your time marketing that practice, getting to getting to know that practice at the same time.
Allison Williams: [00:05:37] Right. So you’re you’re in a in a state of push and pull, pulling yourself out of your primary area, pulling yourself toward the new area, but not quite knowing where the rubber meets the road. In other words, where you can stop doing the primary and start doing the new thing without there being an economic consequence. So usually lawyers are risk averse. We tend to be afraid of losing revenue in the primary area. So we ended up just tacking on that extra learning time to our weekends, to our evenings. Maybe we maybe when we’re having a light load in our primary area, we start learning a little bit more of something else. And the challenge there becomes that we start adding the stress of learning the new area and the economic need of the new area while we’re still doing the old area. Right. So it just doesn’t make for the best practice model of what we create or likely the best result for the client. So you should really be careful, and in strategy number one is to make sure that if it’s not your passion and you don’t have ample free time and money, you really need to bring in someone else or cultivate someone else from inside your firm to be handling that practice area. It should not be you as chief lawyer, cook, bottle washer and law firm owner.
Allison Williams: [00:06:56] All right. Strategy number two, you want to choose a rising star attorney for your department. So whatever the new practice area is going to be, there’s a couple of different types of people you don’t want to import into this practice area. You don’t want to get the mediocre struggling solo. OK, now I’m using struggling solo. Obviously, this is a podcast for solo and small Law Firm Mentor. So please don’t get mad at me. I am not denigrating solos because I once was one. OK, this is not to say all solos are struggling, but there are those struggling solos. We know who they are, right? They’re very nice people, but they couldn’t work for someone else. They wanted to work on their own. They’re very nice, but they’re kind of the core of our profession. Right? I’m talking about Eeyore from Pooh’s Corner. If you guys don’t know who Eeyore is, right. They’re that soft, lazy, soft spoken kind of donkey of the profession in the sense of the energy and tenacity that they bring to the practice. Right. If they’re alive and thriving and hustling and moving forward and advancing and they just happen to want to join a law firm, there could be any number of reasons for that. We certainly don’t look down on people who don’t enjoy being an entrepreneur. It’s not for everyone, but for the people that are in a solo position because they really can’t do anything else. You don’t want that person joining your law firm. Right.
Allison Williams: [00:08:25] The person who was bad working for someone else who kind of either was fired into being a solo or chose to be a solo because they thought they could do a better job at it. And they turn, turns out that they can’t. And now they’re looking to escape being a solo so they can go back to being a mediocre employee. That person you don’t want to add. That person will add risk to your law firm because they don’t have a passion and a tenacity around creating the systems, creating the structure, organizing it, propetizing it, you know, they’re not going to make it into something big for yourself. Now, the second thing to consider is that you don’t want to add a rock star, OK, so you might say, well, why on earth would I not want a rock star? That person that comes in with a big book of business and a lot of energy and is excited to build something, why would I not want that person in my law firm? And the answer is for the same reason why you don’t want a highly entrepreneurial associate in your law firm. Right. If a person has too much of a desire to do it on their own, you are more likely to be a stepping stone. Right. And there’s oftentimes in these relationships something that is not stated that is causing a person to choose to apply to work with you or talk to you up in the courthouse and kind of work their way into a conversation where they can work with you.
Allison Williams: [00:09:51] That rock star oftentimes has been practicing for long enough that he or she is at the top of their game. They bring cachet, they bring a reputation, they bring status, they bring money, create all wonderful things. The challenge there, though, is that person who bought all those things and has that great status on their own tends to want to keep it on their own. And if they don’t want to keep it on their own, it’s usually because they’re either not a good business person. So they’re going to bring the bad numbers associated with their practice to your firm, instead of keeping it with their own. Or they are good with business, but there’s some reason why right now is not the time for them to be solo. So it’s like, all right, I’ll come to your firm and I’ll sit and get comfortable for a minute. And then when I, I don’t know, regenerate my psychological energy or when my wife is no longer sick or when my child’s special needs have been remediated through health insurance and surgeries and what have you, or when I have saved up enough money to be able to get into an office building that I want. I’ll leave. Now, for those of you that have listened to me for any length of time, you’ve heard me say we don’t make decisions from our fear.
Allison Williams: [00:11:11] Right. So I’m not suggesting to you to be wary of any successful person and say, well, why would they ever choose me? They must be faking it until they can get something better. That’s not what we’re talking about here. What we’re really talking about here is the person who is at such a height in the profession that there isn’t anything to induce them to want to work with you that they don’t already have, in which case they’re just getting more of what you have to offer. Now, that doesn’t mean that what you have to offer isn’t so sexy to them that they’re not like, wow, I would love to have a full department, a full accounting department in order to be successful in the law. Or I would love to have associates and I don’t have an associate and I don’t have time to go hire one or I don’t know how to hire one or I’ve never hired well. Right. So it could be that belief system as well. You certainly can have things to add of value, but the rock star tends to be at the height of their profession and they also tend to have a higher ticket associated with that. And while I am all for hiring people, paying them well, giving them the compensation that they earn, but also being generous so that they not just get the economic benefit of what you give them, but they get that extra value that comes with it.
Allison Williams: [00:12:33] Right. They get that that extra sense of, wow, I’m doing really well by coming here. There is something to be said for if you bring a person in at the height of their career, they have to be immensely profitable from day one. Versus if you hire the rising star, maybe they’re eight to ten years out there at the what would otherwise be the partnership level if they were in a large or mid-sized firm, but they didn’t make it for whatever reason or they didn’t choose to be a mid-sized firm or whatever, wherever they are in their career. There is another step up that they have is the inducement to come join your firm. Right that way, when you add your business acumen and you can help them to market up a practice, they see immediate economic benefit because they’re coming to work for you and you’ll pay them well. But they also see the opportunity for more. So they have an incentive to utilize your landscape, your resources, your reputation, the things you have already created to advance them in their lives. And that advancement brings them more so that they see that it’s a win win. Right. Your goal with a rising star is to get them to the win win. You get a person who knows what they’re doing, who can build up the systems and the infrastructure and and all the things that you need for the business.
Allison Williams: [00:13:52] But you also get to have someone who is going to be with you to step it up to the next level. OK, so the third and final consideration for when you want to add a new practice area to your law firm is that when you meet with people, you find that rising star. You’ve got that person who’s in it to win it. Wants to come. Wants to build, can create all the systems, the structure. Talk to you about how to monetize it, how to get the efficiencies into your practice, all the things that you need to have a sustainable, growing law firm that runs without you. Because we don’t deviate from that simply because we’re adding a new practice area. We might take a break from it while you’re building out some of the systems and structure, but you still want to ultimately be working toward the law firm that runs without you. When we are working with that person, we find that person who we think might be that person, we want to talk about money right away. Ok. So strategy number three is to talk about money right away. Now, some of you might be averse to talking about money and might not feel comfortable raising it right away. But I highly recommend that the very first conversation that you have is not a long conversation over lunch. It’s not a detailed dive into all of your values, all of your systems, how big you want to grow.
Allison Williams: [00:15:17] It’s not all of that because the reality is if the numbers don’t work, it’s not worth your time or frankly, theirs to go deep into the weeds here. And what you don’t want to do is you don’t want to create an impression that you are seeking that. Right. I want you to think about this now. This may sound a little manipulative. It’s not designed to be that. But you want to think about how you want to structure this relationship and you want to think about the idea of bringing a person and or a practice into your law firm, into the highly systematized, highly structured, highly profitable machine that you are creating. And by the way, for those of you that have not created that machine, you can always reach out to Law Firm Mentor. That’s what we help our clients to do. So when I’m talking about how we are going to address this particular issue, it’s from the same perspective that I address all issues, which is that law firm owners should be creating highly systematized businesses that have repeated recurring, predictable revenue that allows you ample free time so that the law firm runs without you. OK, and if the numbers don’t work, you can’t evolve fast enough in order for this to be a viable relationship. Because if it’s a new practice area and you’re not intimately familiar with the numbers of the new practice area, what tends to happen now? This is not universal.
Allison Williams: [00:16:46] There are some highly, highly entrepreneurial lawyers out there that are on a wing and a prayer will bring in a person, bring in a department and make it work. Right. So I’m not saying that it can’t happen, but what tends to happen is if you don’t know the practice area and the metrics and the numbers, you’re often relying upon this new person and whatever their skill set is and whatever their knowledge base is in order to get you there. And so if talking to the person yields you numbers that don’t make sense or don’t leave you enough profit to really be able to monetize and grow the department, then what ends up happening is you bring in struggle to your business.
Allison Williams: [00:17:24] Right? So I remember one time I was having a conversation with a lawyer about bringing a practice area to my law firm. And this person had a book of business of about three hundred thousand dollars a year. And they indicated to me that they took home about two hundred and fifty. And I thought, wow, fifty thousand dollars is all that it takes to run your practice. And I live in New Jersey. I think we are the second or third most expensive state. We somewhat where there’s always like a bobble in terms of New York, California and New Jersey. Somewhere in there. We’re never number one, but we sometimes are number two, sometimes number three, depending on the economic factors that are are measured.
Allison Williams: [00:18:07] But I was thinking fifty thousand dollars to run a practice in this area seems really low. And then I thought about it and we continue to have the conversation. And what I realized is that this person practices very differently than I do. Right. So while I want to have profit and I want to pay people well, I also have created a firm that allows for a certain level of convenience because my primary practice area necessitates that it’s family law. I don’t want my family attorneys after dealing with the emotions of our clients, the stress of having ever present every every day of their lives, dealing with the pressures of how the court system treats our bar, all of the things that come with being a family lawyer. I don’t want them delivering papers to the courthouse. I don’t want them stuffing envelopes and metering their own mail. I don’t want them picking up the phone every time the phone rings. There’s a lot that goes into creating enough team and a high quality team so that the fabric of what they do is focused on the lawyering, and not other things and other practice areas, you might not need that right. There are some practice areas that are really not that stressful. In fact, I remember when I first started practicing, the law firm that I worked at had an area of municipal practice.
Allison Williams: [00:19:27] And when I got into municipal court, you go in, you hang out with the lawyers for a while, you talk to the prosecutor, you negotiate for five minutes, and then you go on the record like ten, fifteen minutes later and put it on the record and you’re done. Right. There was nothing, I think, that was ever stressful about that experience. I liked the client, the client didn’t have the highest stakes at issue. Now we’re not talking about DWIs. I wasn’t trying DWIs from the time we started. But, you know, traffic and traffic tickets, local ordinance violations, that kind of stuff. Right. That stuff wasn’t particularly cumbersome. So for me, you know, if I had a full practice in that, I could easily see stuffing my own envelopes and making my own copies or dropping things off at the courthouse because the rest of my time would be spent doing work that was yes, legally of value to people. But it wouldn’t require the same level of intensity and stress as if I had done something else. Now, this is not in any way to denigrate that practice area. We need those lawyers as much as we need family lawyers as much as we need anything else but they’re different practice area. So they have a different need for team and different expenses then associated with team. So I could imagine based on this lawyer’s practice area, that they would be able to keep their costs down.
Allison Williams: [00:20:44] And to some degree, I questioned whether they were really keeping them as far down as it seemed like or if maybe they were cutting corners in some areas where just as a way of practice I would not agree with. But when the person told me those numbers and ultimately said, well, I would want to at least keep my same salary if I came to work for you, there were some immediate issues there because based on what she was paying her team member, I would immediately raise that person’s salary and that person coming into my office would have access to our benefits package, which is substantial, and that person would have to have a certain amount of training that would go into the budget. Right. So there would be additional costs associated with their team, if nothing else. And if I paid the person what the person wanted to make and what the person was making on their own and paid their team member what was necessary to facilitate the work in the way that the person was used to, I would not be able to have enough money left over to receive any benefit from having the person in my office. Right. And just having another practice area on the letterhead was not sufficient for me. It might be sufficient for other people because some people, the impression of increase, the impression of growing. We talk about the impression of increase from the book, The Science of Getting Rich by Wallace Wattles and Chapter fourteen in particular, the impression of increase, i.e. that people want what is already growing and evolving.
Allison Williams: [00:22:15] So the more you put out that you are growing and evolving, the more you attract people and opportunity to you because of that growth. For some people, that would be the stage where they would actually receive a value. So they’d say, I’m OK, foregoing profit right now so I can step myself up into having more bodies, more opportunities, more practice areas, the impression of more. But I already had a multi-million dollar law firm by the time I entertained the conversation. And I said, well, you know, I don’t need more in order to create more, I can simply create more because I already have a lot to start with. Right. So you have to think about those things pragmatically speaking.
Allison Williams: [00:22:54] But when you’re adding a new practice area, just by way of summary, we always want to make sure that unless it’s your passion and you’ve got plenty of time and money, that you’re not the one doing the work, that you’re going to add a rising star to your practice in order to get that work done. And most importantly, that you’re going to have conversations with people about joining your firm, talking about money first so you don’t waste your time, you don’t waste their time. And ultimately, you can get to a place of saying this is a viable solution before you start getting into the weeds of what it looks like.
Allison Williams: [00:23:24] All right, everyone, I am Allison Williams, your Law Firm Mentor. You’ve been listening to another episode of The Crushing Chaos with Law Firm Mentor podcast. And if you have questions about how you can strategically grow your law firm, either with a partnership or on your own, reach out to us. We can always help you with that. We help, we help both solo and small law firm attorneys. And we have had many partnerships come through our doors and ultimately grow their businesses in partnership together. All right, everyone, I’m Allison Williams, your Law Firm Mentor. And tune in next week to the Crushing Chaos with Law Firm Mentor podcast.
Allison Williams: [00:24:11] Thank you for tuning in to the Crushing Chaos with Law Firm Mentor podcast. To learn more about today’s guests and take advantage of the resources mentioned, check out our show notes. And if you own a solo or small law firm and are looking for guidance, advice or simply support on your journey to create a law firm that runs without you, join us in the Law Firm Mentor Movement free Facebook group. There, you can access our free trainings on improving collections in law firms, meeting billable hours, and join the movement of thousands of law firm owners across the country who want to crush chaos in their law firm and make more money. I’m Allison Williams, your Law Firm Mentor. Have a great day.
Allison C. Williams, Esq., is Founder and Owner of the Williams Law Group, LLC, with offices in Short Hills and Freehold, New Jersey. She is a Fellow of the American Academy of Matrimonial Lawyers, is Certified by the Supreme Court of New Jersey as a Matrimonial Law Attorney and is the first attorney in New Jersey to become Board-Certified by the National Board of Trial Advocacy in the field of Family Law.
Ms. Williams is an accomplished businesswoman. In 2017, the Williams Law Group won the LawFirm500 award, ranking 14th of the fastest growing law firms in the nation, as Ms. Williams grew the firm 581% in three years. Ms. Williams won the Silver Stevie Award for Female Entrepreneur of the Year in 2017. In 2018, Ms. Williams was voted as NJBIZ’s Top 50 Women in Business and was designated one of the Top 25 Leading Women Entrepreneurs and Business Owners. In 2019, Ms. Williams won the Seminole 100 Award for founding one of the fastest growing companies among graduates of Florida State University.
In 2018, Ms. Williams created Law Firm Mentor, a business coaching service for lawyers. She helps solo and small law firm attorneys grow their business revenues, crush chaos in business and make more money. Through multi-day intensive business retreats, group and one-to-one coaching, and strategic planning sessions, Ms. Williams advises lawyers on all aspects of creating, sustaining and scaling a law firm business – and specifically, she teaches them the core foundational principles of marketing, sales, personnel management, communications and money management in law firms.
Contact Law Firm Mentor:
00:16:46 (38 Seconds)
There are some highly, highly entrepreneurial lawyers out there that are on a wing and a prayer will bring in a person, bring in a department and make it work. Right. So I’m not saying that it can’t happen, but what tends to happen is if you don’t know the practice area and the metrics and the numbers, you’re often relying upon this new person and whatever their skill set is and whatever their knowledge base is in order to get you there. And so if talking to the person yields you numbers that don’t make sense or don’t leave you enough profit to really be able to monetize and grow the department, then what ends up happening is you bring in struggle to your business.
00:22:54 (30 Seconds)
But when you’re adding a new practice area, just by way of summary, we always want to make sure that unless it’s your passion and you’ve got plenty of time and money, that you’re not the one doing the work, that you’re going to add a rising star to your practice in order to get that work done. And most importantly, that you’re going to have conversations with people about joining your firm, talking about money first so you don’t waste your time, you don’t waste their time. And ultimately, you can get to a place of saying this is a viable solution before you start getting into the weeds of what it looks like.