When your firm reaches a certain level of stability, growth is the next natural step in its progression. The prospect of growth is undoubtedly exciting because it indicates you are experiencing a solid level of success. However, it can also be an intimidating process if you aren’t prepared to handle all the moving parts that go into growing a firm. But with the proper level of planning, you can help your firm realize its full potential.
THE COST OF GROWTH
The first thing that law firm managers need to keep in mind when managing growth is the cost of added salaries. These are the obvious, hard costs of expansion. When taking on more cases, you need more people to handle those cases, and you have to pay them. Your cash flow and caseload will determine how much you can grow. If you don’t have the level of work and, therefore, income to justify having a significantly larger staff, it doesn’t make sense to expand.
There are also other hidden costs that are much harder to quantify upfront. These costs — such as HR service, payroll service and supervision costs — are essential parts of running the business, but they can easily be forgotten or neglected as they aren’t the direct payment of staff. As you continue to add more employees, these products will be necessary.
“Perhaps the single biggest mistake that any law firm manager could make is to be afraid of spending money. You need to invest in your growth.”
Even further, there are physical costs that come along with growth. As the firm adds more staff, you’ll need to add office space. (Unless you are operating hybrid or fully remote. But that’s for another article.) It would be unreasonable to expect a team of eight lawyers to work in the same amount of space as a team of four. That also means you’ll have to provide more and better supplies for your office.
