What Stage of Growth Is Your Law Firm In?
Sep 15, 2020 by Krystal Champlin
Stages of growth are important for every business, including law firms. Identifying and understanding law firm growth stages are crucial to your current and future success. It helps you better interpret the success of your current objectives, determine future objectives, and also determine which law firm growth strategy will help your practice literally take it to the next level. However, to make use of this information and plan for the future, you must be able to identify which stage of growth your law firm is in.
What Are the Stages of Growth in a Law Firm?Growth can be measured in the size of your firm. It is why we all think of law firms in the sense of solo, small or boutique, mid-size, and big law. However, in law firm growth, stages of growth are categorized by profit. There are four stages of growth for law firms.
- Stage 1: Up to $250,000 / annually. Remember that determining the stage of growth for your law firm has nothing to do with size. However, the majority of law firms do start out as Stage 1, making up to $250,000 on an annual basis. This could be a solo practice, a small or boutique practice, or a mid-size practice. One of the law firm growth strategies that must be implemented to move on to the next stage is to identify and integrate better internal systems and technology to make the practice of law more efficient.
- Stage 2: $250,001 - $500,000 / annually. Your law firm is growing. Maybe you’ve brought on an assistant (or two) or an associate (or two) to meet the needs of your clients and to help you continue to grow the firm. Yet, with more business comes more management as well as financial responsibilities. With the increased needs of your clients, there is also a bigger internal need for the best legal talent. And you must keep your employees happy. There are a lot of hats to wear in this stage as well as a lot of key metrics to watch to maintain your standing while also moving toward the next stage once you’ve identified the proper law firm growth strategies.
- Stage 3: $500,001 - $1 million / annually. In this third stage, there are, of course, client and management needs of the firm that must be managed. There are also significant financial assets that must also be managed. There are many lawyers as well as law firms that do not make it to stage 3. Because of the financial assets involved and the level of growth involved, it requires a close review of the law firm growth strategies as well as the current management strategies.
- Stage 4: $1 million + / annually. Lawyers and law firms (those that are not categorized as big law) do not often enter into stage 4. It requires the re-evaluation of both management and growth strategies for the law firm to ensure that talent, client, and financial assets are properly tracked, assessed, and managed to sustain, improve, and grow.