One of my favorite business books for lawyers is Michael Gerber’s The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It. Written in 1995 as a follow-up to his first book, The E-Myth, it has sold over 1 million copies, and was recently released on audio CD. (Available at most larger bookstores.) It might be slightly dated in some circles, but still very applicable to the slowly-evolving legal profession.
Gerber’s main thesis is that many people go into business for themselves because they are good technicians, meaning they are good plumbers, accountants, or whatever, so they decide to go out on their own. This includes lawyers too. They reason that if they do good work, then clients will beat a path to their door. However, many of these businesses fail, according to Gerber, because the technician fails to wear the other two other hats needed to run a business: In addition to being a good “technician”, you must also be a manager and an entrepreneur.
I see this with lawyers all the time. We think that if we provide good legal work, then people will tell their friends, and the clients and money will roll in. The fallacy is that without wearing the entrepreneur “hat” these law practices or small firms will never generate enough clients and income to build a successful business. Sometimes the opposite happens: The business comes in so fast, but the systems and procedures are not in place to handle the flow of clients. The lack of management eventually turns off clients who take their business elsewhere.
Even when a lawyer understands the need to wear all three hats, the hard part is wearing them in the right balance. This almost always means that the lawyer must rein in the desire to do legal work and spend more time on management and being an entrepreneur. Not a welcome commitment because most lawyers still bill by the hour, but it is a commitment that needs to be made nonetheless.
Even if you have run your firm or practice for a while, it will be worth a few hours of your non-billable time to see what Mr. Gerber has to say to improve the success of your business.
