Small firms see ongoing challenges.

Byline: Dan Heilman

Nobody ever said running a small law firm would be easy. But a recent report from Thomson Reuters' Legal Executive Institute outlines a number of challenges that are either unique to or more pronounced for small firms.

The institute's second "State of U.S. Small Law Firms" showed that, not surprisingly, the chief burden for small firms is drumming up new business. Every segment surveyed chose business development as a "significant challenge."

Among the other frequently mentioned obstacles facing small firms are:

spending too much time on administrative tasks;

controlling costs;

keeping abreast of new technology;

a lack of internal efficiency;

keeping up with the competition;

getting paid by their clients; and

clients demanding more for less or pushing back on rates

"The challenges themselves are pretty consistent," said Mark Haddad, Thomson Reuters' general manager, Small Law Firm Segment. "There's business development pressure and trying to stay competitive.

Not enough time

Another bugaboo is inaction, according to Haddad.

"Generally, small firms are pretty slow to adopt change," he said.

That could be because many small-firm lawyers are preoccupied with keeping up with the mundane tasks that keep their firm going. Most of the lawyers surveyed said almost 40 percent of their days go toward administrative work other than the practice of law. That means a 10-hour day might net, at most, six hours of work for which time can be billed.

Take into account poor timekeeping practices, discounts and write-downs offered by the lawyer to address client concerns and clients arguing over the final invoice, small-firm lawyers face razor-thin margins much of the time.

That might explain why Haddad said there is a "general level of inaction" when it comes to addressing the challenges that consistently come with running a small practice.

"Lawyers are trying to run a business," he said. "That requires them to be nimble about finding their next dollar. I'm always amazed by how sophisticated they are with business development tools and how rudimentary some are, relying on things like billboards, placements in bulletins. Some of our clients still advertise in the Yellow Pages. When was the last time anyone looked at the Yellow Pages?"

The bright side

But not all small-firm lawyers see their practice is nothing but doom and gloom. Chad Snyder, a partner at Rubric Legal in Minneapolis, said most small-firm lawyers are well acquainted with the...

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