Q. As if I don’t have enough to do, my insurance agent thinks I should get a “risk management audit” of my law firm. Is this really necessary?

A. It’s not necessary at all. Nor is professional growth, job satisfaction, or passion for the practice of law.

Although enduring an “audit” evokes images of stressful meetings with intimidating IRS agents, law firm audits need not be taxing. If done right, a thorough review will improve operations, reduce anxiety, and move our firms in the right direction.

Regardless of what your insurance agent calls it, a risk management audit is akin to a physical examination at your doctor’s office. But unlike routine physicals, you need not get one every year, or necessarily every few years. In the practice of law, even one ounce of prevention is worth more than a pound of cure.

In a hectic practice, the constant demands of clients, courts and opposing counsel leave little time for reflection as we solve one crisis before moving swiftly to the next. Without reviewing our own practices, our clients’ unrelenting crises soon become our own, as we lose sleep, money and quality of life in a practice prone to error, grievances, and ethical infractions.

Putting out one fire after another causes burnout. Unable to focus on the work we prefer, we lose passion for our profession as we live for the end of another long day.

If we want to improve our practices and our lives, we must make time to examine both. Coupled with a plan of action, law firm audits enable us to set measurable goals and achieve personal and professional success.

Too few lawyers take advantage of this opportunity. But those wishing to minimize the risks associated with law practice may profit in many other ways from a comprehensive review of firm operations. If conducted by counsel with law firm management experience, these audits help to identify new opportunities, enhance efficiency and improve the bottom line. Beyond profits, you will likely experience significant growth in client satisfaction and in your own job satisfaction.

As much as I like to fight for lawyers in disciplinary proceedings, I derive greater job satisfaction by helping our colleagues avoid them entirely. When lawyers ask me to “audit” their firms, they’re usually focused on avoiding ethics violations and potential malpractice liability. But if we do our job right, this collaborative process may revitalize the firm, establish a game plan for growth and guide the lawyers within it to a brighter future.

Building a winning team starts with its players. So I interview lawyers and staff to learn more about the firm, its workflow, workplace dynamics, personal and professional goals and areas of potential improvement. The most enlightening information often comes from staff who may feel more comfortable sharing candid assessments with me than with the lawyers they work for. Developing rapport with paralegals, administrative assistants and other staff is critical to this process, as they will play a key role in implementing any changes proposed.

When permitted, I also like to chat with some of the firm’s clients to get their views on customer service. In some cases, we have also composed surveys which yield important data while communicating the firm’s sincere interest in client perspectives.

Taking a holistic approach to law firm management, we review:

The Marketing Plan

It may surprise you that this is one of the first topics we address. Developing an effective marketing plan requires that we set goals for the firm as a whole. Picture the type of practice you wish to create. Who are your favorite clients? What are your favorite cases, and what tasks do you enjoy the most? How may we attract the work you love and find the freedom to refer the rest to lawyers who may reciprocate?

Despite the proliferation of shady marketing firms selling “leads” to law firms, we need not compromise professionalism to market effectively. If properly executed, communicating our value proposition to those we may help is integral to client service. Unlike lawyers who launched practices with whatever came in the door, those who follow their passions create careers they love attract clients who love them back.

To target our ideal client, firms require a multi-channel strategy which may include public speaking, publishing, social media, web development, search engine optimization, search or “pay-per-click” advertising and other effective tools. We must review existing websites and other campaigns to ensure compliance with ethics requirements and to create cost-effective funnels for new and repeat business. Regardless of the arsenal we deploy, the overall effort must demonstrate our unique talents and the value we provide.

Client Selection & Intake

Once clients contact the firm, what criteria do we use to determine whether to accept or to decline representation? How does the firm screen for conflicts of interest? When taking a case, what retainer agreements does it use?

To form productive attorney-client relationships, we cannot borrow old boilerplate language which may run afoul of modern ethics codes. We must craft each agreement to precisely define the scope of representation, to detail each party’s obligations, to provide clear compensation terms and to establish when fees are earned. With the right modifications, we will forge healthy relationships at the start of representation and preempt problems in the future.

Workload & Workflow

Afraid to say “no” to incoming clients, many lawyers bite off more than they can chew. Stretching existing resources, firms reach a point of diminishing returns which threaten the stability of staff and jeopardize the practice as a whole.

As our practices evolve, we all experience growing pains. They force us to make critical decisions on the future of our firms: Should we scale our operation to serve more clients, or limit caseloads to more manageable levels?

Picking the best option requires us to weigh the costs and benefits of each. If we wish to expand, our firm’s growth must keep pace with increased business, while providing for the additional staff, office space and technology needed to handle it.

Even if we decide against expansion, caseloads and business climates change over time. As lawyers, we must ensure that we can effectively handle the matters we accept and must exercise the discipline to decline those which exceed our resources. All firms will benefit from a close examination of workflow to eliminate redundant tasks and to optimize operations.

Human Resources

A firm’s most valuable resource lies within the attorneys and staff who work there. In addition to reviewing each person’s function within the firm, we must examine the firm’s hiring, firing and promotion practices, policies for addressing workplace issues, and measures taken to promote diversity and inclusion. What staffing is needed? Are there dynamics that impair productivity? How do we supervise staff to ensure client confidentiality and compliance with ethics rules? Based on this review, we may need to hire additional staff, to adjust job responsibilities, or even to terminate some employees. To implement these tough decisions, we may wish to consult with employment law or human resources professionals to minimize potential liability.

Information Technology

If the firm’s software is limited to word processing, email, the internet and some spreadsheets, we must explore the range of programs designed especially for lawyers and law firms. Rather than rely on manual labor and memory, these practice management tools help us track deadlines, schedule key events and tasks, and assemble documents that once took hours to create. With the emergence of artificial intelligence, this software will become even more powerful and indispensable to the practice of law in the future.

Traditionally resistant to technology, competent lawyers must embrace it in a modern law firm. Having used such software for more than 30 years, I have exponentially increased the speed of my work, eliminated redundant tasks, reduced some staffing needs and bolstered the productivity of all personnel. Combined with robust cybersecurity measures to store and to protect client information, these innovations have transformed the practice of law, enhanced client service, and greatly improved the quality of representation.

File Management

Innovations aside, lawyers do not yet work in a paperless world. As long as paper files exist, we must organize, maintain and store them for efficient use. How may we arrange our files to reduce clutter and to ensure that all information is readily accessible? Do we have an appropriate document retention policy to determine when records may be destroyed and what information or documentation should be kept indefinitely? Do our systems protect client confidentiality? How may we reduce our reliance on hard copies and improve our efficiency in a digital world?

Billing Practices

Many of us are so busy serving our clients that we fail to bill them for it. But regular billing isn’t only good for business. It is an ethical requirement. Failing to bill at frequent intervals impairs the firm’s cash flow and creates “sticker shock” when larger bills are eventually sent. This increases client objections, collections problems and bar complaints.

Even if we bill clients in a timely manner, the lack of timely payment and past due accounts raise other issues. Do we consider the client’s ability to pay before taking the case? Do we require retainers to secure fees in appropriate cases? Should we run the risk of counterclaims and grievances by suing to collect?

Contrary to public perception, most of the lawyers I encounter are far from greedy. In fact, many of us cheat ourselves out of proper compensation. Relying on handwritten timesheets, we often lose track of time amid a distracting flurry of phone calls and emails.

We may prevent this problem by using time and billing software. Helping us capture lost time, modest investments in the right technology can save us thousands of dollars in lost revenue per year.

Beyond the lack of technology, our lack of business acumen is an even greater culprit. Uncomfortable discussing fees up front, we often represent clients who lack the means to pay us. Fearing that clients may go elsewhere, some of us also set rates well below the market for similar services. There is, indeed, room for pro bono or low bono work to help clients with limited means. But the choice to donate our time must be conscious, deliberate and measured.

There is no merit in lax business practices which deplete the revenue needed to support firm operations and the resources to represent paying clients. Nor is there virtue to being the cheapest lawyer in town. By studying the market for similar services in the region, we must strive to provide competitive rates, selling the value of our services rather than their price.

Trust Account Management

A process they never taught us in law school, many lawyers lack awareness of the multitude of regulations surrounding trust accounts. Even when lawyers properly deposit unearned fees in trust, many firms fail to reconcile these accounts on a monthly basis, maintain shoddy records, commingle funds by leaving earned fees in trust, and lose track of the money maintained.

Rather than wait for Bar Counsel to catch our mistakes, we must eliminate them, gain control of these accounts and meet the standards set forth in the Rules of Professional Conduct and accompanying regulations. Taking an interdisciplinary approach to these problems, we may consult with accountants who understand these regulations, implement technology to better account for funds entrusted to us, and work to streamline what would otherwise be a daunting task.

Business Continuity

In the event of a disaster or other catastrophe, are we equipped to maintain representation? To avoid disruption to the clients we serve, we have a duty to implement systems which backup data, enable continuous communication, and ensure access to the files we need. In the event of our sudden death, do we have a succession plan to protect the clients and staff we leave behind?

The need for “business continuity” is not limited to catastrophic events. When key employees leave their law firms, the disruption to workflow and efficiency can be disasterous as well. Once they leave, it’s too late to recover the wealth of information and experience they take with them. Since such departures are inevitable, we must have these employees contribute to an office manual with clear instructions to enable others to fill the void.

Professional Liability Insurance

Many firms lack adequate professional liability insurance to cover the risks assumed in the course of practice. As crazy as it sounds, quite a few have no coverage at all. To protect the firm and its partners, we must procure adequate coverage for potential malpractice claims. As the nature and value of cases vary over time, we must periodically consult with experienced insurance agents to review policy limits, as well as other types of coverage that may apply to particular circumstances.

Health & Wellness

Healthy practices require healthy practitioners. In a profession plagued with a higher incidence of addiction and mental illness than society at large, we cannot afford to neglect our own health, the health of our partners or of other staff members. Although the principals of the firm retain outside counsel to conduct these audits, they may permit the auditor to maintain individual confidentiality for the purpose of facilitating appropriate counseling and intervention. Naturally, this is a sensitive subject which must be handled with extreme care to ensure that firm personnel get the treatment they need, to ensure that no client or other staff member suffers harm as a result, and to waive a potential conflict arising between the firm and affected individuals.

By engaging in a thoughtful evaluation of firm operations, what your insurance agent calls an “audit” need not be the cold and calculating process that this term may evoke. Under the guidance of counsel with law firm management experience, this review should enhance the efficiency and profitability of your firm, provide a path for professional growth and improve the health of your practice and of those working within it.