3 Legal Practice Management Mistakes & How to Avoid Them

7 min read

Don’t let your law firm fall prey to these costly errors.

Every lawyer will make a mistake at some point, regardless of their level of skill, their education, or the name of the law school on their degree. And while most firms are constantly on the lookout for errors in applying the law, not as many are actively monitoring for practice management mistakes. 

Sometimes a personal blind spot obscures the problem. Sometimes the partners and senior lawyers are so busy with all the minutiae of running the firm that a mistake slips past them. And sometimes the administrator makes a mental note to correct the mistake, but fails to follow through on it when some new emergency arises.

While there’s no shame in admitting you made a mistake, (lawyers are still human, after all), in a high-pressure field like law, every mistake has a consequence. Sometimes it’s lost money or a few hours of lost productivity. Other times, it’s disciplinary action from an industry body or even a malpractice claim.

(Don’t think it can’t happen to your firm: Both the American Bar Association and the Canadian Bar Association say that 4 out of 5 lawyers will be sued for legal malpractice at some point during their career.) 

Taking proactive steps to prevent mistakes before they happen is the best way to protect your firm from litigation, avoid a loss of time or productivity, and maintain current growth. Here are some of the ways that your firm can prevent — or at least minimize — practice management mistakes.

BizDev Blunders: Limiting Law Firm Growth Through Underdeveloped Processes

According to internal data from LexisNexis, one of the most significant challenges that law firms face in growing their business is a lack of business development processes. Quite simply, too many law firms try to grow too big, too fast. When your law firm is rapidly growing — hiring your next cohort of new employees, opening new offices in new locations, or expanding your suite of legal services — the key element that guides and controls that growth is your set of business development processes. Without those processes in place, growth is unpredictable, uncontrollable, and ultimately, unsustainable. A lack of business development planning also leaves your firm vulnerable to the competition; without business development, you won’t be able to leverage new opportunities quickly enough to stay competitive. Or, if your firm is struggling, a lack of business development means you won’t be able to differentiate yourself from the competition or spot the easy opportunities to cultivate new clients.

The solution is to invest time fleshing out your business development processes. 

Business development is not the same thing as sales. It’s not the same thing as marketing. And it’s not the same thing as business growth. Business development is a set of processes, procedures, and systems that enable your law firm to create value for clients and that foster your firm’s long-term growth and profitability.

If your law firm is growing quickly, you’ll want to invest some time into defining your business development processes. What systems can you implement that will help you quickly build out more capacity for more clients? What technologies will you use to manage your growth? What benchmarks will you use to judge when it’s time to expand to a new territory? How will you measure success? These are the kinds of questions that a business development plan can answer ahead of time.

Communication Failure: The Leading Cause of Claims Action from Clients

Contrary to popular belief, the most common cause of legal malpractice claims against law firms is not legal error.

According to the Lawyers’ Professional Indemnity Company (LAWPRO), the Law Society of Ontario’s official provider of errors & omissions insurance, the single most common cause of legal malpractice claims against law firms is a failure to communicate. 

LAWPRO’s internal data shows that between 2009 and 2019, only 14% of claims were caused by errors in how lawyers applied the law. (This figure excludes tax law and family law.)

Meanwhile, during that same time period, human error accounted for 67% of LAWPRO claims, with the leading issue in that category being communication breakdown.

LAWPRO notes that these claims most frequently result from discrepancies between what the lawyer delivered and what the client believes they were promised.

That’s why prompt, accurate, and thorough communication with clients is key to avoiding a malpractice claim. Manage your clients’ expectations. Make sure they understand what you will and will not do for them.

More importantly, keep thorough, well-organized documentation regarding your client interactions. Use document management software like Worldox in conjunction with legal records management software like Appara to keep all of your client records in one central digital repository where your entire team can access your records. When you combine a document management system with a cloud-based records management system, you can ensure everyone at your firm always has access to the same information, reducing the likelihood of miscommunication with clients. Your team can also use notation features to keep accurate and ongoing notes about who said what to the client and when, making it easier to manage and meet client expectations — or defend your firm against malpractice claims.

Perfection Culture: The Blame Game Compounds Mistakes

So someone at your firm made a mistake. Perhaps a big one. You’re looking at lost time, lost money, probably a lawsuit, and maybe even a regulatory complaint. What’s your next move?

Do you publicly excoriate the perpetrator and hope that by making an example of them, you’ll motivate the rest of your staff to be more cautious?

Or do you use the mistake as a teachable moment and show your team how to correct the mistake (or avoid it in the future)?

Elizabeth Rimmer is the CEO of LawCare, a UK-based charity that provides mental health support services for lawyers. Rimmer says that a heavy-handed blame-driven approach to mistakes only leads to more mistakes. When junior lawyers fear reprisal for mistakes, Rimmer says, it can prompt them to try to cover up said mistakes — which generally results in more severe consequences and harsher disciplinary action than if the lawyer had just admitted to the mistake.

Rather than eliminating mistakes, playing the blame game only compounds them. In that respect, taking a heavy-handed disciplinary approach to a mistake is, itself, an even more egregious mistake. Rimmer contends that law firms need to adopt a culture of learning and growth — one where mistakes are addressed in a positive manner, without reprisal. Teach your team to view mistakes as learning opportunities, and you’ll equip them to recover quickly when mistakes happen.

Legal practice management mistakes can cost your firm time, money, and possibly even your reputation. In some cases, large enough mistakes may even warrant regulatory action. But by being proactive, focusing on mistakes as a form of learning, and managing your records and clients well, you can sidestep around pitfalls and maintain your firm’s reputation for excellence.

Running a law firm can be messy and complicated. We’re here to help.

Contact Appara today to discover how our software helps you save time, reduce errors, and communicate more effectively — with both your team and your clients.