The Growth Staffing Conundrum

The number one business issue for law firm owners is what I call the Growth Staffing Conundrum (I'll likely refine the name as this idea evolves, but the reality of it is very real).

Once you make it past the "zero stage", meaning you have a solid base of clients and your days are filled with client work, you've usually taken one of two pathways: you either started your own practice from nothing, or you bought into a firm and took over an existing book of business.

While I'll do a separate piece later on the specific phases of growth for small firms, right now I want to look at the wall you are currently hitting (or are about to hit). This stage usually takes between one and three years to reach, and it's where you realize that being "super busy" is starting to create serious business problems.

I've broken this entire cycle down in a new video for those who would rather watch or listen than read the full breakdown below. You can catch that here: The Growth Staffing Conundrum

Business Problems

As you build a practice from nothing, there are distinct phases to this growth. Assuming you've broken through the "zero" phase, you now have a base of clients and a full schedule. However, your requirements have changed: you need to file GST returns on a different basis, you might have a legal executive, an admin, or a VA. You're paying rent and managing a suite of subscriptions, PMS (Practice Management Software), document management, DocuSign, Office 365, Wix, etc.

This is where the reality of being a business owner truly sets in, namely:

• Viewing and deciding to lease your own office (and the back-and-forth with the bank to arrange guarantees).
• Realizing your personal income is only as good as your business cash flow, i.e. no consistent monthly "salary."
• Managing regular income tax and GST payments while balancing cash flow.
• Spending hours solving IT problems you have no clue about.
• Trust account reconciliations that never balance on the first go.
• AML/CFT requirements that slow everything down.
• The shock of PI and business insurance, on top of electricity at business rates and general overhead.
• Ultimately, having no one to blame but yourself because you are responsible for EVERYTHING.

Growth Staffing Conundrum

Now, you aren't just busy with client work; you're encountering an ever-increasing set of business issues. It becomes a vicious cycle: the busier you are with client work, the more pressure it puts on your infrastructure (billing, customer service, quality control). The more pressure on the business, the more problems arise, demanding more of your time. Because you're busy with clients, you neglect the business side; because you've neglected the business side, you start dropping the ball for your clients. They feed into each other.

At some point, you'll want to do something about this. Most people decide to hire their first lawyer, but that often creates a new set of problems:

• Pressure: You now need to keep this person busy, creating more pressure to find clients.
• Lack of Systems: Without proper induction and training, they are essentially learning the role as they go.
• Technical Gaps: Because you are small and have a limited budget, you've likely hired someone junior. They don't just need to learn how your firm works; they are still learning the technical application of the law.
• Productivity: This makes them less productive than you hoped. It's not like buying a machine that just produces; instead, more of your time is spent reviewing, reworking, and putting out fires they started.
• Financial Stress: On top of it all, they represent a regular cash outflow. The financial pressure of paying salaries is immense.

Instead of solving your business problems, a new hire can often add to them.

The Three Common (and Dangerous) Exits

When firm owners try to escape this problem, they usually take one of three paths:

One: Brute Force. You get more active with sales and marketing, hoping to scale your way out of the problem. For most professionals, sales doesn't come naturally, so this isn't feasible. But for those who are naturally gifted at it, this route is even more dangerous. You've just made the problem worse: more clients, more staff, more problems, no cash, and a mental capacity that is beyond maxed out.

That's when something explodes - a Law Society complaint because you dropped a critical ball, a heart attack (I've seen it happen), or a marriage that falls apart because you're never there.

Two: The Downsize. You decide it's all too hard. You stay small or downsize, get rid of the office and staff, and narrow in on a tiny niche. You take home $80k-$150k for the next 20 years. You don't have a business; you have a job that is more fragile than being an employee. You play it small, but in the back of your mind, you feel like you've sold yourself short.

Three: The Exit. You decide it's too hard and just go get a job. You exit the game completely.

None of these options are preferable. However, if we look at this in a different way, there is a fourth way out, a path that actually leads to the firm you imagined when you started.

I call it the Hero Journey. In next week's video, I'm going to show you exactly how to start it on a practical, personal, and tactical level.

Please stay tuned; I look forward to seeing you there.

More next Tuesday

Gordon