Three of the Worst Mistakes in Law Firm Business Planning
Jehan Georges Vibert, The Fortune Teller (1850)
Of course, the biggest and most costly mistake in business planning is not to have one at all.
In the past two weeks, several law firm managing partners have asked, “What are the worst mistakes that law firms make in business planning?” Going beyond the obvious answer, above, there are three particularly costly mistakes that small and midsize law firms (and sometimes even larger ones) make when developing their business plans for the new year. What places these three errors among “the worst” is that they are among the most common causes of disappointing financial results twelve months later — and often before then.
Mistake 1: A wish list, not a plan
Many law firms draft long catalogs of inspiring goals that read like an aspirational to‑do list but are not a realistic plan to accomplish any of them. The result is a diffusion of effort, waste of time, a few if any observable results. The partners chase too many priorities, urgent client work always wins, and nothing reaches critical mass to make sustainable improvements to anything. Having seen few, if any, results from their business planning efforts, the partners in these firms fall back on an equally ineffective wait-and-see approach, sometimes disguised as “alertness” and “agility.”
How can law firms avoid this mistake? Here are three highly effective and relatively easy improvments:
Limit the business plan to three to five firm‑level priorities, each with a few supporting actions.
Looking at this technique from the opposite perspective, make sure that every action in the plan is clearly and directly tied to one of those top priorities. Tie every initiative explicitly to a financial or competitive outcome (e.g., improved profitability, more durable client retention, better management of cash flow).
Remember the SMART rule: goals should be Specific, Measurable, Agreed, Realistic, and Time-defined. If a business goal does not meet all five of these SMART criteria, it probably will not be achieved.
Mistake 2: Planning without real numbers
Small and midsize law firms frequently plan around “last year plus a bit” or rely on partner anecdotes instead of detailed financial and practice data. This technique is frequently accompanied by shrugging statements such as Who can predict the future? As one law firm partner once told me, “We make our best guess, work hard, and hope for the best.”
This leads to targets that ignore cash‑flow risks, practice‑level profitability, and early warning signs in realization, management of unbilled work-in-progress, and unprofitable leverage, each of which can derail otherwise solid strategic ideas.
To make better-informed planning decisions:
Build the plan on a basic but explicit budget and forecast rather than reactive or “on‑the‑fly” budgeting.
Require practice‑group metrics (margins, write‑offs, collection cycles, matter economics) to support any growth or investment assumptions.
Mistake #3: No implementation engine
Many law firm plans fail to deliver their business plans not because of bad ideas but because there is no mechanism to execute them: no owners or champions of an initiative, no timelines around which to organize the work, and no feedback loops to help keep the effort on schedule and — more importantly for many firms — identify potential problems before they become a crisis.
To turn goals into realities:
Assign each priority a responsible partner or small team, milestones, and quarterly check‑ins where results are reviewed and course corrections agreed.
Treat planning as a rolling process—updating assumptions and actions at least quarterly—rather than a one‑time, year‑end event.
It’s no too late to produce a business plan that will get substantial, sustainable results for your law firm.
In fact, my colleagues at Walker Clark LLC and I advise our clients to wait until the end of January (or the first month of their new fiscal year for firms not operating on a calendar-year basis) to finalize their business plans. There are two solid reasons for this wee bit of procrastination:
It gives the firm time to compile, confirm, and analyze the final financial report for the year just ended.
It also allow the firm to take into account any significant opportunities, challenges, or uncertainties that are already might be appearing in the new year.
We can help.
For a small fixed fee, we will be happy to review your business plan for 2026 and point out some improvements that will allow your firm to manage more efficiently and with greater confidence your progress toward success. To learn more about this “new year’s special,” contact us using the secure e-mail link at the bottom of this page.