When you embark on hiring a lawyer, take a little time to understand the economics of law firms.

It’s clear to anyone practicing law or otherwise that law is now a business rather than simply a collegial profession. However, this may not be apparent to non-lawyer folks.

I don’t disagree. There’s some humorous concepts that L.A. Law – the TV show was the point when it full transformed.

What’s interesting is that consultants and other financial experts apply or refer to law firms as using a particular business model.

When you review the literature, you’ll discover there are 3 typical law firm business models.

The first model is a leveraged model.

Leverage is an excellent business technique (and non-business technique). In law it works like this.

The amount pocketed by the owners of the firm is firm profits.

This model is similar to a manufacturer creating tons of widgets using a large labor force. The owner creates a business that in theory can operate on its own.

A totally different model in law is the specialization model.

The specialization model is where one or a few lawyers offer legal services in a very focused / narrow area.

The few lawyers (or single lawyer) have highly specialized knowledge and offer very specialized legal services.

Because the customized lawyer has specialized knowledge, they bill more per hour than most other lawyers. It is the premium billing that results in hyper-profits.

Some firms manage to embrace both the leveraged and customized models.

For example, some large firms are leveraged, but then have some senior lawyers who are very specialized.

Although mixing business models isn’t generally recommended, sometimes it works for firms to combine the leveraged and specialization models.

The final broad model is where lawyers’ fees are earned by contingency.

The contingency model is when a lawyer’s fee is a percentage of the amount earned for the client.

Many lawyers end up working in the contingency model because this is the predominant way personal injury lawyers work.

Since most people in a car accident can’t afford lawyer fees, the contingency arrangement is perfect.

It’s interesting that some firms integrate the models.

It’s important to note that some large firms will also use the contingency model in some cases.

If you’re looking for a lawyer, it’s important to learn about the lawyers in your area. Part of learning about the lawyers you’re looking to hire includes understanding the economics of a law firm.

Did you know there’s a Supreme court in Chilliwack? Yes there is and that explains why there are so many Chilliwack lawyers. Narrow your chilliwack lawyers’ search using this lawyer directory