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Client Services Bulletin October 2003
Bulletin Number:
03-002   Date: October 2003   Subject: Periodic News

Dr. John Olmstead
  1. TIPS ON GETTING PAID

    2. We have seen more law firms and other business firms destroyed by poor cash flow than any other calamity. Cash flow is what keeps owners, partners and administrators awake at night. Many of our law firm clients have asked us for tips on getting paid. Here are some of our thoughts and suggestions:

    • Build a solid foundation with new clients and establish a sound relationship based upon trust, integrity, and open communications.
    • Develop a sound client intake system. Screen both new clients and matters and insure that they meet your firm’s profile, requirements, competencies, and capabilities.
    • Check client’s credit history within your firm on prior matters and within the general business community at large.
    • Establish credit limits for your clients.
    • Charge interest on delinquent accounts.
    • Accept credit cards if you work with individual clients.
    • Discuss fees and expenses up front with the client.
    • Require retainers in advance when appropriate. Collect additional retainer as needed.
    • Execute fee agreements/engagements with clients on all matters.
    • Bill clients promptly upon completion of work or billing cycle. Consider billing more frequently than once a month. Bill completed matters immediately rather than waiting for the month-end billing cycle.
    • Cut-off your monthly billing cycle early and date bills and mail so your client receives them in the current month.
    • Send out statements (reminder bills) on the 15th of each month.
    • Assign someone to be in charge of monitoring collection of delinquent accounts receivable and hold them accountable for results.
    • Implement an accounts receivable collections system consisting of a series of follow-up letters after 30, 60, 90 days outstanding; phone follow-ups; and payment plans and other arrangements agreed to with the client.
    • Refer non collectable accounts for further action. (Internal billing committee, partnership, collection agency, suit, etc.)

  2. ASKED & ANSWERED

    3. A successful law firm competitive strategy requires effective law firm management. Managing Partners and Administrators must keep updated on all aspects of law firm management. In order to assist in this effort we are pleased to share our insights and thoughts.

    Readers and clients alike have asked us the following questions pertaining to a variety of management topics.

    Please contact me via email at jolmstead@olmsteadassoc.com with your question. I will answer your question and share with our readers as well. You can also visit our web site and review and post questions there as well: www.olmsteadassoc.com/Resource/oacforum.asp

    • Q. We are current using an “eat what you kill” compensation system in our firm. Is this appropriate method for our firm to use?

    • A. It depends. You must ask yourself what kind of firm you want to be – team-based firm or group of space sharers or partnership of individual firms. Such systems are not appropriate for law firms that want to build a firm and create a team-based practice since such compensation systems typically reinforce “lone ranger” behavior resulting in a “me first vs firm first” orientation. It is hard to build a team-based firm with such an orientation. However, some firms do not want to practice as team-based firms – they want to practice as groups of individuals. For these firms such a system may be appropriate. The challenge will be to nail down a method of allocation revenue and overhead that is fair and equitable to all members concerned. Compensation systems should do more than simply allocate the pie – they should reinforce the behaviors and efforts that the firm seeks from its attorneys. Many firms are discovering that desired behaviors and results must go beyond short term fee production and must include contributions in areas such as marketing, mentoring, firm management, etc. to ensure the long term viability of the firm. Eat-what-you-kill systems discourage these behaviors.

    • Q. I am the managing partner in a three attorney firm and am having problems with office staff members getting along. Office conflict is rampant. Any suggestions?

    • A. You must begin by identifying some of the causes. Poor communications often can be the root cause of such problems. Interview each of your staff members individually and probe. What do they think? Is communications a problem? Are roles, duties, and responsibilities clarified? Lack of clarity can in these areas can lead to turf wars. You may want to design job descriptions for each employee and clarify roles, duties, and responsibilities for each employee. Conduct short weekly staff meetings to enhance communications. Use agendas. Take minutes of the meetings. Advise everyone of your expectations including all members working together as team members. Let them know that working together as a team is a performance factor that will be considered in performance evaluations and reviews. Conduct periodic performance reviews. Counsel and take action against problem employees.

  3. NEWS RELEASES

    4. The following news release can be reviewed in detail on our web site www.olmsteadassoc.com under the News Releases area:

    • Olmstead & Associates announces that Paul J. Sullivan has joined the firm as Adjunct Consultant.

    • Olmstead & Associates announces that Dr. John W. Olmstead will be a presenter at Consultants University sponsored by the St. Louis Chapter of the Institute of Management Consultants.

    • Olmstead & Associates announces that Dr. John W. Olmstead has been elected as President-Elect, Institute of Management Consultants, St. Louis Chapter.

  4. RECENTLY PUBLISHED LAW FIRM MANAGEMENT ARTICLES

    5. The following articles were recently published in The Lawyers Competitive Edge: The Journal of Law Office Economics and Management, West Group and other publications:

    • Office Conflict: Are You Coach or Referee, by Paul J. Sullivan
    • Protecting Your Firm Against Loss of Key Employees, by Paul J. Sullivan
    • Strategic Planning: Its Easier Than You Think, by Paul J. Sullivan
    • Calculating Overhead to Determine Profitability, by Paul J. Sullivan
    • Cutting the Pie: Determining Partner Compensation, by Dr. John W. Olmstead

    Please note that all of these articles have been copyrighted by Olmstead & Associates. However, copies of these articles can be obtained for references purposes by printing them from our web site at www.olmsteadassoc.com. Copies can also be obtained by calling our office.

    Many other fine articles are published in The Lawyers Competitive Edge. To order a subscription contact West Group at (800) 328-4880.

  5. QUOTED IN THE MEDIA

    6. Dr. John W. Olmstead was recently interviewed and quoted in the following publications:

    • Indiana Law Firm Consolidations and Mergers, written by Scott Olson, Indianapolis Business Journal, Indianapolis, Indiana.
    • Refining Relationships When Associates Become Partners, written by Jenny B. Davis, American Bar Association Journal.

  6. CASE STUDIES

    7. Please review our case section on our web site. A total of three case studies are now up on our web site. These studies feature case study summaries and articles on successful strategies being deployed by some of our clients.

  7. Just a reminder that in addition to change, strategic planning, and marketing we offer the following additional management services to clients:
    Management Assessment/Audits
    Client Satisfaction Assessment Audits
    Business Planning
    Profitability Audits
    Coaching & Mentoring
    Marketing Services
    Technology Selection/Implementation
    Attorney & Staff Issues
    New Practice Start-Up
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