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Oct 10, 2019


Finding and Training in a New Estate Planning Attorney

Question: 

I am the owner of an estate planning firm in the Western Chicago suburbs. My practice is a specialized practice that focuses on estate planning, estate administration, estate litigation, and elder law. While I was a solo practitioner for many years approximately four years ago I brought in an associate that had three or four years experience with an other estate planning firm. Unfortunately, he just gave me his notice and advised that he was leaving to join another firm. We have too much work for me to handle by myself and I am going to need another attorney with estate planning experience. How do I go about finding this person. Any suggestions that you have will be appreciated.

Response: 

I have assisted several of my Chicagoland estate planning law firm clients as well as clients in other parts of the country and I can tell you that experienced estate planning/administration and elder law attorneys are like gold and hard to find. This was even the case during the 2008 recession when recent law school graduates and experienced attorneys with other skill sets were having difficult times finding jobs. Now, with the current job market, finding experienced estate planning/administration and elder law attorneys is even more difficult. Many of these attorneys tend to work in small firms, are loyal to their firms, and less mobile. They tend to stay put and often remain with one law firm for their entire careers.

I would start your search for an experienced attorney by:

  1. Putting the word out through your professional network. Ask around.
  2. Prepare an ad for the position
  3. Post the ad with www.indeed.com, ISBA.org Career Center, LinkedIn, local suburban bar associations, and local law schools.
  4. Have resumes come to you electronically.
  5. After initially reviewing resumes and narrowing down to candidates of interest use a telephone interview as your first interview and face to face for a subsequent interview if appropriate.

If after thirty days or so you are having no luck you might have to consider using a local headhunter or simply looking for a recent law graduate and investing the time to train a new attorney.  Several of my estate planning/administration and elder law clients are having to hire new law graduates and train them. Many have been quite satisfied with the results and now believe it is the best way to go. Recent law graduates start with a clean slate and do not bring in any baggage or bad practices or habits picked up in other law firms. They are often more loyal and stay with the firm longer.

A few suggestions concerning recent law school graduates:

  1. Look for candidates that took elective courses in estates/trusts/elder law.
  2. Look for candidates that had meaningful clerking experience with law firms specializing in estate planning/administration and elder law. Not running errands but meaningful experience.
  3. Develop a comprehensive training plan with specific timelines designed to get the attorney billable and productive as soon as possible in easier forms of work (possibly guardianship) and then gradually move the attorney into simple estate plans and more complex areas over time.
  4. Be patient – the process will take time – consider it an investment.
  5. It will take time for you to make money from the new associate. Be happy if you cover the cost of the associate in the first year.

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John W. Olmstead, MBA, Ph.D, CMC

Oct 03, 2019


How to Handle the Messaging and Public Relations When a Law Firm Partner Leaves

Question:

Our firm is a twelve attorney litigation defense firm in Phoenix, Arizona. We have eight partners in the firm and I am a member of our executive committee. Yesterday at a partner meeting we were advised by four partners that they were leaving, would be starting a new law firm, and would be taking several key clients that they handle with them. A couple of associates and staff members will be going with them. What do we tell people and how do we go about it? You suggestions are most welcomed.

Response: 

My first suggestion is to move very quickly otherwise the rumor mill will get started and rumors will get ahead of you. You must get in front of the message to all audiences. The remaining and the departing partners should meet immediately, come to terms and agreement with the message, and be prepared to answer the following questions:

  1. Who is leaving
  2. Why following
  3. Whether the relationship is contentious or amicable
  4. How the departure is going to effect clients
  5. Whether the departing partners are named partners
  6. Future name of both firms
  7. Where the two firms will be located
  8. Contact information

I further suggest that you:

  1. Plan and advance and drill
  2. Identify your audiences and appropriate messages for each
    1. Clients
    2. Employees
    3. Legal community
    4. General public community
  3. List anticipated questions that your audiences will have
  4. White out the answers to the questions
  5. Write out the message for each audience
  6. Designate a single spokesperson to respond to the press and others so that messaging remains consistent from firm management.
  7. Identity clear lines of authority.
  8. Ensure that you follow the rules of professional responsibility in regarding client communications.

Situations such as this can be very stressful for all concerned. Try not to let your personal feelings cloud your vision and get in the way of a properly planned transition. There will be a lot of work to be done on the part of the remaining partners and departing partners. A well designed project plan will be helpful in managing all the tasks that will have to be handled and managed. The public relations should be at the top of the list.

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John W. Olmstead, MBA, Ph.D, CMC

Sep 25, 2019


Succession-Exit Options for Law Firm Solos

Question: 

I am a solo real estate practitioner in Long Beach, California. I have one paralegal that works in the firm. I am 70 years old a would like to retire in the next couple of years. What are my options?

Response:

Solo practitioners have the greatest challenge since they have no associates or anyone in place to transition the practice. Therefore, the practitioner must both hire and groom an associate that could buy the firm or become a partner and buyout the owner’s interests, sell the firm to another firm, or merge with another firm. Other options would be to become Of Counsel with another firm or simply close down the practice. This takes time.

Hiring and Grooming an Associate

Hiring and grooming an associate can be problematic for the solo. If he does not have sufficient business and the associate does not originate business, the associate will be an expense and the owner’s net earnings will suffer. Other issues include:

Sell the Firm to another Lawyer or Law Firm

The owner can sell the firm to another lawyer or law firm. This option works best when the practitioner is actually ready to retire and quit practicing. Often this is not the case and the restrictions on sale of law practice levied by a state’s rules of professional conduct, in particular Rule 1.17, may make this option undesirable. Locating desirable candidates will take time and a well-planned search process may have to initiated. Our experience has been that this can take a year or longer.

Solo practices are often very personal practices with little annual repeat business. Clients of law firms advise us that they hire the lawyer and not the law firm. This makes buyers very cautious due to their concern that the clients and referral sources will not stay and the revenues will not materialize after the owner sells the practice. Therefore, many buyers are not willing to pay cash for a law practice. Our experience has been that most of these practices are sold with payouts over time based upon a percentage of revenues collected over a certain number of years. Usually, the seller stays on in a consulting capacity for a year to help insure that clients and referral sources stay with the new owner.

Merger with another Firm

Merger with another lawyer or law firm is another option. This is often a better option for solos that want to gradually phasedown yet continue to practice for a few more years. In essence, they join another firm as either an equity or non-equity partner, member, or shareholder and subsequently retire from that firm under pre-agreed to terms for the payout. The odds are improved for clients and referral sources staying with the merged firm and the merged firm is more committed that a buyer might be under a payout arrangement based upon collected revenues. The solo practitioner has more flexibility with regard to the ability to continue to practice longer, reduced stress, additional support and resources, and gradual phasedown to retirement.

Of Counsel with another Firm

Forming an Of Counsel relationship with another firm is an option that many solos are taking. Sometimes it is a final arrangement where a solo winds down his or her practice and then joins another firm as an employee or independent contractor. He or she is paid a percentage of collected revenue under a compensation agreement with different percentages depending upon whether the practitioner brings in the business, services work that he or she brings in, or services work that the firm refers to the practitioner. In other situations, an Of Counsel relationship is used as a practice continuation mechanism that provides the solo with additional resources and support if needed. An Of Counsel relationship can also be used to “pilot test” a relationship prior to merging with another firm. We have had several law firm clients that has taken a phased approach to merger with Phase I being an Of Counsel “pilot test” exploratory arrangement and Phase II being the actual merger.

One option is not necessarily better than the other – much depends upon “fit” and individual circumstances as well as a little luck.

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John W. Olmstead, MBA, Ph.D, CMC

 

Sep 19, 2019


Do You Have “Stars” in Your Partner Ranks?

Question: 

Our firm is a second generation insurance defense firm in Bakersfield, California. We have fourteen lawyers, nine of which are partners. While all of the partners are great trial lawyers, work hard, and bill the required lawyers none of our partners are good at business development, leadership, or management. Our business comes from the client that we inherited. Any thoughts would be appreciated.

Response: 

Successful law firms need at least a few star partners in their ranks.

“People are our most important asset” is a standard phrase heard in business. A more accurate and honest statement in many industries might be” competent people are a necessary component of our success.” However, as important as the company’s people are, they are somewhat expendable. The reason is simple. In most businesses the company’s competitive advantage does not rely on the retention, motivation, and behavior of particular individuals. Instead, it turns on shelf space, brand strength, core position, distribution systems, price, technology, product design, location, or any number of other variables that can exist apart from individuals who created the product or service. So except in the long term, most companies profit does not necessarily correlate with their people assets.

This is not the case for law firms. A law firm’s success depends not just on its people assets but on stars. Who are an organization’s stars? They are the individuals who have the highest future value to the organization, the men and women critical jobs whose performance is central to the company success. In a law firm, if a star leaves, the firm and its clients notice the difference. If enough stars leave the firm’s financial performance suffers. In a law firm, partners for significant clients, practice areas and offices are its stars.

In law firms stars are typically partners, but not all partners are stars nor are all stars partners. What  what makes them law from stars is that they propel the business model along all three of its dimensions – building and enduring client relationships, performing up to their full potential in putting the firm first, and implementing strategic imperatives. Because they are so accomplished other members of the firm emulate their behavior.

You need to either develop or eventually recruit a few star partners that have the leadership, management, and client development skills that help the firm grow or stagnation will develop over time. I have seen make practices such as yours limp through second generation and dissolve in third generation.

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John W. Olmstead, MBA, Ph.D, CMC

Sep 04, 2019


Merger vs Transitioning Our Firm to Our Associates

Question:

I am one of three founding partners in a twelve attorney insurance defense firm in New Orleans. The three of us are in our early sixties and contemplating retirement in the next several years. The three of us have been discussing our succession plans and are wondering whether we would be better off merging with another firm or transitioning the firm to our associates. What are your thoughts on this matter?

Response: 

A majority of firms prefer transitioning to the next generation of attorneys within the firm whenever possible. Many founding partners at this stage of their career are often not ready to move to another firm unless they have to.

Advantages of transitioning to associates in the firm include:

Disadvantages of transitioning to associates in the firm include:

I believe that you should start by taking a critical look at the demographics of your associates and raise the following questions:

  1. What are the retirement timelines for each of you? Will you be retiring close to the same time?
  2. Do you have the bench strength – your present associates – to serve your existing clients if the three of you are no longer with the firm?
  3. If the three of you were no longer with the firm could your present associates retain your existing clients?
  4. Do any of your associates have the leadership and management skills to lead and manage the firm?
  5. Do any of your associates have the will to take over the firm and buy-out your interests?

Your answers to the above five questions will determine whether you should consider a merger strategy. It is often difficult to get a “founders benefit” (goodwill value) in mergers with other firms.

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John W. Olmstead, MBA, Ph.D, CMC

Aug 21, 2019


Law Firm Strategic Planning in a One Day Planning Retreat

Question: 

Our firm is a twenty-attorney litigation firm in Miami, Florida. We are managed by a three-member management committee supported by a firm administrator. While our committee and our firm administrator are entrusted to make many of the operational decisions, all partners must weight in on and vote on all major decisions as outlined in the firm’s management plan. Currently we do not have a strategic plan and our firm administrator has suggested that we can accomplish this in a one day off site retreat with all the partners. Is this realistic?

Response: 

This is a little bit aggressive and optimistic. The strategic planning process is as important as the end result – the strategic plan document, so you don’t want to rush the process. Two sessions a few weeks apart would be better as it would give some time for the ideas and discussion from the first session to cook and simmer until the second session. However, you might find that one session is all that you are going to get. If this is the case you need to do some homework before the retreat. I suggest the following:

  1. Solicit feedback from all your partners using a questionnaire. An online questionnaire such as SurveyMonkey would be preferred. Questions should include general attorney demographic information as well as issues and challenges facing the firm and suggested solutions, future direction of the firm, succession planning, talent management, practice area expansion or contraction, etc.
  2. Develop a retreat planning session agenda and workbook with all relevant supporting materials such as questionnaire results, financial reports, recent relevant articles, draft strategic plan with at least a mission, vision, goals, objectives, and issues sections completed in rough form. This should be developed by the management committee beforehand.
  3. Provide all your attorneys with the agenda and workbook at least two weeks prior to the planning retreat to allow them to come to the retreat fully prepared.
  4. Keep the retreat focused on strategic issues with day to day operational items discussions being off limits. Discuss the questionnaire results then use the draft Strategic Plan as an outline for the session. Try to get consensus on mission, vision, goals, objectives, and issues by the halfway point of your session. Focus the remainder of the session on developing specific strategies dealing with issues and goals outlined.
  5. After strategies have been developed, develop specific action items for each strategy with start and completion target dates for each action item with the name of the person that will be responsible for completion.

Once the retreat is over the management committee should finalize the rough notes from the planning session into a initial draft of the strategic plan and circulate to all partners for review and comment. Hopefully, the management committee based upon comments can finalize and launch the strategic plan within thirty days, if not a partner meeting should be scheduled for additional discussion.

Using an approach to similar to what I have outlined will improve your chances of a successful one day planning retreat.

Good luck.

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John W. Olmstead, MBA, Ph.D, CMC

Aug 07, 2019


Listening to Law Firm Clients – Number One Marketing Initiative for Institutional Clients

Question: 

Our firm is a sixteen attorney insurance defense in Louisville, Kentucky. We represent approximately twenty-five insurance companies in property casualty and personal injury cases. We handle products liability and medical malpractice cases as well. Our firm is in second generation and all of the founding partners have retired. Virtually all of our clients were inherited and none of the existing partners have brought in any new clients since the founding partners retired eight years ago. While we are trying to do what we can to cultivate new clients we want to insure that we retain our existing clients and don’t have any client defections. Do you have any suggestions?

Response: 

We have done numerous client satisfaction interviews with law firm insurance company clients. The category where most firm rank the lowest is understanding clients needs. For law firms one way of achieving a competitive advantage is to have a better understanding of the wants and needs of clients than does the competition. This understanding comes from an open dialog with your clients. In other words ask them.

Recently I had a law firm client who’s business was suffering due to the client’s operations shifting to adjacent states. The firm was considering an additional office location to serve these clients and was debating where and how to locate this office. I advised, why don’t we ask the clients. In our interviews we asked this question and the clients told us where their needs were and where to locate the office. It was not where the law firm was thinking of locating. Six months later a mini merger was done in the location where the clients advised us there needs were.

This is best accomplished by having an ongoing systematic structured client feedback system that tracks client preferences, desires, and requirements. Here are a few ways that this can be accomplished:

There are several articles on our website – see links below – that discuss client satisfaction survey programs and how to get started.

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Click here for our article on client satisfaction

Click here for our article on client surveys 

Click here for our article on analyzing survey results

Click here for our article on developing your client service improvement plan

Click here for our article on tips for rewarding and recognizing employees

Aug 01, 2019


Care and Feeding Associate Attorneys

Question:

I am the owner of a law firm in Chicago suburbs that specializes in estate planning. I started the firm twelve years ago. Over the years the firm has grown from just myself as a solo to a firm with myself and six associate attorneys. Prior to starting the firm I worked in several other firms as an associate and as a partner. I felt I was not being compensated for my hard work so I started by own firm. I have always worked hard and in addition to managing the firm and bringing in all the clients I bill 1700 billable hours a year. My associates are a disappointment. They work the bare minimum, some are lazy, and none are even billing 1400 hours a year. Some are not even billing 1200 hours a year. I have tried bonus systems based on production of fees collected and they have had no effect. In my old firms this was not the case, everyone worked hard and was self motivated. I am at a loss and I don’t know how to motivate these associates. I would appreciate any thoughts that you have regarding what I should do?

Response: 

I suspect that you, as a founder, expect the same sort of work ethic and drive that you, as well as others, in your prior firms had over the years. Welcome you the new generation of workers and the era of work-life balance. This is not to say this generation of workers is lazy – their priorities in life are different and work is not the only priority in their lives as it may have been in yours. They may not also not have the drive and self motivation that you had and require direction. You can’t simply put them on autopilot – they require care and feeding in the form of:

Often a little care and feeding will go a long way to changing performance and often accomplishes more that formulaic bonus systems. Here is a prior blog on how to go about this. 

I agree that 1200 billable hours is unsatisfactory and you should be expecting 1600 for your type of practice.  Expectations need to be established, if they aren’t, and consequences for non-compliance. I think bonus systems such as yours are fine but often do not accomplish desired results without some care and feeding. If you are unwilling to do some care and feeding your other option is to fire your worst offenders and try to replace them with self-motivated associates that have a documented track record of performance. Getting the right people on the bus can be more productive than care and feeding beyond a certain point.

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John W. Olmstead, MBA, Ph.D, CMC

 

 

Jul 17, 2019


Law Firm Succession – Pros and Cons of Hiring an Associate as My Succession Plan

Question: 

I am a sole practitioner in San Diego, California. My practice is mostly general practice with some emphasis on commercial real estate. I am 64 years old and am looking for a way to transition and exit my practice in the next three to five years. I am the only attorney in the firm however there are three legal assistants that work for me. I have been considering hiring an associate so that I have someone to sell my interests to in the next three to five years. I have never had an associate so I would appreciate your thoughts concerning the wisdom of hiring an associate at this stage of my career.

Response: 

In general I prefer an internal succession strategy when the firm has an attorney or attorneys in place that are willing to step up to ownership and take over the firm. Often this is easier said than done. Issues you will face will include:

  1. Unless you are loaded with work that you are unable to handle or you hire an attorney that can bring work with him or her you will be increasing your expenses and reducing your income/compensation.  Since you have operated all these years with just one attorney I assume that there is only enough work to support one attorney. If you are ready to slow down to a reduced work schedule and take less compensation that is another matter. If not, you may want to look for an experienced attorney with some business rather than hiring a lawyer fresh out of law school or wait a little longer till you hire someone.
  2. Associates require care and feeding – in other words training, mentoring, etc. A certain amount of training and orientation will be required even with an experienced attorney. Revenues may lag from one to two years and your will be saddled with their compensation and other related expenses. You have no experience with mentoring attorneys and this may be something that you are ill equipped to do or don’t want to do.
  3. You may end up hiring and training in an associate only to have them leave the firm in a year or so to join another firm and possibly take clients with them.
  4. The associate you hire may only be looking for a 9-5 lawyer job and have no interest in owning a law firm.
  5. The associate you hire may expect to have you hand them your practice for free and he or she may be unwilling to pay you for your practice.

Many firms have had positive experiences with transitioning their firm to associates. Just be aware of the possible pitfalls. You may be better off going a different direction.

Click here for our blog on succession

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John W. Olmstead, MBA, Ph.D, CMC

Jul 11, 2019


Law Firm Operating Metrics and Statistics

Question:

I am the newly elected managing partner in our twelve-attorney firm in Chicago, Illinois. Our firm is a business transaction firm that was started by the present four partners ten years ago. While we have an office manager that does the bookkeeping, prior to this year all four partners as a group managed the firm. This year the firm decided to create the managing partner position. Since this is new to me I am trying to learn all that I can about law firm management. My first priority is to help the firm improve profitability and I would like to know what the key operating metrics and statistics are that I should be monitoring. You suggestions will be appreciated.

Response:

Law firm operating statistics represent an important management tool. They highlight superior performances and they flag below average performances. They provide law firm management with the key information needed to manage the firm’s business. In addition to measures such as firm fee revenue collections, firm profit/net income, profit per equity owner, billable hours, fee revenue collected per attorney, operating statistics found in law firm management reports typically include information on:

The first three statistics represent factors that relate to earning the firm’s revenue. Responsibility for earning the firm’s revenue rests with the firm’s partners. Consequently, it is important to assign this responsibility to specific partners – typically the responsible/billing attorney.

In recognition of the assigned responsible attorney concept, many firms choose to present revenue-related operating statistics reports in a format that focuses on each partner’s responsibility. This gives the management group the ability to access each partner’s “business” performance.

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John W. Olmstead, MBA, Ph.D, CMC

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