Law Practice Management Asked and Answered Blog

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November 2009

Nov 24, 2009

Competitive Business Models: Competitive Strategies and Ideas For A Personal Injury Plaintiff Firm

Question: We are a five attorney personal injury plaintiff firm in the midwest. In the last few years we have gone through tort reform, increase competition from other law firms doing extensive advertising, and now trying to weather the recession. From a profitability standpoint – we are holding our own. However, we are concerned about the future. While we do not want to be a high volume PI advertising factory – we believe we need to be doing something different. Do you have any suggestions on how we should plan our future?

Response: The majority of our PI law firm clients are advising that they are having to work much harder at getting clients and investing more heavily in marketing – both time and money. PI firms were feeling the most of these challenges before the recession. However, the recession may accelerate the pace with which law firms reevaluate existing processes and consider new business models. PI firms may want to begin by:

  1. Develop a firm strategic plan and individual attorney marketing plans which include aggressive network/contact plans for past clients, attorney referral sources (non PI attorneys), attorney referral sources (other PI attorneys), and other referral sources.
  2. Evaluate the feasibility of adding an additional practice segment to reduce the level of risk in the case portfolio and reduce cash flow variability.
  3. Reduce case portfolio risk and improve case profitability by implementing a case intake system whereby all new cases over a specified level of projected case value are reviewed and approved by the partnership (or a client intake committee) in order for the case to be accepted by the firm. In other words – don't let one attorney expose the entire firm to either excessive levels of case risk or case investment (time and client cost advances) without other partners having a say on the matter.
  4. Analyze the profitability and return on each case and ascertain what can be done differently on future cases. Metrics might include effective rate, return on LOADSTAR, dollar case profit after allocation of all appropriate firm overhead, etc.
  5. Review and measure present marketing investments (time and money) and determine what is working and what is not. Reallocate resources if appropriate.
  6. Insure that you are using an appropriate mix of marketing tools in your program.
  7. Consider increasing marketing investments (time and money). Suggest a marketing budget be developed in the range of 8-12 percent of fee revenue. Also suggest that non case production (non-billable) time be budgeted for business development and marketing activities as well.
  8. Look into defensive advertising.
  9. Insure that you have a first-class website that goes deep and demonstrates expertise.
  10. Maintain a yellow page presence – but gradually reduce investment and shift into website and other online vehicles.
  11. Find ways to enhance the client's experience and deliver exceptional client service.
  12. Use exceptional client service and bedside manner as a primary means of differentiating you from your competitors. Under Promise – Over Deliver in everything you do for the client.
  13. Make your office client friendly.
  14. Use end-of-case satisfaction surveys to measure the client's experience with the firm and to improve future service.

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

Nov 24, 2009

Getting to the Next Level


I am a member of a three attorney firm. I think that we know where we are as a firm, where we want to be, but we don't know how to get to the next level. Do you have any ideas?


Rather than following the pack – attorneys need to find ways in which their firms can "dare to be different."

Many attorneys are providing the same service – solving the same sort of legal problems for their clients using similar tools strategies/approaches. To many clients – attorneys all look the same. What can you do to stand out?

Marketing is about more than just promoting the firm to get clients. It is also about deciding on:

  1. What services to offer, where, and to whom? Sometimes less is more – by focusing on fewer areas of practice. Just because a law firm focuses on say three areas of practice – doesn't mean that it does not handle matters in other areas. It just means you are building you brand around the three core areas. These are the areas you primarily promote, speak about and write about. Broader geography?
  2. Pricing. Not just the amount to charge but how to charge. Clients are asking for budgetary certainty? Get creative.
  3. Delivery and producing the service. Are you doing all that you can using technology, staffing, work processes, etc. to minimize the cost of producing your services? If you are – aggressively promote it. Office location, client site visits, etc., all come into play here. 
  4. Promotion (which can include advertising, e-newsletters, newsletters, websites,
    networking, seminars, press interviews, social networking on the internet, etc.)

Effective marketing requires a mix of the above elements in your plan and then effectively communicated.

Many attorneys suffer from random (unplanned) acts of marketing or business development. To be effective you need to be well focused, have a plan to focus the firm's efforts, and be disciplined and make excellent use of your professional time. Often the largest marketing investment is not advertising or the cost of other marketing vehicles – it is the cost of you non-billable (or investment) time.

A business/marketing plan (10 pages or less) for the firm can do wonders.

Sit down with the other attorneys in the firm, do some brainstorming away from the office, and put a plan together. Then work the plan.

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

Nov 17, 2009

What Can We Do To Be Different

Question: During a recent firm meeting one of our partners asked what the firm could do to be different than every other law firm. What are your thoughts?


Creating a competitive advantage that is sustainable over time is difficult at best. It is so easy for your competitors to copycat your recent innovations. Clients of law firms advise us that they hire the lawyer – not the firm. However, this only partly true. The firm – its image – its brand – provides a backdrop for the individual attorneys marketing efforts as well – makes marketing easier – and provides backup and bench strength that many clients require before retaining a lawyer.

In general the law firm is faced with the dual challenge of developing a reputation (brand) at both the firm and the individual lawyer level. In general – client delivery practices and behaviors that are part of the firm's core values and have been burned into the firm's cultural fabric are the hardest to copycat.

Areas in which you can consider differentiation strategies:

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

Nov 08, 2009

Profitability Improvement Ideas

Question: What are some ideas that our eight attorney should be doing to improve profitability?


Use the RULES formula to focus your effort.

R = Realization rate or effective rate per hour.
U = Utilization – billable hours or case production hours.
L = Leverage – ratio of partners to other timekeepers.
E = Expenses – overhead.
S = Speed – collection cycle – converting work to bills and bills to cash.

Profitable law firms have an appropriate mix of each of these profitability levers. Compare against internal and external benchmarks and determine which of the levers require attention. Usually expenses is not the primary problem – in fact many firms should be spending more in the form of investment. Usually the primary focus should be on improving:

Many firms need to increase case/matter volume through better client development and marketing to be able to obtain higher leverage ratios.

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

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