Law Practice Management Asked and Answered Blog

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December 2009

Dec 26, 2009

Dialing For Dollars: Tips For Collecting From Your Clients

Q.     These economic times have been challenging for our firm at best. A major problem for us is collecting our client receivables. Do you have any suggestions?  


A.     Regardless of whether economic times are good or bad cash flow is always a matter of prime concern for law firms. With it taking in general 3-4 months to convert client work to cash anything the firm can do to speed up the collection cycle is always desirable. Here are a few ideas:      

    1. Do everything you can to keep receivables from going out to 90 days. Receivables aged one month are 93.2% collectable; three or more months are 72.3% collectable, and one year or more are 28.4% collectable. 
    2. Call – don't waste time with mailing follow-up letters. 
    3. Treat collection calls as an extension of client service. Calls should be treated as client service calls – not collection calls.
    4. Caller should be someone other than the attorney who did the work for the client, qualified staff member or outsourced Accounts Receivable Account Manager.
    5. Calls should be made by a trained Accounts Receivable Account Manager with client-friendly people skills.
    6. Calls should be made on each account as soon as it reaches the due date.
    7. Accept credit cards and offer it as a payment option.
    8. Discount bills when necessary if it will expedite payment and engineer payment plans.
    9. Diary, calendar, and follow-up.
    10. Consider outsourcing to an Accounts Receivable Account Manager – not a collection firm.

      Consider our firm for outsourcing this effort.

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


Dec 22, 2009

Is Your Firm Ready For the New Competitive Landscape


At a recent partner meeting we discussed the current economy and what changes we need to be thinking about both now and when we come out of the recession. What are your thoughts?


As law firms emerge from the current recession many will face many new business realities and be forced to consider whether existing business models are still appropriate for the future. Legal process outsourcing (LPO), off-shoring, virtual offices,  alternative billing, etc. We believe that the recession may accelerate the pace by which firms reevaluate existing processes and consider new business models.

Ten years ago (1999) the ABA hosted the "Seize the Future" conference in Phoenix, Arizona.

The conference predicted massive change fueled by the internet. Many of these changes we have already witnessed and experienced – others are yet to come – possibly in the near future. Richard Susskind's popular book "The End of Lawyers: Rethinking the Nature of Legal Services paints an interesting future. As we emerge from the recession pressures will exist that may excelerate some of the other changes that have been predicted.

Here are some changes that some firms are already implementing:

Here are a few examples:

Direct Law

Lawyers on Demand

FSB Legal Counsel

Virtual Law Partners


Talwar and Talwar

The key ingredent is to not get stuck in the past. Incumbancy and pass success has never been worth less. Ask General Motors.

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

Dec 16, 2009

Off-shore Outsourcing Tips


Our firm is beginning to consider off-shore outsourcing. Our clients are asking about this as a service delivery option. Do you have suggestions?


Off-shore outsourcing is the new frontier. While there are opportunites and benefits that can result there are also pitfalls. Here are our thoughts:

  1. Do your homework. Proceed with caution and do extensive due dilligence.
  2. What are reasons, objectives, for such an arrangement? 
  3. Do a search for potential vendors? Ask other law firms who they are using and what their experience has been?
  4. Obtain a certified photo of the vendor's premises.
  5. Insure that the vendor has appropriate data security in place at their premises.
  6. Insure that the vendor has third party audits conducted.
  7. Obtain vendor references.
  8. Verify vendors past history with clients.
  9. Review vendor contracts.
  10. Determine how money will be transferred.
  11. Check into liability issues and coverage with your malpractice insurance carrier and insure that the vendor has professional liability insurance.
  12. Check ethic rules.
  13. Look into client privilege issues.
  14. Research export control issues.
  15. Obtain client consent in writing.
  16. Start with a small pilot project and then initially on small projects at are not subject to export control rules.

Start slow with a small project and monitor results. Build up your initial experience.

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

Dec 13, 2009

Insurance Defense Law Firm Strategy

Question: I am a legal administrator with a 14 attorney law firm in the Chicago area. It seems that it is becoming more and more difficult to deal with insurance company clients.While we have always had to deal with low billing rates and unrealistic controls mandated by insurance companies, recent trends have reached levels that threaten the business relationship which has reached an all time low. We must now jump through even more hoops to be able to play in the insurance defense arena. What are your suggestions?

Response: The present state of the insurance defense practice presents numerous challenges to the law firm. These challenges simply cannot be ignored – they will have to be faced head-on. The solutions are complex and will require time to sort through. While solutions can come in different varieties, they will take the form of one of two general strategic approaches.

Reinvent The Practice – Stay In The Game

For many firms the appropriate strategy may be to stay in the game. These will be firms that have a well-established reputation in insurance defense, where insurance defense represents a major source of their revenue, and where adequate leverage and profitability and leverage exist. These firms will not be firms that dabble in insurance work. These firms will be committed to this practice area and will focus on it exclusively. They will be innovative client-market driven firms that blend contemporary approaches with the lessons learned from the founding fathers.

Exit Or Diversify The Practice 

This strategy will be appropriate for firms that desire to get out of insurance defense work entirely or that desire to reduce their dependence on insurance defense work by diversifying the practice. In this way the mix of the practice can be altered. This strategy will not be easy. It will be a rough road and will take time.

Insurance defense attorneys typically do not have the expertise, experience, or the client contacts in other practice areas such as corporate business. Another factor is perceived image. The business community often views insurance defense firms as second rate firms. Often the law firm has in essence branded itself as an insurance defense firm. This can be a difficult obstacle to overcome. Client law firms with whom this author has worked have found that it can take five years or longer to accomplish such objectives.

Specific tactics will depend upon the firm’s size and the amount of insurance defense work in the practice mix. One of the first steps is for insurance defense firms to try to leverage their litigation experience in order to obtain the defense work from self-insured corporations and general corporate representation. In some instances it may be possible to pick up some of the general corporate representation of insurance companies. This will be a tough road.

Larger firms will require some new blood in the firm with expertise, experience, and a book of business in the desired practice areas. This will require insurance defense firms to consider merger or acquisition. Smaller firms may be able to accomplish these objectives completely internally or with lateral partner acquisitions. Both large and small firms should begin extensive programs of continuing education in desired practice areas. Firm and personal marketing plans should place strong emphasis on creating new business relationships as well.

Much work needs to be done by management of insurance defense firms. The process will take time, hard work, and dedication regardless of the strategic options chosen. Now is the time to get started. Click here for an article on the topic.

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

Dec 13, 2009

Feasibility of Home and Virtual Offices


I am a solo attorney in private practice. I have been practicing for two years. The bulk of my practice is in the wills, trusts and estates area. I occasionally handle real estate transactions as well. I work from a home in office and meet clients in their homes at night. I have given thought about moving to an office outside the home, but even if I did I think I would still end up meeting clients in their homes at night. My clients seem to really appreciate this and as a result I have yet to walk away from a potential client's home without a signed retainer agreement. What are your thoughts on home offices?


Sounds like working from home has worked well for your practice and it has caused you  to deliver personal attention to your clients which is so necessary in your practice area. I opened my consulting practice 25 years ago and had the overhead of an office and staff from day one. So much has changed since then. Now I have both – small office in St. Louis and home offices that the rest of us work from remotely – Less staff – and less space. We have downsized our office dramatically over the years and now primarily use it for client meetings/presentations when needed. Our infrastructure – phone systems, files, copiers, file servers, and people are primarily housed out of remote home offices. More and more of our work is being delivered remotely/virtually using GoToMeeting and other such tools.

Take a hard look at your purpose and cost for the office and then go from there. Also, consider that sometimes we have to spend money to make money. The increased visibility than the office may give you generate more revenue than its cost? Also, as you get busier and need to boost up infrastructure – staff, systems, etc., you may need a place to house the infrastructure. If you just need a place for client meetings occasionally you might be better off having a virtual office suite arrangement where you pay and use a space as needed with some of the companies that provide such as service. If you have a Regus in your area – you might look into that option.

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

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