Law Practice Management Asked and Answered Blog

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November 2011

Nov 30, 2011

Reducing Bar Complaints and Improving Client Service

Question:

Our firm has 14 attorneys. Just this year three of our more senior attorneys have had bar complaints filed against them. One has been disciplined by the bar. How can we improve this situation?

Response:

Hopefully you have the right attorneys on the bus and they actually care and see the importance and value of client service. If not – an educational program for the entire firm combined with a coaching program for the offenders, if needed, might be a starting point.

Here are a few other suggestions:

1. Improve client selection. Learn to recognize problem clients and say no to some and do not represent them.

2. Use engagement letters as a tool to manage client expectations. Underpromise and overdeliver.

3. Ramp up your communications and communicate, communicate, communicate with clients as well as office team members. Communications problems with clients – both initially and later on in the engagement – is the root cause of most problems.

4. Insure that you have effective office systems for managing client work production, conflicts of interest, calendar and docket control, and overall case management.

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

 

Nov 22, 2011

Governance Plan for a Law Firm

Question:

Our firm has 25 attorneys. We are located in the greater Washington D.C. area. I am one of three members on the Executive Committee. While we try hard to effectively manage the firm too many people are trying to make decisions on behalf of the firm, therefore nothing is getting done. All of the partners continually second guess everything that our committee tries to do. I have been told that we need a governance plan. What is a governance plan?

Response:

Sounds like your practicing attorneys are spending too much time on administrivia and there is not a definitive outline of roles and responsibilities in the firm. Everyone is dabbling in the day-to-day maintenance and administration of the office, leading to decreased profitability and billable hours. Not only are each of you practicing law, you are also involved in the everyday management of the firm as it relates to finance, staff and systems. Clearly these are roles within the office that could be delegated to a trained and professional administrator. It just takes a little push of encouragement and trust on behalf of the partners to let go of the day to day details of running the firm.

You might want to develop a three tiered governance plan to help draw a line in the sand regarding responsibilities. In the law firm setting, it is appropriate to distinguish between administration, management, and leadership. Administration is concerned with the day-to-day business and practice support activities of the firm that should be the responsibility of a firm administrator, office manager or other assigned staff member. Specific functional areas of responsibility include supervision of staff personnel, accounting and billing, collections of accounts receivable, financial management and profitability analysis, budgeting, information systems, purchasing, and facilities management.

Management is concerned with the production and delivery of professional services to clients. Specific areas of responsibility include committee management, planning and oversight of information systems, development and enhancement of client relationships and communications and development and maintenance of practice support system. These functional areas are often the responsibility of the managing partner, executive committee or chairpersons of firm practice groups.

Leadership is concerned with the executive functions of the firm. These functions involve the long-term policy activities of the firm and are often performed by a board of directors, the partnership at large, or committee. Specific areas of responsibility include long-range strategic planning, practice development, marketing, lawyer recruiting and development, lawyer performance management, mergers and acquisitions, service quality management, and partner compensation.

In essence a governance plan are job descriptions specific to management, administration and leadership and spells out roles, responsbilities, and accountabilities for each. Once established these establish the boundaries and help prevent backsliding.

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

 

Nov 22, 2011

Getting Control of the Financial Side of Law Firm Practice

Question:

I am a partner in a 14 attorney firm. Our bookkeeper has been with us for 20 years. We have a time and billing system, a separate bookkeeping system, and a separate database for clients, and something else for trust accounting. The other partners and myself do not know the name of the software that we are using, don't know how to access the software, and we have to ask the bookkeeper for any financial information that we require. We feel like "hostages". She gets offended when we ask questions. When we do receive information we don't know how to read or interpret much of the information. How can we get control of our firm back?

Response:

It is imperative that owners and partners in a law firm have access to financial information on a timely basis, understand the information, and use the information in a proactive way to manage the practice. We suggest:

  1. The owner, or an appointed partner(s) in larger firms, obtain a basic level of understanding in basic accounting/bookkeeping and law firm financial management.
  2. The owner, or an appointed partner(s) in larger firms, obtain detailed training on the accounting software system(s) along-side the bookkeeper when the system is implemented. In addition to general operation of the software, special training should also be obtained on interpretation and use of the management reports.
  3. In your current situation – this may be a good time to consider upgrading your system and at that time obtain training on the new system, review the roles of all parties, and current procedures.
  4. Insure that you have accounting controls in place and appropriate segregation of accounting duties.
  5. Outline your expectations and requirements of the bookkeeper, meet with her/him, and communicate appropriately.

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

Nov 16, 2011

Contemplating Merging with Another Law Firm

 

Question:

We are a 15 attorney estate planning firm just outside of New York City. Ten years ago we had 37 lawyers in the firm. We have had several defections due to internal management problems pertaining to structure and compensation. We have operated more as a group of solo practitioners than as a true law firm. Recently we have considered the option of merging with a larger firm. What are your thought regarding the pros and cons of doing this?

Response:

Research indicates that 1/3 to 1/2 of all mergers fail to meet expectations due to cultural misalignment and personnel problems. Don't try to use a merger or acquisition as a life raft, for the wrong reasons and as your sole strategy. Successful mergers are based upon a sound integrated business strategy that creates synergy and a combined firm that produces greater client value than either firm can produced alone. Right reasons for merging might include:

a. Improve the firm's competitive position. .Increase specialization – obtain additional expertise.
b. Expand into other geographic regions.
c. Add new practice areas.
d. Increase or decrease client base.
e. Improve and/or solidify client relationships.

I would start by thinking about your reasons for wanting to merge and your objectives. Ask yourself the following questions?

a. Do you want to practice in a large firm? If not, what is the largest firm that you would want to practice in?
b. What is driving the desire to merge?
c. If the desire to merge is being driven by a desire to retreat from internal problems – what have you done to address these issues internally?
d. Is your name being part of the firm  name important to you?
e. What are your expectations and objectives for a merger?
f. What are you  looking from a merger partner?
 g. Make sure that you look for a complimentary fit. If you are weak in firm leadership, management and administration – look for a firm that is strong in these areas. Strong leadership, management, and administration may be hard to find in a firm under 25 attorneys.

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

Nov 08, 2011

Diversifying a Personal Injury Plaintiff Law Firm

Question:

Our firm is a personal injury plaintiff law firm located in Austin, Texas. We have 4 attorneys in the firm and all are partners who have been practicing for over 25 years. One hundred percent of our practice is PI plaintiff. We have been extremely successful over the years and handled some very large cases, have had some big wins, and handled several class action cases. Our current challenge is cash flow. The cases we are involved with seem to be bigger and more complex with fewer smaller cases that can be resolved quickly and contribute to cash flow. We are getting in deeper to our line of credit. Of late we have been discussing pros and cons of diversifying the practice and adding a non-PI practice area to our practice. What are your thoughts? Have you seen PI plaintiff firm do this successfully?

Response:

More and more of our PI plaintiff law firm clients have been raising this question during the past year. While a lot can be said about specialization – a firm can also sometimes be too specialized. I have seen many hybrid firms over the past 20+ years that have successfully combined a plaintiff personal injury practice with a transactional practice. As one firm told me "us transactional folks bill the hours and pay the bills while we turn the PI folks loose to go after the big hits." Firms that operate the firm as a "firm-first" firm tend to be more successful with such a practice mix than do firms that are "long ranger" firms operating as a collection of individual practitioners. In these firms compensation can become difficult and divisive due to the large swings that can occur in contingency fee work. However, firm-first firms look beyond this year's fee production, carry their contingency fee brothers and sisters when their numbers are down, and share the wealth when the big hits come in. Marketing and advertising came be more challenging – but it can be done. Practice areas might include commercial litigation, employment discrimination, business transactions, etc. High-end family and criminal practices have also been good candidates as well. It is not so much the type of practice as it is the type of practitioner and whether then be a good "cultural fit" with the PI folks.

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

Nov 01, 2011

Law Firm Partnership: Pros and Cons

Question:

I am a solo owner of a small law firm in Southern Illinois and have been solo for ten years. I have two staff members in the firm. Recently I have been contemplating either bringing in a partner or joining another firm? What are the advantages and disadvantages?

Response:

Partnership can offer its lawyers a measure of value independent of the skills, talents, and contributions of its individual partners?

Pros

The advantages that the best law firms have over sole practitioners or groups of lawyers who share overhead include:

 Cons

Like anything else in life nothing is free and there are tradeoffs. There can be conflict and interpersonal struggles, large capital contributions, requirements for you to be guarantor on huge firm debt balances, missed paychecks, and loss of independence.

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

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