Law Practice Management Asked and Answered Blog

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July 2012

Jul 31, 2012

Using Law Firm Economic and Other Surveys

Question:

I am the firm administrator for a 16 attorney in Memphis. I am new to the field and just started with this firm. I have been asked to conduct some preliminary law firm economic research and obtain – purchase if necessary – survey data on the subject. Do you have any suggestions concerning using such surveys?

Response:

The use of sound secondary research surveys can be invaluable and can assist firms in their quest for “best practices.”  While law firms should strive to use surveys that meet the test of sound research, this is not always possible since no other source of information may be available. In other words – some information may be better than no information at all. In such situations law firms may decide to use research surveys that do not satisfy sound research guidelines. Such information can still be useful for exploratory analysis and when the information will be used for “benchmark” purposes. However, it is important for the firm to keep in mind the limitations of the study.

Many of the national law firm management surveys are designed to provide the information necessary for law firm management to evaluate their firm’s performance relative to comparable law firms. Statistics included in these studies represent broad performance benchmarks against which an individual firm can be measured. Law firms can use this information to compare their firm’s performance with other firms as a whole, as well as with firms of similar size, geographic location, population, practice specialty, etc. Keep in mind that the objective of such comparisons is
to identify potential “red flags” that warrant additional investigation. Deviations between your firm’s figures (for any performance measure) and figures in the survey is not necessarily good or bad. It merely runs up the red flag which alerts you investigate further. Information in these surveys should
be used as guidelines rather than absolute standards.

There are numerous considerations that should be investigated when acquiring and using secondary research. Due the extent and complexity of these considerations rather than outline these here is a link to an article that I wrote on the subject that provides a good outline, checklist and tool for using secondary research. How to Use Secondary Research to Manage Your Firm – A Primer

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

Jul 24, 2012

Focused Effort in Law FIrms – Effective Problem Solving and Implementation

Question:

Recently our firm of 14 attorneys decided to transition from all partners weighing in on every management decision to a managing partner form of management. I was elected to the new managing partner position and have been in the position for four months and I have accomplished very little during this period of time. I am not sure where to start. I would be interested in your ideas.

Response:

You might want to read last week's blog/posting on governance. Structuring and Running Your Firm Like a Business

Lack of focus and accountability is one of the major problems facing law firms. Many times, the problem is having too many ideas, alternatives and options. The result, often, is no decision or action at all. Ideas, recommendations, suggestions, etc., are of no value unless implemented.

Look for ways to insure that your, and your partners, time spent on management is spent wisely. At first identify a few (maybe three) management initiatives that you can move forward fairly quickly and get implemented. Then build upon these successes.

Don’t hide behind strategy, planning, and endless debate. Attorneys love to postpone implementation. Find ways to focus the firm and foster accountability from all.

Don't attempt to initially, in the short term, take on management projects that the firm is unwilling or unable to implement.

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

 

 

Jul 17, 2012

Structuring and Running Your Law Firm Like a Business

Question:

Our firm is a 34 lawyer litigation boutique based in San Antonio, Texas. We have 20 partners and 14 associates. I serve as managing partner at the will of the partnership and spend 35% of my time on firm management matters and the remainder of my time practicing law. A legal administrator and accounting manager assist me with managing the firm. While I have the general support of the partnership, maybe because no one else wants the job, I serve more as a filter and still find that I have to run most of the firm's management decisions before the full partnership. Often I feel that my staff and I are second guessed, management decisions take too long to make and are diluted and watered down, and the firm has missed out on opportunities due to our structure or lack of structure. Other law firms that we have competed against for years have passed us by and have grown while we have stagnated. Do you have any suggestions concerning our approach to managing the firm?

Response:

You firms has reached a size where more structure is usually required. The democratic system of all partners being involved in virtually every management decision might have worked when you were five or six attorneys but has now outgrown this structure. Think about how some of your business clients are organized and structured. Ask around and talk with other law firms and accounting firms your size. I think that you will find that they have put in place more structure to support their business models.

I suggest that you:

  1. Put in place a structure consisting of the full partnership that weighs in on matters pertaining to firm policy/strategic direction, size of firm, partner admission/termination, merger, dissolution, etc.
  2. Appoint a three to five member executive committee that serves as a board of directors that is charged with planning the firm's future and submitting plans to the partnership, budget approval, general oversight of the CEO or managing partner.
  3. CEO or managing partner that implements firm plans, oversees the budget, oversees practice group chairs, and supervises the firm administrator. CEO or managing partner reports to the board of directors.
  4. Firm adminstrator and practice group chairs.
  5. Put in writing a management or governance plan. Start by adopting a list of decisions
    which require a vote of the partners. Charters and job descriptions should be established
    to clarify roles, authority and expectations for the partners, board of directors or executive committee, managing partner(s), the firm administrator, and practice groups heads. Mechanisms should be put in place to insure conformity and accountability.
  6. The partners should delegate full authority for decision making to the board of directors, except for those decisions specifically reserved to the partners, the board should delegate
    appropriate authority to the CEO/Managing Partner and he/she should delegate appropriate authority to the firm administrator.
  7. Partnership, board of director, staff, and practice group meetings should be chaired by the appropriate officials. Agendas should be prepared in advance and permanent minutes should be
    typed up and maintained. Unfinished business should be reviewed at each meeting. Follow-up and implementation mechanisms should be developed.

You should start with general partnership discussion on how the members would like to work together and the kind of firm they want going forward. Are the partners willing to be managed and willing to be accountable to each other and to what extent? Then go from there.

Click here for articles on other topics

Click here for our blog postings on partnership and governance

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

 

Jul 10, 2012

Law Firm Marketing Investment/Maximizing Results

Question:

Our firm is a 6 attorney firm in downtown Chicago. Our practice is a litigation boutique focused on representing individuals in personal injury and divorce matters. We do a fair amount of advertising and have had mixed results. We tried radio and limited TV ads, have an innovative website, have done some pay per click ads on the web and are now considering a lead referral service. Do you have any suggestions concerning what we should be investing in marketing and what we should be doing to maximize our results?

Response:

Studies that have been conducted indicate that law firms that provide services to business firms (B2B) spend approximately 2.4% of fee revenue on marketing. However, law firms that focus on individual consumers (retail law if you will) spend much more – 10%+ of fee revenues on marketing – especially if strong referral networks are not in place. I have several PI, SSDI, Elder Law and Estate Planning firm clients that are spending 10%+ of their fee revenue or greater on marketing. I have some extremely successful PI firm clients spending 20% of their revenue on marketing.

The amount of appropriate investment can depend upon referral networks in place. I have successful PI and Estate Planning firms that are spending very little on marketing, are getting all of their business from their referral networks, and spending next to nothing on marketing and advertising. (By referrals I am speaking about professional referrals not involving a referral fee and client referrals. If referral fees are involved they should be considered a marketing cost) So it depends upon your situation, the type of cases you are going after, etc.

Measure Return on Marketing Investment (ROMI)

As important as the amount of your marketing investment is to your program – you must constantly measure the effectiveness of your various marketing program activities and know at all times your ROMI (return on marketing investment). Then you determine what is working for you and what it now working – then fine tune your program.

Implement Effective Inquiry/Lead Management and Client In-Take Systems

Many firms spend enormous amount on marketing and then drop the ball on managing and processing prospective client inquiries. Inquiries that are generated thought the internet or advertising are colder leads than referrals from other clients or referral sources. Cold inquiries expect 24/7 response – often you only have a two hour window to get back with these inquiries or they will contact someone else. Before you make major investments in TV, Radio, Pay-Per-Click, or Internet Referral Programs insure that you have put in place the appropriate inquiry/lead management and client in-take infrastructure and staffed accordingly. Otherwise you may find that you are getting the inquiries/leads but are not being successful in converting them into paying clients.

Click here for our blog on marketing

Click here for our published articles

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

 

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