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August 2013

Aug 27, 2013

Benchmark for Law Firm Revenue

Question:

I have recently been hired as our firm's first firm administrator. We are an insurance defense firm with 14 attorneys located in Memphis. This is my first law firm. Previously I managed a mid-size CPA firm in the area. I am interested in your thoughts concerning law firm revenue benchmarks.

Response:

Surveys vary. However, national averages for all firm – types – sizes, etc. tend to be around $385,000 per lawyer. I have firms averaging $250,000 to $550,000 and up. So it varies by location, type of practice, size of firm, etc. However, I believe that $300,000 per year per lawyer should be considered a realistic goal for all firms, all sizes, all practice areas, and all locations. For some firm this might be a stretch – but I believe it to be an attainable goal.

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

Aug 20, 2013

Law Firm Associate Performance Evaluations

Question:

I am the managing partner of an eight attorney firm in Central Illinois. We have five partners and three associates. Over the years we have experienced excessive associate turnover and have had problems retaining associates. While we believe that we provide adequate feedback to our associates regarding our expectations and their performance in real time and in their annual reviews several of my partners believe that we can do better. I would appreciate your thoughts and suggestions.

Response:

One of the most frequent complains I hear during interviews with associates in law firms of all sizes is lack of specific detailed feedback, unclear or non-existent expectations concerning their performance and future career progression, and vague informal performance reviews.

Here are a few suggestions:

  1. Institute a system where associates, especially when they are new, have a chance to work with all of the partners in the firm.
  2. As managing partner solicit feedback from your partners and meet monthly with each associate and discuss their performance during their first two years of employment with the firm.
  3. Annually conduct formal performance reviews with each associate. Before the review obtain specific feedback from each of the partners and have each partner complete a written review of each associate using the associate performance rating form. Ask each associate to conduct a self-evaluation using the firm's associate performance rating form and then conduct a detailed review with each associate. The review should be detailed and specific and should be developmental with specific goals and timelines established. Document the review in the associate performance rating form.
  4. Consider developing an associate career progression program (partnership track) and committing it to writing. The program should outline the timeline for first consideration for partnership, competencies and performance factors, what partnership means in your firm, how an associate becomes a partner, buy-in or capital contribution requirements, voting, etc.
  5. Be honest and open with your associates – don't try to be Santa Claus – tell them the truth, have the difficult discussions, and make the tough calls. Be accessible.

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

 

 

 

Aug 10, 2013

Law Firm Strategic Planning – Implementation – Responsibility – Accountability

Question:

I am the managing partner of a 17 attorney law firm in downtown Chicago. We are a litigation boutique firm with a majority of our work in insurance defense. We have been in practice for 7 years. While we grew quickly during the early years – we have reached a plateau and growth has stalled. We are planning our first strategic planning retreat and hope to develop a long range strategic plan. Do you have any suggestions?

Response:

Where more planning efforts fall short is in the implementation of the plan. The plan lays on the shelf and collects dust. I suggest that the plan be implemented through the firm's existing management structure, i.e., the managing partner, executive committee, the strategic planning committee, and practice area chairs.

Individual partners should be assigned responsibility and held accountable for the satisfactory implementation of each phase of the plan in accordance with an agreed-upon timetable. This should be done during the planning retreat session.

Status reports should be provided to the other partners in each phase of the plan in order to keep them apprised of the planning activities.

Suggest an online project management system (portal) be used to track progress.

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

Aug 06, 2013

Are We a Suitable Candidate for a Traditional Law Firm Merger?

Question:

Our firm is a 22 attorney firm located in Pittsburgh. While we represent both individuals and businesses our focus is on small business representation. During the past few years we have come upon hard times. We have lost several partners and a couple of business clients and we have a few partners coming up for retirement over the next few years. Several of our senior partners have suggested that we might be a merger candidate for a large law firm. What are your thoughts?

Response:

Don't count on a larger law firm coming to your rescue unless:

  1. You have a practice that is strategically important to the larger firm (all practice areas).
  2. You have an exceptional bench of superior lawyer talent with mixed age spread.
  3. Your firm has had exceptional financial performance and on a par with the larger firm.
  4. Your billing rates, methods, and practices are on a par with the larger firm.
  5. Your partner earnings are on a par with the larger firm.

Unless the above ingredients are in place the firm may not be a suitable candidate for merger or it might find that the larger firm cherry picks some of the key partners off one by one.

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

 

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