Question:
I am a partner and a member of the Executive Committee of a 250 attorney firm in the mid-west. We have had a succession plan in place for several years for our senior partners. Several have completed their phasedowns successfully and others are struggling. One of our challenges is many of our mid-career partners are simply not ready. I would appreciate your thoughts.
Response:
This is a common problem that many larger firms face as their senior partners phasedown to retirement and try to transition client relationships and firm managerial and leadership roles to the next generation. Often the focus of non-founders is on billable hours and working attorney fee collections as opposed to non-billable longer-term investment activities such as client development, firm leadership, and management.
Unlike smaller law firms most large law firms do invest time and effort in developing mid-career partners in these areas. However, often more can be done. Here are a few thoughts:
I would encourage mid-level partners to try to budget 70% of their worked time for billable client production and 30% for non-billable investment activities.
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John W. Olmstead, MBA, Ph.D, CMC
Question:
I am a partner in a 12 attorney general business firm located in St. Louis, Missouri. I was elected as managing partner earlier this year. I have been a lawyer and with this firm for eight years. I also have a MBA degree and managed a small business before becoming a lawyer. Frankly, I have been amazed at how law firms conduct business and I would like to change our thinking and our culture. Do you have any thoughts?
Response:
Here are five tips that you might find useful.
TIP #1: Work with the attorneys in the firm and help them develop more of a business mindset. Try to get them to become more entrepreneur and learn how to think like businesspersons. Encourage them to look at the world from their client’s perspective and consider their clients their business partners.
TIP #2: Encourage all attorneys to select their clients carefully. Establish client acceptance criteria. Learn how to say no. Dump undesirable clients.
TIP #3: Encourage all attorneys to brand themselves. Ask them to look for was ways to differentiate themselves from their competitors and to become perceived as the only attorney that can do what they do. Ask them to make a decision – what do they want to be known and remembered for? Unique services, unique client groups, different service delivery strategy, personal style. Have the firm and each attorney create a five-year plan for goal accomplishment.
TIP #4: Encourage each attorney to become “solutions orientated” and become consultants – trusted advisors to their clients as opposed to simply their task and process attorneys. Solutions may involve activities and services other than legal services. Ask each attorney to think out-of-the-box and outside of typical frameworks in which they are comfortable.
TIP #5: Conduct a firm-wide management and leadership assessment and identify strengths and weaknesses. Enhance management and leadership skills through skill development training and personnel acquisitions.
Good luck!
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John W. Olmstead, MBA, Ph.D, CMC
Question:
I am a founding partner in a 17 attorney firm with nine partners and eight associates located in Chicago west suburbs. We represent business firms and other institutional clients. I am the primary rainmaker in the firm. I am 60 and am planning on retiring when I am 65. My concern is how to effectively transition clients. I would appreciate your thoughts.
Response:
Successful client transition – moving clients from one generation to the next – is a major challenge for all law firms. Shifting clients is not an individual responsibility but a firm responsibility. To effectively transition clients the individual lawyer, with clients, must work together with the firm to insure the clients receive quality legal services throughout the transition process. Both the individual lawyer and the firm must be committed to keeping clients in the firm when the senior attorneys retire. Potential obstacles include:
Transitioning client relationships effectively can and where possible should take a number of years – preferably five years – typically not less than three years.
The following client transition plan might be an approach you could take to transition clients over a three to five year period:
Effective client transition takes time so start early. Clients hire lawyers not law firms.
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John W. Olmstead, MBA, Ph.D, CMC
Question:
I am the managing partner of a four attorney (all partners) estate planning firm in Tulsa, Oklahoma. We are all working hard but I do not believe that we are making the money that we should be. Last year our fee collections were $600,000 and our net income $250,000 which was the total amount that was available for partner compensation. Thus, we each made $62,500.00. Each of us have been practicing for over 20 years and I believe this is totally unacceptable. We appear to be busy and have plenty of work. I would appreciate your thoughts.
Response:
I agree that the firm should be doing much better. Regardless of practice area (unless you are an insurance defense firm) and where you are located I believe you should be averaging $300,000+ fee collections per lawyer. You are averaging $150,000 per lawyer. You expenses of $350,000 ($67,500 per lawyer) is actually low and not the problem. You need to dig into the numbers and look into why the revenue numbers are not higher. Usually the culprits are lack of business, inadequate billing rate (or effective rate for flat fee matters), not putting in the hours, or poor time management and time keeping habits. Each attorney should strive for 70% of worked time to be billable (client production) time. Lexis has published a couple of studies on billable hours that you might find useful - Billable Hours Survey Report, Non-Billable Hours Survey Report and Where Do all the Hours Go
I find that many estate planning firms that do much of their work on a flat fee basis often are not realizing effective rates anywhere near their target time billing rates.
Look into the numbers and determine the culprit or culprits and then develop a strategy for dealing with each one – marketing to improving work ethic and time management and time keeping habits.
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John W. Olmstead, MBA, Ph.D, CMC