Law Practice Management Asked and Answered Blog

« April 2017 | Main | June 2017 »

May 2017

May 31, 2017

Law Firm Governance – Partner Participation in Management

Question: 

I am the founder, majority partner (80%), and managing partner of a twenty two attorney firm in Phoenix, Arizona. The firm practice is focused in the area of health care. There are twelve equity partners, five non-equity partners, and five associates. I manage the firm as a benevolent dictator. I am becoming overwhelmed trying to manage the firm and practice law and I believe the firm is now at a size where others must become involved in managing the firm. I have been considering forming a committee of all the equity partners to manage the firm. Your thoughts are welcomed.

Response: 

While I believe that you are of a size that warrants broader participation in the governance and management of the firm you can go too far. Broad participation in decision making and consensus building slows things down. It can also make it difficult to reach a definitive conclusion. Getting all the partners to agree takes time. Broad participation can also diffuse responsibility. If everyone is in charge no one is in charge. In law firms whose partners are overly deferential to their partners’ views, the decision-making process often seizes up. Unless firm partners who, when necessary, will assert themselves and use their influence to press for action, the only decisions it’s likely to make are decisions not to decide.

I believe that you should stop short of broad participation by all the equity partners. Consider a three member executive committee elected by the equity partners on three-year staggered terms. This committee would have responsibility for the general management of the firm not delegated to your firm administrator if you have such a position in your firm. Committee responsibilities would include financial management, human resource management/oversight, client development, IT systems oversight, procedures and policies, etc. Establish proper structure for the committee with a chair, identified roles and duties for each member, defined meeting schedule, and agenda and meeting minutes. Define in your partnership agreement those powers that are restricted to a vote by the full partnership and the rules for voting – one partner one vote or vote by percentage interest. Other than those powers restricted to the full partnership partners should let the executive committee manage the firm and not second guess.

Click here for our blog on governance

Click here for articles on other topics

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

May 23, 2017

Solo Practitioners Best Friend – Law Practice Continuation Plan

Question: 

I am a sole practitioner in Peoria, Illinois. My firm is a general practice firm that services clients throughout Central, Illinois. I have four staff members. I am fifty eight. While I have enjoyed having my own practice for the past twenty years I am concerned – what if something were to happen to me today or tomorrow – what is my backup plan in the event of short-term illness, disability, death, and even vacations. How would the firm keep operating? Who would take care of the client’s needs? How would my staff be taken care of?

Response: 

Sound practice continuation arrangements can solve this dilemma and preserve practice value and can help prevent a lawyer’s spouse or immediate heirs from facing a hasty sale or disposition of the practice in an emergency. A practice continuation arrangement can also give lawyer practitioners, their staff, and their family’s peace of mind.

A practice continuation arrangement is an arrangement – typically in the form of an agreement or contract made between an individual lawyer or a small law firm and another lawyer or law firm. The arrangement describes a course of action to transfer a lawyer’s practice and sets payment for its value. In the event of vacation, temporary or permanent disability, or death, a practice continuation arrangement protects the practice, the business interests of the lawyer or law firm’s clients and the financial interest of the lawyer and his or her family.

Approaches

There are different kinds of practice continuation arrangements. Typically, a lawyer enters into a one-on-one agreement with another sole proprietorship, partnership, limited liability company, or professional corporation in the community. Agreements can range from simple “dual coverage for each other” for vacation or other temporary absences to sale of the practice in the event of long-term disability or death.

A practice continuation agreement’s provisions for the sale of a practice must contain a reasonable valuation and a realistic payment structure. What lawyers really want is to leave to their surviving spouses or heirs is something from all the hard years of work it took to build the practice. To accomplish this end, selling the practice at a buyer friendly price may be necessary. Law practices can lose value very quickly, so timing is vital.

Lawyers must invest time and effort to find suitable successors for their firms and to create useful, equitable, practice continuation agreements. The key is to finding the right person or firm. The investment of time is a good investment, however, because a good practice continuation arrangement will ensure that if a lawyer is unable to continue managing the practice, the value he or she has built over the years will not be lost. An orderly transfer of a practice to another lawyer or law firm is a substantial financial benefit to the lawyer’s family. At the same time, through the handpicked successor, the lawyer fulfills his professional responsibility to his clients. Lawyers who do not have these agreements should learn more about preserving the value they have created.

Click here for our blog on succession

Click here for out articles on various management topics

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

May 16, 2017

Setting up a Branch Office in Another State – Ask Your Clients

Question: 

I am the managing partner of a sixteen attorney insurance defense firm in Kansas City. Several of our insurance company clients have advised us that they are willing to send us cases in Texas. We have decided that we would like to establish an office in Texas. Our plan is to hire three lateral attorneys with seven to twelve years experience with Texas based insurance defense firms. We are not certain as to the best city to establish this office. We are thinking it should be a central location. We would appreciate your thoughts.

Response: 

Unlike many states that have one or two major cities Texas has several including Austin, Dallas, San Antonio, Houston, Ft. Worth, El Paso, Corpus Christi, and others. Austin, Dallas, San Antonio, and Houston are all desirable locations for branch offices. Austin is more centrally located if your goal is to service the entire state.

I think it would be risky to simply try to guess as to the appropriate location. Your clients may have law firms they are using in certain areas of the state and may be looking for you to serve a need in a particular area of the state. They may not be willing to pay your travel expense if you are on the other side of the state. If this is the case this is the area that you need to be. I suggest that you have a discussion with each of these clients and ask them where their cases are concentrated and where they would like to see you have an office. This should dictate the office location. Hopefully, each of these clients are on the same page. If each of these client’s cases are concentrated in different geographical areas ask your clients whether they are willing to pay for travel related expenses from a central location. This should guide your location decision.

I would also make sure that these commitments are solid from each of these clients. I would get commitments from each client as to the types and number of cases they envision sending to you so you can properly assess the profitability of establishing a branch office. Do some research on the availability of experienced lawyer talent in the area. I would also give some thought as how you plan to integrate these Texans into your firm and culture. See my prior blog on branch offices.

Click here for articles on other topics

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

 

May 10, 2017

Law Firm Billing Software – Cloud-Based vs. Desktop

Question: 

I am the managing partner of a twelve attorney firm in Toledo, Ohio. Our firm is evaluating new billing software and we are looking into some of the cloud-based solutions. We are currently using a desktop program that we have been using for fifteen years. The program handles our billing as well as our accounting. We have kept up with the updates to the program and the software has worked well for us. Several of our younger attorneys have used a couple of cloud-based billing programs in other firms and are trying to convince the firm to change over to one of these programs. They believe it is easier to enter their time sheets and they believe the software is easier to work with. What are your thoughts?

Response: 

I agree that the subscription cloud-based billing programs are easier to learn and use. In part this is due to limited function and capabilities. However, user simplicity is only part of the equation. The bigger question is whether the software will meet your needs. Many of the cloud-based programs were designed for solo practitioners or very small firms with limited reporting requirements. While these programs are getting better and inheriting more features they are still not up to par with the older desktop programs. Limitations include:

By the time you add in the cost of additional accounting software that you have to buy and maintain and factor in the number of users – subscription cloud-based solutions can get expensive for a firm such as yours that may have twenty users. The cloud-based billing software alone may cost between fifty to one hundred dollars per user per month – in your case one thousand to two thousand dollars per month. This cost will be offset by savings on hardware, IT support, user training, managing software updates, etc.

Cloud-based subscription billing software is getting better every year, is the wave of the future, and is a good solution for solo attorneys and very small practices. However, it may not have the functions and features that you need in your twelve attorney firm. Analyze the reports you are using now and what you need out of your system and then compare your requirements against the capabilities of each cloud-based system that you are considering.

Click here for our blog on technology

Click here for articles on other topics

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

 

May 02, 2017

Increasing Law Firm Revenues Through Additional Marketing Investment

Question: 

I am the solo owner of a two attorney firm in Atlanta. I have been in practice for thirteen years. I have one associates that has been with me for one year, one full-time paralegal, and two part time assistants. I have a general practice. Revenues have stagnated and I need to identify strategies for getting to the next level. My practice is struggling. I have been thinking about narrowing my practice and focusing on five or six practice areas. I am ready to invest in marketing. I would appreciate your thoughts.

Response: 

This is the age of specialization – less often results in more. Many attorneys in small general practice firms are afraid to specialize and focus on three or less – even one – area of practice. The concern is that by specializing there simply will not be enough business of keep the attorneys busy generating sufficient revenues.

I have worked with several firms that have shifted their practices from general practices to practices limited to estate planning and elder law and they have performed far better as specialized practices than they did as general practices. I suggest that you consider focusing your practice on on no more than 2-3 key practice areas in which you can differentiate yourself.

Here are a few thoughts:

  1. Don’t copycat. Brand yourself. Look for ways to differentiate yourself and your firm from your competitors. Become the only attorney that can do what you do. Make a decision – what do you want to be known and remembered for? Unique services, unique client groups, different service delivery strategy, personal style. Create a five-year plan for goal accomplishment.
  2. Create a marketing culture and environment. Marketing and client service needs to be incorporated into the culture of the firm. All attorneys and staff should have a role in marketing. Owners/partners must walk the talk and consistently, build and reinforce the marketing goals of the firm. Marketing goals and action plans should be formulated and team members held accountable. Over time a marketing mindset will emerge.
  3. Learn how to become “solutions orientated” and become a consultant to your clients as opposed to simply their attorney. Solutions may involve activities and services other than legal services. Think out-of-the-box and outside of typical frameworks in which you are comfortable.
  4. Join a client’s trade association and make contributions in the form of articles, speeches, conference attendance, etc. Learn the client’s business from top to bottom.
  5. Increase your geographic reach – possibly a state wide or multi-state practice.
  6. Institute quarterly client service/marketing brainstorming sessions. Break the rules. Encourage all members in the firm to think out-of-the-box and innovate. Look for new ways to solve client problems. Look for new solutions. No topic should be initially be considered out-of-bounds.
  7. Write an article every other month.
  8. Take a client or referral source to lunch once a week.
  9. Establish a marketing library to include general materials on marketing as well as specific publications related to your clients business.
  10. Provide marketing training/coaching for attorneys and staff. and improve time management skills of everyone in the firm.

Click here for our blog on marketing

Click here for articles on other topics

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

 

 

Archives

Categories

    Subscribe to our Blog