Law Practice Management Asked and Answered Blog

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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.

• Keep strategy and planning simple.
• Undertake a few projects at a time that can be realistically accomplished.
• Delegate tasks across the firm.
• Build upon initial successes and move to more complex strategies, which will require more difficult degrees of change.
• Adopt management structures that enable the firm to act decisively and quickly. Replace structures that do not support such a culture.

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.

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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

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

Jun 26, 2012

Branding the Law Firm vs. Branding the Individual Attorney

Question: 

Our firm is a 42 lawyer firm in downtown Chicago. We have 22 equity partners. Five years ago we decided to allocate a significant portion of our marketing budget to branding the firm. In that regard we cannibalized the marketing budget to the extent that very little was left for individual marketing. Now we have many unhappy campers. Some of the partners are advocating scrapping the firm-level effort and going back to our past practices of "long ranger" individual marketing. What are your thoughts regarding firm branding? Should we continue our efforts in this regard?

Response:

In today's climate it takes both – a firm brand and individual attorney brands. Since I don't have all the details concerning your situation – it is difficult for me to generalize. However, based upon what I am seeing in the competitive landscape I believe that the firm was correct in deciding to invest in enhancing the firm's image and brand. However, personal attorney brands are important as well. I am often advised by law firm clients that they hire the lawyer – not the law firm. While this is only partially true, it bring home the importance of individual branding. Often lawyers think they can push off their business development responsibilities to "the firm" and go back to practicing law. This is simply not the case. Marketing and business development must occur at the firm, practice group and individual lawyer levels. Resources must be allocated to each.

Suggest that you review the firm branding program and what is working and what is not. Do not look for quick fixes. Modify the program if necessary. Review the budget and modify it so that resources are allocated to firm, practice groups if they exist, and individual lawyers. Insure that practice groups and lawyers submit business development plans and they are held accountable for results when their plans are funded.

Click here for our blog on marketing

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

Jun 19, 2012

Law Firm Dissolution/Winddown

Question:

Our firm has recently gone through a series of partner defections – we were a 40 attorney firm – now we are 10.  In our last partnership meeting we had some discussions about the possibility of dissolving the firm. If this comes to pass – do you have any tips or suggestions regarding winding down the firm?

Response:

Winding down a firm is like starting a firm but in reverse, harder, and has more steps. Sort of like building a house and then later tearing it down. You will have to deal with:

1. Clients (notification, termination of representation, and disposition of case files)
2. Retired partners
3. Current partners
4. Employees (associates and staff) – job placement, severance, etc.

Unlike other businesses – the major asset of a law firm are its clients, employees, and partners – many of which may have already defected or walked out the door. You may be left with only the liabilities.

One of your priorities will be to decide who will manage the winddown and who will manage internal and external communications.  Then you will need to develop a project management plan and dissolution/winddown plan/checklist. Major priorities will include:

1. Bank Loans
2. Building Lease
3. Retainer Obligations to Clients
4. Equipment Leases
5. Retirement and Other Payouts to Former Partners

Firm should consider if it will retain a caretaker or trustee to manage the winddown.

You should insure that you review the ethical requrements with your state bar association concerning:

1. Clients right to choose legal counsel.
2. Notice to clients
3. Proper and continuous handling of a client's matters
4. Protecting a client's interest
5. Disposition of client files
6. Conflict of interest due to any new affiliations

Click here for our blog on mergers

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John W. Olmstead, MBA, Ph.D, CMC 

Jun 13, 2012

Law Firm Merger – Challenges Implementing a Small Firm Merger

Question:  Three years ago our firm merged. The merger involved three solo attorneys and their staff merging into one firm. Now the firm consists of three partners and six staff members – a firm of nine people.  While the firm is doing well financially and we are on a growth track we are having issues involving conflict among the partners and staff. In some ways we are still operating as three law firms. Staff are not working well together and they refer to old firm and new firm. They are resistant to change and they have created personal fiefdoms. We merged to create one firm – not three – but we fear that we are still functioning as three law firms. Do you have any suggestions?

Response:

The people issue is often the major hurdle that law firms face when implementing a merger. In your situation you are now a firm of three lawyers and six staff members – nine people – a firm three times the size of the individual firms. You are now a law firm – not solo practitioners – and you must adjust you management and communication styles accordingly. Partners must begin to think in terms of firm-first rather than their individual practices or me-first. Roles need to be spelled out for the partners regarding management and leadership of the firm (structure and management plan). Roles and performance expectations should also be spelled out for the staff as well. While conflict can result from personality clashes and having the wrong people on the bus – often conflict results from unclear roles and expectations and poor communications. Fix these issues and you often will reduce the conflict. If you are not having frequently scheduled team meetings I suggest that you start having them. This will do a lot to improve communications.

You must also review your work processes and practices and consolidate as much as possible into a set of firm – rather than three firm's sets – of policies and procedures and everyone should conform to these rather than the practices of the past.

Consider:

1. Partners sitting down, discussing whether they want a firm-first v.s. a me-first firm and what they need to do to set the tone – the example – for the firm.
2. Partners clarifying how they want to manage and lead the firm – specific roles and responsibilities for management, etc.
3. Job descriptions outlying roles and expectations for staff.
4. Annual performance reviews for staff. Working together and teamwork should be one of the measures.
5. Monthly team meetings with an agenda and minutes taken.

If the conflict is due to personality or behavioral issues – confront the behavior and if necessary put the individual off the bus.

Click here for our blog on HR ideas

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

May 28, 2012

Improving Law Firm Management Team Performance

Question:

Our firm has 24 attorneys. We are managed by a management team consisting of a managing partner (25% of his time), a full-time office administrator, controller, and marketing director. I am currently serving as the managing partner. Recently we have been having conflict between various members of the management team. Our team meetings are stressful and I fear that our effectiveness is being compromised. Do you any suggestions?

Response:

I suggest you start by identifying some of the causes. Poor communications often can be the root cause of such problems. Interview each of your team members individually and probe. What do they think? Is communications a problem? Are roles, duties, and responsibilities clarified? Lack of clarity can in these areas can lead to turf wars. You may want to design a team charter as well as job descriptions for each employee and clarify roles, duties, and responsibilities for each team member. Conduct short weekly team meetings to enhance communications. Use agendas. Take minutes of the meetings. Advise each team member of your expectations including all members working together as team members. Let them know that working together as a team is a performance factor that will be considered in performance evaluations and reviews. Conduct periodic performance reviews. Counsel and take action against problem team members.

Take stock of your performance as well. Are you micro managing the team or second guessing team members? Have you honed your leadership skills? If not – work on your management and leadership skills as well and consider coaching and leadership training if necessary.

Click here for our blog on HR ideas

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

May 20, 2012

Law Firm Branch Office – Key Issues

Question:

Our firm represents general business clients in Cleveland, Ohio. We have 37 attorneys. Currently we have only one office at the present time. As part of our planning process we have been discussing whether we should open a branch office in another major city in Ohio. What issues should we be thinking about?

Response:

Branching is being incorporated into more firm strategic plans. However, often the results do not meet firm expectations considering the time, effort and investment made. Overhead increases, anticipated opportunities do not materialize, management becomes more complex, resources are spread too thin, and the firm loses sight of its common identity.

Branching can be risky due to the dollars and managerial time investment. However, there can be significant benefits as well.

The starting point is to avoid knee jerk reactions such as branching because other firms are doing it, assuming that clients want you to have a presence in another geographical area, etc. Do your homework and build a business case for the branch office. Here are ideas to get you started:

1. Ask your clients what they think about the move. Is the move important to them?
2. Determine your objectives for the branch office. For example:

a. It meets the firm's strategies outlined in the firm strategic plan
b. Geographic expansion
c. Client requirements
d. Defensive measures
e. Convenience office for client meetings

3. Obtain and analyze quantitative data.

a. Client information obtained from meetings and surveys
b. Information concerning referral sources
c. Competitor analysis
d. Business growth market research

Build your business case (a business plan for the branch office if you will) and make sure that a branch office makes business sense for your firm. Create a pro forma budget and review the financial impact. If a branch office makes sense begin thinking about implementation issues such as staffing, actual location, management, etc.

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May 16, 2012

Law Firm Business Plan Implementation and Accountability

May 09, 2012

Using Financial Dashboards to Manage the Law Firm’s Pipeline

Question:

Our firm is an 8 attorney general practice firm in Kansas City. In addition to hourly work we have a heavy mix of contingency fee work as well. Other than our monthly profit and loss statement and a report of hours produced we have no other financial reports that we use. I have read about financial dashboards. What might we use them for in our firm?

Response:

In these economic times effective pipeline management is becoming more and more important in law firms – especially in those firms that do a lot of contingency fee work. This might be a good place to start using some dashboard metrics.

Pipeline management is a term used in the management consulting profession to refer to the process by which you continually evaluate your active opportunities (prospective clients to booked clients) for their balance of QUALITY and QUANTITY. The goal is to continually stay on top of the overall health which is a full pipeline. Pipeline management allows client relationship managers to more accurately forecast fee revenues, better staff and manage client engagements, and close more client business.

I often also refer to Pipeline Management in law firms in the context of using financial dashboards by which the individual charged with financial management responsibilities is continuously aware of significant changes in the firm's Pipeline (from prospects to cash):

• Number of new business inquiries for the month
• Number of pending prospective clients
• Number of open client matters
• Dollar value of Unbilled Work in Process/Age
• Dollar value of Accounts Receivable/Age
• Dollar value of billings
• Dollar value of unearned retainers
• Dollar value of fee receipts/collections

By comparing these dashboard statistics to a prior month, quarter, or year – you are able to measure the effectiveness of your marketing and avoid financial surprises down the road.

Click here for our blog on financial management

Click here for our law firm management articles

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

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