Law Practice Management Asked and Answered Blog

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

Apr 04, 2018

Associate Attorney Motivation

Question:

Our firm is a fourteen attorney firm in Chicago. There are nine partners and five associate attorneys in the firm. Our practice is limited to insurance defense. I am one of the founders and senior partners in the firm and have been practicing for 35 years. We are having problems getting our associates to produce at the levels that we need for the firm to be profitable. We have a 1800 annual billable hour requirement and several of our associates aren’t even close. We have a bonus system that pays associates a bonus based upon billable hours exceeding 1800 billable hours. What are we doing wrong?

Response:

It often takes more than setting up a bonus system and then leaving it on autopilot. I am finding that the intrinsic reward of doing a good job and meeting the expectations of the firm’s partners are as important as the bonus system. In client law firms that have had similar problems we have found that by supplementing the bonus system with monthly reviews and coaching sessions with associates not meeting their targets has made the difference. Here is an outline of the process:

Review you monthly billing/hours reports for all associates each month.
Identify those are below targets and expectations.
Meet with those associates that are below targets and expectations.
Discuss why there are having problems meeting expectations. Lack of work, not working enough hours, poor time management habits, or poor timekeeping habits.
Identify solutions to the above problems.
Monitor and follow-up.
Continue to meet every month until such time as the associate is meeting targets and expectations.

The bonus rewards those that want to push beyond the 1800 billable hours but does nothing to solve the problem of those not meeting the 1800 billable hour expectation.

Click here for our blog on compensation

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

Mar 14, 2018

Attorney Career Progression – Competency Model

Question:

I am a member of a three member executive committee with our twelve-attorney firm in San Antonio, Texas. One of our responsibilities is oversight of our career development program for associates and non-equity partners. We have been discussing our policy of admitting associates to non-equity partner and non-equity partners to equity partner. Presently, we do not have anything in writing regarding timeline for consideration or what qualifies one to move to the next level. Associates and non-equity partners are unhappy with the present process. They want more clarity concerning their career advancement within the firm. You advise would be helpful to us.

Response:

Several of my clients are developing career advancement programs that incorporate a competency-based approach that outlines specifically what is takes to be successful and advance from associate to non-equity partner and from non-equity partner to equity partner. Rather than leaving the formula for success in the minds of the equity partners, a competency model gives each attorney in the firm an understanding of how he or she will need to perform in order to be perceived as progressing, an ultimately, as successful. Competency models offer transparency and clarity. The model outlines specific behavioral observations as the primary source of performance information. Benefits are as follows:

Associates are presented with clear information on expectations for their level of experience and a road map of what is expected as they progress. Specific expectations are laid out for progression to non-equity partner as opposed to a specific timeline.

Non-equity partners are presented with clear information on expectations for their level of experience and a road map of what is expected as they progress. Specific expectations are laid out for progression to equity-partner as opposed to a specific timeline.

Equity partners and senior lawyers benefit from a consistent description of performance standards that allow them to access performance, assign work effectively, and offer more meaningful career guidance.

The firm has a consistent methodology for making and compensation decisions.

In order to work, a competency model should be integrated with attorney recruiting, performance evaluations, training, and compensation systems. Associates and partners must invest time in attorney development.

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

Feb 21, 2018

Law Firm Staff Work Distribution Analysis

Question:

I am a new firm administrator with a thirty-five attorney litigation firm in Los Angeles, California. In my accounting department I have seven staff members handling a variety of tasks. My partners are concerning that we are inefficient and over staffed. I am having a hard time finding where to start so to get a handle on this issue. Please provide any information that you are willing to share.

Response:

There are questions that you must ask yourself in order to analyze the work distribution of your accounting department. Such questions as the following will help you in knowing what to look for:

What activities take the most time?
Is there any misdirected effort?
Are skills being used properly?
Are you staff doing too many unrelated tasks?
Are tasks spread too thinly?
Is work distributed evenly?
Are the right people on the bus?

Before you can analyze your accounting department you must be able to see clearly, in one place, all the activities of your accounting department and the contribution of each employee on each activity. A work distribution chart is the easiest and best way to arrange these facts in simple form. A properly made work distribution chart will help you determine if the largest time of your staff is devoted to the major function of your department. (Operations list down the left rows and staff names listed across the columns) It may indicate that more time is being devoted to other functions than is necessary. A function or task may require a more detailed study, as might be indicated where total hours seem unreasonable. You may discover that your accounting department is spending too much time on relatively unimportant or unnecessary work. Misdirected effort appears on the work distribution chart when staff are involved in tasks not contribution directly to the mission of the accounting department.

Here is an overview of the process:

Have each staff member prepare a task list.
1. List specific and clear activities for a specific time period with time listed for each activity.
2. Task lists should cover a complete cycle of work. (Weekly, Monthly, etc.)
Determine operations performed
1. Prepare an operations list grouping related or same kind of tasks (operations).
2. Check operations list against breakdown of department mission.
Complete the work distribution chart
1. Complete heading.
2. List operations.
3. Enter staff names in a column of the chart.
4. Enter tasks, time, and work count for each operation.
5. Total the columns and rows.
Examine the present work distribution
1. What operations take the most time?
2. Are they essential?
3. Is there misdirected effort?
4. Are skills used properly?
5. Are you staff doing too many unrelated tasks?
6. Are tasks spread too thinly?
7. Is work distributed equitably?
8. Is the department overstaffed?
9. Are the right people on the bus?
Improve work distribution
1. Consider eliminations, additions, and rearrangement of tasks and operations.
2. Prepare a proposed work distribution chart.
3. Discuss proposed changes with your partners.
4. Put proposed changes into effect.

Click here for our blog on profit improvement

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

Aug 02, 2017

Associate Attorney Career Track in a Small Law Firm

Question:

I am the owner of a five-attorney estate planning practice in Denver. I have four associate attorneys of which three have been with the firm for over twelve years. Last year an associate that had been with me for many years left the firm and started his own practice. I thought I was paying him well by virtue of a competitive salary and discretionary bonus in additional to other benefits. I do not want to lose other seasoned attorneys. What should I do to provide more incentives for them to stay with the firm?

Response:

Our experience as well as research over the years by our firm and others has demonstrated that the following, in priority order, are the key drivers of associate attorney job satisfaction:

Satisfaction with immediate manager or supervisor
Opportunities for training
Satisfaction with team and coworkers
Opportunities for career growth
Compensation
Opportunities for promotion

While compensation often is considered the primary factor related to associate satisfaction, I often find that opportunities for career growth and promotion play a significant role. Associates do leave law firms for less money for career growth and promotion opportunities in other firms or in some cases starting their own firm.

A key tool that law firm’s should be using for managing attorneys is a well-defined career path/track. The critical components of a career track include well-defined levels, roles and responsibilities at each level, promotion criteria, and compensation plans for each level. Typically these are outlined and documents in a career advancement program policy document. For example:

Levels. Each attorney level within the firm (partner, non-Equity partner, principal, senior associate, associate) should carry a specific and clear title.
Roles and Responsibilities. For each level, the typical roles and responsibilities should be clearly documented including client service work as well as business development and administrative responsibilities.
Promotion Criteria. For each level in the firm, the criteria for promotion to that level should be outlined in the career track or career advancement program policy document. These criteria are often tied to competencies (knowledge, capabilities, and experience of the attorney), tenure as well as other factors.
Compensation. A compensation plan should be developed for each level. (salary, bonus, benefits, and other perks)

I suggest that you give some thought to developing such a program. As you start with levels you will have to do some soul searching and confront the most burning issue – is partnership an option for associates in your firm – do I want partners – and go from there.

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

Jul 11, 2017

Small Law Firm Retreat

Question:

Our law firm is a sixteen attorney Intellectual Property firm in Tampa, Florida. We have ten partners and six associates. I am a member of our three member executive committee and I have been given charge of looking into the pros and cons of having a firm retreat with all of our partners and associates. We have not had a retreat before and we would like your thoughts concerning the benefits that a small firm can receive from a retreat.

Response:

Attorneys in group practice experience numerous issues as they grow and expand their practices. Management problems increase as the firm becomes larger. Senior partners often do not want to be involved in increased firm management responsibilities. If this is one of your firm’s issues, a retreat will provide an opportunity to deal with it before it gets serious and out of hand. Use a retreat to review how administrative responsibilities are being handled throughout the firm’s entire operation. Place on the retreat agenda topics such as strategic planning, succession planning, growth planning, client development, etc. Consider whether your firm has the need to establish an office administrator position (if you do not have one) or whether the broadening of responsibilities of those on staff will provide the desired remedies. It is particularly important for small to medium-sized firms to clearly recognize at the retreat that the problems of growth are in part administrative and appropriate steps to deal with these problems early will prevent serious disruptions and internal conflicts later.

Many attorneys are reactors – they are trained to solve client problems – not management problems. Most attorneys find firm management distasteful and feel that their time is best spend doing billable work for clients. However, a firm’s success is in part dependent upon how well it is managed. The retreat can be used to educate firm members about the importance of these issues, even if the firm is a small firm. Retreats also benefit attorneys by helping them understand the management roles of other partners and other management positions in the firm as well as open up and improve communications.

Click here for our blog on strategy

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

Apr 04, 2017

Law Firm Retreats – Including Key Staff Members

Question:

I am a partner in a forty-five lawyer firm in Memphis and a member on the firm’s executive committee. We are planning on having a two-day planning retreat in June of this year. We have had these retreats every year for the past six years. Past retreats have only included attorneys. This year we are considering including staff members. We would appreciate your thoughts as to whether this is a good idea.

Response:

A firm invites all key staff to a retreat when they can play a major role in identifying problems and developing solutions. A firm retreat is an excellent forum if the partners or management have determined that individuals at different levels within the firm are having communication problems – for example – where communication is inadequate between:

Equity partners and non-equity partners
Partners and associates
Attorneys and staff

Having these individuals participate in solving their own communication problems at the retreat usually produces better results than those obtained when the partners hand down orders that may not deal with the real issues. Staff participation can help identify problems and can involve more firm members after the retreat in the implementation of solutions – improved buyin.

As a rule, it is very productive to include individuals from nonprofessional or non management levels at a retreat when they are eager to be involved in problem solving efforts on a day to day basis.

A retreat solely for partners at the senior level is conducted to review firm progress and to deal specifically with financial, compensation, conflict between partners, growth planning, business development, or unique problems with staff members.

Some firm hold separate meetings for each level of staff in addition to combined meetings with attorneys.

Click here for our blog on strategy

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

Mar 21, 2017

Retaining Valued Associate Attorneys – Conducting Exit Interviews

Question:

Our firm is a fourteen attorney law firm in San Diego, California. We handle business transactions and litigation for business firms in the area. I am a member of the firm’s three-member executive committee. We have been experiencing associate attorney turnover for the past two years and don’t know whether it is due to more opportunities in the job market as the economy has improved or whether we have internal issues. We would appreciate your thoughts on the matter.

Response:

I suggest that in the future you conduct structured face-to-face exit interviews when associates resign their positions. You may want to even interview associates by phone that recently resigned and left the firm. Exit interviews can provide an opportunity to find out how you can retain your valued associates. Departing lawyers that are willing to be open regarding their experience with your firm can provide valuable feedback and information as to how your firm is viewed by your associates, why your associates are leaving, and what the firm can do to resolve issues and improve retention.

I suggest that you conduct either face-to-face or telephone interviews or as a last resort written confidential voluntary questionnaire. Questions might include:

What influenced your decision to join the firm?
Has the firm met your expectations? Describe?
Were your work assignments aligned with your personal and professional goals and interests?
Did you find your work assignments interesting and challenging?
Were there particular individuals who had a substantial impact on the quality of your experience here? How did they impact your experience?
Did you receive timely and quality feedback regarding your performance?
What experiences did you find the most positive?
Least positive?
Is there anything that the firm could have done to improve your experience here?
Were you satisfied with your compensation and benefits?
Why did you decide to leave the firm?
What factors influenced your choice of the new firm that you joined?
Other issues or recommendations that you feel would be helpful for the firm to know.

After you have solicited feedback via exit interviews it is critical that you look into any issues reported, determine whether there is merit, and take appropriate actions that can be taken to resolve issues and improve retention.

Click here to download the above document.

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

Jan 31, 2017

Law Firm Administrator Competencies – Searching for a First-Time Legal Administrator

Question:

Our firm is a twelve attorney business litigation firm in Springfield, Illinois. I am a member of our three member management committee and I have been charged with helping the firm find and hire our first legal administrator. This will be our first experience. While we have a bookkeeper that handles our billing and accounting the rest of the firm’s management matters are handled by the management committee. We believe that we have reached a size where we need help with managing the day-to-day operations of the firm. What sort of skill set and type of person should we be looking for?

Response:

The starting point is to have some heart to heart discussions internally to make sure all the partners are on the same page regarding the role the firm is looking for an administrator to play? Is the firm willing to delegate authority with responsibility and let the administrator really manage the business side of the practice (a true administrator) or is the firm looking for more of a lower level office manager? This will dictate the skill set and type of person that you should be looking for. I suggest that you develop a job description for the position listing not only the duties but the authority levels as well and have every partner in the firm sign off on it.

An excellent resource in the Association of Legal Administrators (ALA) which is the professional trade association for legal administrators. They have published a document listing 56 competencies in the following five categories:

Communications and Organizational Management
Legal Industry/Business Management
Operations Management
Financial Management
Human Resource Management

ALA also has some helpful areas on their website for a law firm looking for an administrator including articles on evaluating your firm’s needs, – the candidate search process, and defining the role of the administrator.

Many firms burn through their first administrator quickly and end up having to try again with another person or two. First time failure if often the result of not determining up front and having the partners agree regarding the role, expectations, and authority level of the administrator.

Do your homework and you will increase the change of success with your first administrator.

Click here for our blog on governance

Click here for our blog on compensation

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

Oct 04, 2016

Law Firm Client Business Development – Motivating Lawyers to Develop New Client Business

Question:

I am the managing partner of an eighteen attorney firm in New Orleans. We have six equity founding partners, four non-equity partners, and eight associates. We represent institutional clients. Four of the six equity partners are in their sixties and two are in their late fifties. The six equity partners are concerned about the future of the firm as they approach retirement. If they retired today the firm would cease to exist – the non-equity partners would not be able to retain our existing clients and acquire new clients. We have not been successful at motivating our non-equity partners to develop and bring in new clients. We have harped on this for years and encouraged all attorneys to develop business. We implemented a component of our non-equity partner and associate compensation system to compensate them for new client origination. Unfortunately, we have not been able to motivate our non-equity partners and associates to develop new sources of business. Our non-equity partners and associates have a nine to five work ethic and an entitlement mentality. Would you share your thoughts?

Response:

Often law firms hire associates simply to bill hours and perform legal work. Then years later they are asked to develop clients. Many are unprepared and at a loss as where and how to start. I believe that if you want attorneys to develop clients you have to hire attorneys that have the personality, ability, and you have to get them started on business development in their early years.

To turn your non-equity partners and associates into rainmakers at this stage will be difficult but not impossible. Here are a few ideas:

Insure that your compensation system reinforces and rewards business development results. However, don't be surprised that even if your system rewards business development behavior does not change.
Extrinsic motivators such as compensation often are not as impactful with professionals as intrinsic motivation that involves engaging in a behavior because it is personally and professionally rewarding – performing an activity for its own sake rather than the desire for external reward. Many law firms are requiring attorneys to submit annual personal business goal driven plans that are incorporated into annual performance reviews. I have found that these plans as or more powerful than compensation in developing new behaviors such as client development when an attorney is uncomfortable with such behaviors.
Integrate the compensation system with personal goal plan achievement.
Implement an equity partner admission program (partner track) that outlines requirements for admission. Make business development goal attainment a component. Make it clear that to become an equity partner you must be a rainmaker.
Provide business development training and coaching for attorneys willing to participate.
Have serious discussions with non-equity partners and terminate those that are not meeting production and client development goals.
Consider hiring lateral attorneys with books of business or merging with another firm.