I am a newly appointed managing partner for an eighteen attorney law firm in Dayton, Ohio. We are a employment law litigation firm that represents plaintiffs on a contingency fee basis. We have been in business for five years and we are facing severe cash flow and profitability challenges primarily due to lackluster contingency fee outcomes. Do you have any guidelines or suggestions as to what we should be aiming for?
In general I find that successful contingency fee law firms are:
I would use this as sort of an initial performance checklist. You may need to examine your case portfolio and your contingency fee case risk profile and look for ways to diversify your case mix.
Happy New Year and Best Wishes for a Personal and Professional 2017
As 2016 comes to an end we begin with a clean slate for 2017. As with anything new – the uncertain future can be scary and exciting at the same time. Year-end provides an opportune time for reflection on the past year and setting goals for the next year – both personal and professional. Goal setting can improve your personal life and your practice.
Here are a few ideas for 2017:
Best of luck for a prosperous 2017!
Our firm is a sixteen lawyer firm – eight partners and eight associates located in Memphis. We handle business transactional work and litigation for small to mid-size companies. However, for the past forty years our mainstay has been small community banks. With recent bank mergers and new banking regulations our banking business has dropped off significantly. We have reached a desperate stage and we must replace this business quickly or consider possible dissolution. We have talked with a possible lateral partner that has a $300,000 book of debtor bankruptcy business. Is adding a lateral partner a good strategy for us?
Lateral partner acquisition is a growth strategy being used by many firms today. However, many lateral hires are not successful as a growth strategy. In a recent survey conducted by Lexis-Nexis and ALM Legal Intelligence only 28 percent of the respondent law firms found lateral partner acquisition a "very effective" strategy for growth.
I suggest you start with the following two questions:
I would question whether debtor bankruptcy fits within the firm's overall business strategy. I also don't believe a $300,000 book of business satisfied the one plus one equals three rule.
A lateral strategy may be a good strategy for the firm. However, I believe you need to expand your search and it may be difficult to attract candidates given your present financial situation.
I am the owner of a fourteen attorney firm in the western suburbs of Chicago. I am 45 years old and I started my practice as a solo ten years ago. The firm focuses on business litigation exclusively. Like many law firms the name of the firm is My Name, LLC. The firm has grown rapidly and we have been successful. However, I am concerned that I should be building more of a "firm brand" and the firm is too much about me. I would appreciate your thoughts?
This is a common issue for solos and sole owners. While it may be an ego booster for you in the early days of your practice it can be a negative in future years, especially when you approach retirement and want to exit the practice. In essence the firm is all about you and the goodwill is you. This can have negative consequences when you:
I suggest that you consider the following to develop more of a firm image or brand rather than just you.
I am a member of a three member management committee of a 16 lawyer firm located in Akron, Ohio. We have 10 partners and 6 associates. Several of our partners are in their 50s and 60s. Recently, we have had discussions with a couple of potential merger partners and laterals and in all cases they have backed out advising us that they were uncomfortable with our balance sheet. What can we do to better position ourselves. We desperately need to bring in new talent with books of business?
First there are the obvious balance sheet items – bank debt, large tapped out credit lines, equipment leases and other liabilities. Then there are the items that are not recorded on the balance sheet – namely unfunded partner retirement buyouts and long term real estate leases. These are often major deal breakers in mergers and scare away laterals. If you have bank and other debt on the balance sheet work at cleaning it up. More importantly if you have unfunded partner buyouts begin either rethinking the desirability of these programs or begin funding this liability now with a goal of the liability being totally funded over the next five to seven years. Then shift to a retirement program that is totally funded. Unfunded partner retirement programs are becoming a thing of the past.
John W. Olmstead, MBA, Ph.D, CMC
Happy New Year and Best Wishes for a Personal and Professional 2016
As 2015 comes to an end we begin with a clean slate for 2016. As with anything new – the uncertain future can be scary and exciting at the same time. Year-end provides an opportune time for reflection on the past year and setting goals for the next year – both personal and professional. Goal setting can improve your personal life and your practice.
Setting and achieving goals is one of the best ways to measure your life's and practice's progress and to create unusual clarity. The alternative is drifting along aimlessly with hope and a prayer.
I am a strong believer in the power of goals. This year I finished writing my book, The Lawyers Guide to Succession Planning published by the ABA which is scheduled to be released in January. I never would have even started, alone completed, such a project without very specific goals and timelines.
I strongly suggest that you established a few SMART goals for both your personal life and your practice for 2015 where each goal is:
S = Specific
M = Measurable
A = Attainable
R = Realistic
T = Timely (on a timeline with a deadline)
A goal without a number is just a slogan – so it is critical that you develop a system for measuring. For example, if you goal is to improve client satisfaction and loyalty you might administer an end of matter client satisfaction survey with a rating scale from 1-5 for key performance indicators, enter completed surveys into a spreadsheet, and then generate a quarterly report reflecting actual performance scores. If your goal is to meet with ten clients or referral sources during a month – develop a tracking system and generate a monthly report.
While goals can help focus you and your practice in 2016 – too many goals can have the opposite effect. Start with baby steps and identify three to five goals for 2016 and then focus intensively on these goals and their accomplishment.
Focusing on a few targeted strategic goals could take your practice to the next level.
I am a senior partner in a fourteen attorney intellectual property firm in Memphis. We are planning on having a firm retreat in January 2016. We have never had a retreat before. Our plan is to have a one day retreat facilitated by a consultant with specific focus on competitive strategy and marketing. We have just decided this week that we would like to do this and are just beginning the planning process. I would like to hear your thoughts and suggestions.
Here are my thoughts:
I am the managing partner of a 16 attorney business transactional firm in Chicago. Over the last five years we have lost several core clients due to client consolidation of their outside law firms and mergers of the clients themselves. Competition is getting fierce in our market, our services are being viewed as commodities, and it is getting harder to stand out. What can we do to differentiate ourselves from everyone else? We welcome your thoughts.
Creating a competitive advantage that is sustainable over time is difficult at best. It is so easy for your competitors to copycat your recent innovations. Clients of law firms advise us that they hire the lawyer – not the firm. However, this only partly true. The firm – its image – its brand – provides a backdrop for the individual attorneys marketing efforts as well – makes marketing easier – and provides backup and bench strength that many clients require before retaining a lawyer.
In general the law firm is faced with the dual challenge of developing a reputation (brand) at both the firm and the individual lawyer level. In general – client delivery practices and behaviors that are part of the firm's core values and have been burned into the firm's cultural fabric are the hardest to copycat.
Areas in which you can consider differentiation strategies:
John W. Olmstead, MBA, Ph.D, CMC
Our firm is a six attorney personal injury plaintiff located in Kansas City. We have been in practice for 20 years and the firm has been very successful. However, in the last few years the cases are getting larger, more complex, and really putting a drain on our cash flow. We are always into our credit Line. You thoughts would be appreciated.
Cash flow has always been a challenge for contingency fee practices. However, times are getting harder. For personal injury plaintiff firms insurance companies are refusing to settle cases, stretching out timelines for settling cases that they do settle, paying less, and becoming even harder to deal with. Other contingency fee practices are also facing similar challenges and everyone is finding it harder to find adequate lines of credit. Many firms that were once 100% contingency fee practices are looking for ways to improve cash flow implementing different fee arrangements or by adding non-contingency fee practice areas.
I suggest that you evaluate ways that you might re-balance your case portfolio to say 60% contingency/time-bill mix. You might consider:
Review your case pipeline report and your work habits to insure that you are putting the right effort and mix into the cases that you have so that when your time bill matters come up for billing at the end of the month – all can be billed.
John W. Olmstead, MBA, Ph.D, CMC
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?
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.
John W. Olmstead, MBA, Ph.D, CMC