Question:
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.
Response:
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.
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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!
https://www.olmsteadassoc.com/blog/category/strategy/
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John W. Olmstead, MBA, Ph.D, CMC
Happy New Year and best wishes for both a personal and professional 2015.
Here are a few ideas to help you jump start your practice in 2015:
Good luck in 2015!
https://www.olmsteadassoc.com/blog/category/strategy/
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John W. Olmstead, MBA, Ph.D, CMC
Question:
I am the managing partner of a 5 attorney general practice firm in Kansas City, Missouri. My book of business is down and I have been considering taking on insurance defense work. During the past year I had the opportunity of working as co-counsel on a couple of insurance defense matters and enjoyed the experience and the work. It seems to me that representing insurance companies would represent a steady flow of work. I would appreciate your thoughts.
Response:
Insurance defense work can be a blessing and a curse. Working for insurance companies often does result in a steady flow of work but at the following costs:
So, in exchange for a flow of cases you may be selling your freedom, independence, and your soul. It is hard to be successful if you dabble in insurance defense. You either need to be in or out and if you are in you would have to leverage the practice in order to be profitable at the lower billable rates. Be careful about relying on a large volume of work from one just one company. Consider diversifying your case portfolio to include a mix of higher stakes cases, if you are able, such as professional liability, products liability, medical malpractice, commercial litigation, and major construction defects.
Realize going in that insurance defense work is commodity work and insurance companies are shopping for the best deal and the best price – so is your competitive strategy to be a low cost provider?
https://www.olmsteadassoc.com/blog/category/strategy/
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John W. Olmstead, MBA, Ph.D, CMC
Three weeks ago I was asked by the managing partner of a 16 attorney insurance defense firm about staffing and growth models for an insurance defense firm and I listed the following models and discussed the first model – grow your own associate staffing. Over the past two weeks in other posts I have discussed models 2-5.
Attorney staffing/growth models include:
This week I will outline the pros and cons for number 6 and 7 – Mergers and Branching.
Mergers (or small firm acquisitions)
PROS
CONS
Branching
The appropriate strategy is often a mix or combination of the above approaches. Need to drill down into the financials and review past experience concerning breakeven point for profitability of your attorneys, costs/overhead, fee collections, time, and profit margin.
Often the WHO dictates the WHAT (specific strategy)
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John W. Olmstead, MBA, Ph.D, CMC
Two weeks ago I was asked by the managing partner of a 16 attorney insurance defense firm about staffing and growth models for an insurance defense firm and I listed the following models and discussed the first model – grow your own associate staffing.
Attorney staffing/growth models include:
This week I will outline the pros and cons for number 4 and 5 – Lateral Partners (Equity or Non-Equity) and Of Counsel.
Lateral Partners (Equity or Non-Equity
PROS
CONS
Of Counsel – Various Approaches and Purposes
Other models to be discussed in upcoming posts.
Click here for our article on hiring associate attorneys
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John W. Olmstead, MBA, Ph.D, CMC
Last week I was asked by the managing partner of a 16 attorney insurance defense firm about staffing and growth models for an insurance defense firm and I listed the following models and discussed the first model – grow your own associate staffing.
Attorney staffing/growth models include:
This week I will outline the pros and cons for number 2 and 3 – Lateral Associate Staffing and Contract – Staff Associate Staffing
Lateral Associate Staffing
PROS
CONS
Contract – Staff Associate Staffing
PROS
CONS
Other models to be discussed in upcoming posts.
Click here for our article on hiring associate attorneys
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John W. Olmstead, MBA, Ph.D, CMC
Question:
I am the managing partner of a 16 attorney insurance defense firm in Chicago Southwest Suburbs. We have 4 partners and the balance of our attorneys are associates – many of which have been with us for several years. We are on a growth spree and needing to hire more associates to handle client assignments. Associate hiring, mentoring, and training has always been a challenge for us and our clients are restricting us in the way we use associates on their files. I would appreciate your thoughts.
Response:
Attorney staffing/growth models include:
I will address the pros and cons of each model/approach in upcoming postings. I will begin by addressing the first one.
The traditional staffing model for insurance defense firms has been Grow Your Own Associate Staffing.
PROS
CONS
Click here for our article on hiring associate attorneys
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John W. Olmstead, MBA, Ph.D, CMC
Question:
I am the owner of a five attorney personal plaintiff firm in Wheaton, Illinois. Our practice is in its 25th year of practice and we are 100 percent concentrated in personal injury. Over the years we have been very successful but over the last three years we have been struggling and revenues and profits have been flat. It is getting harder to get good cases and harder to settle and move the cases that we have. We need to approach our business differently. I would appreciate your ideas and thoughts:
Response:
We are hearing this question quite often and have provided some thoughts in past blogs and articles.
The majority of our PI law firm clients are advising that they are having to work much harder at getting clients and investing more heavily in marketing – both time and money. PI firms were feeling the most of these challenges before the recession. However, the recession may accelerate the pace with which law firms reevaluate existing processes and consider new business models. PI firms may want to begin by:
1. Develop a firm strategic plan and individual attorney marketing plans which include aggressive network/contact plans for past clients, attorney referral sources (non PI attorneys), attorney referral sources (other PI attorneys), and other referral sources.
2. Evaluate the feasibility of adding an additional practice segment to reduce the level of risk in the case portfolio and reduce cash flow variability.
3. Reduce case portfolio risk and improve case profitability by implementing a case intake system whereby all new cases over a specified level of projected case value are reviewed and approved by the partnership (or a client intake committee) in order for the case to be accepted by the firm. In other words – don't let one attorney expose the entire firm to either excessive levels of case risk or case investment (time and client cost advances) without other partners having a say on the matter.
4. Analyze the profitability and return on each case and ascertain what can be done differently on future cases. Metrics might include effective rate, return on LOADSTAR, dollar case profit after allocation of all appropriate firm overhead, etc.
5. Review and measure present marketing investments (time and money) and determine what is working and what is not. Reallocate resources if appropriate.
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https://www.olmsteadassoc.com/blog/category/strategy/
Click here for our law firm management articles
John W. Olmstead, MBA, Ph.D, CMC
Question:
I am a member of the firm planning committee. We are an 18 attorney firm based in downtown Chicago. We have had planning retreats in the past with mixed results. Some believe that they have been a waste of time. We are planning a fall retreat. I would appreciate any ideas that you may have that would help us accomplish more from these retreats.
Response:
A retreat will not be successful unless an implementation plan is formulated during the actual retreat and made a part of the proceeding. Specific assignments and completion dates must be agreed upon during the retreat itself and schedules for reporting on progress must be determined.
At the conclusion of the retreat the outcome of the retreat and the implementation plan should be summarized.
Within two weeks after the conclusion of the retreat a retreat report should be written and distributed to all firm members in attendance. Completion dates should be placed on the firm's calendar as well as the individual's calendar. A retreat follow-up item should be on each and every firm meeting agenda. A post retreat evaluation should be conducted six months after the conclusion of the retreat.
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John W. Olmstead, MBA, Ph.D, CMC