Law Practice Management Asked and Answered Blog

Category: Strategy

Dec 29, 2015

Law Practice Management – Goals for 2016

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.

Dec 15, 2015

Law Firm Retreat – Suggestion for a Firm Having Their First Retreat

Question:

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.

Response:

Here are my thoughts:

1. First of all it is now December and January is just around the corner and I believe that you need to have at least 60 days to properly prepare and plan for the retreat. Most management consultants that facilitate retreats, including myself, will want to get to know the firm and will want to conduct attorney interviews, (face to face or via telephone depending upon whether they are local), review financial reports and other documents, and prepare the retreat program. Participants (your people) may need time to prepare as well. Off-site facilities will need to be booked as well.
2. Decide in advance the outcomes that you would like to achieve. Is it to entertain, inform, educate, or to develop specific solutions or action plans.
3. Keep the retreat's focus narrow and concentrate on just a couple of topics – it sounds like you are doing this.
4. Establish ground rules upfront – example – off agenda items, day to day operations issues, etc. are off limits.
5. Building follow-up action plans into the program and identify who will be responsible for following up after the retreat is over.

Oct 20, 2015

Law Firm Competitive Strategy – Daring to Be Different

Question:

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.

Response: 

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:

• Services offered clients
• Fee pricing (amount and method)
• Methods of producing, staffing, and all other aspects of service delivery
• Promotional methods used and messages used
• Client service
• Managing client expectations

https://www.olmsteadassoc.com/blog/category/strategy/

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

May 06, 2015

Law Firm Contingency Fee Practice – Surviving the Cash Crunch

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:

1. Billing and collecting up front for all client costs even if the fee is contingent.
2. Flat fee paid up front for a certain segment or phase of work – then contingency fees for the rest of the work.
3. Actively marketing and targeting certain small business firms, establishing relationship, and seeking out defense employment work billed on a time-bill basis.
4. Adding a different practice area that would not be billed on a contingency fee basis.
5. Bring in a another attorney with a book of business in a complimentary non-contingency fee practice area.

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.

Click here for our financial management topic blog

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

Feb 17, 2015

Transitioning to a More Business-Like Law Firm

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/

Click here for our law firm management articles

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

Dec 30, 2014

Law Practice Management – 5 Ideas for Jump Starting Your Law Firm in 2015

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:

1. During the next week review your 2014 personal and practice performance and consider
1. Things that you did well and could have done better
2. Things done poorly
3. Things that you should have done but did not do
4. What you should be doing now – in 2015 – to be effective in your practice
2. Write down what results you expect – goals – for 2015 – both financial and non-financial – and compare actual results against these goals
3. Ask each person in your firm to create and implement one goal that will improve your practice in some way (revenue, profitability, process, client satisfaction)
4. Implement one action item that you have been things about for years and procrastinating
5. Give some though as to what you want to be remembered for – personal and professionally

Good luck in 2015!

https://www.olmsteadassoc.com/blog/category/strategy/

Click here for our law firm management articles

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

Oct 21, 2014

Law Firm Insurance Defense Work – Opportunity or Commodity?

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:

1. Low billing rates – often in the range of $145 – $175 for partners and even lower for associates – auto mechanics and plumbers often fare better
2. Unrealistic controls.
3. Mandated billing guidelines regarding what can, what cannot, and how much time can be billed
4. Strict litigation guidelines that dictate how the case is handled and managed.
5. Case budget requirements
6. Audits of your legal bills
7. Limited loyalty and inability to develop close relationships with the client due to centralized claims offices and restrictions on social activities

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/

Click here for our law firm management articles

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

Sep 16, 2014

Law Firm Staffing & Growth Models – Mergers (Small Firm Acquisitions) & Branching

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:

1. Grow Your Own Associate Staffing
2. Lateral Associate Staffing
3. Contract – Staff Associate Staffing
4. Lateral Partners (Equity or Non-Equity)
5. Of Counsel (Various Approaches and Purposes)
6. Mergers (Or Small Firm Acquisitions)
7. Branching

This week I will outline the pros and cons for number 6 and 7 – Mergers and Branching.

Mergers (or small firm acquisitions)

PROS

1. Quicker access to talent, expertise in a new practice area, and client book of business.
2. Access to infrastructure and resources.
3. May enable the firm to fill in weak spots quickly.

CONS

1. Risks of a wrong business marriage. (The larger the target firm the greater the risks)
2. Issues involving integrating the firms.
3. Control issues.
4. Conflict of interest issues.
5. Compensation – money, approaches, etc.
6. Cultural incomptability
7. Management time to evaluate the feasibility of the merger.

Branching

1. Using approaches listed above.

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)

Click here for our blog on law firm mergers

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

Sep 09, 2014

Law Firm Staffing and Growth Models – Lateral Partners & Of Counsel

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:

1. Grow Your Own Associate Staffing
2. Lateral Associate Staffing
3. Contract – Staff Associate Staffing
4. Lateral Partners (Equity or Non-Equity)
5. Of Counsel (Various Approaches and Purposes)
6. Mergers (Or Small Firm Acquisitions)
7. Branching

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

1. Maybe a quicker way to increase profitability and cash flow.
2. Allows the firm to acquire talent that it may not have time to grow or develop.
3. Allows the firm to expand into new areas if the candidate has said experience and brings a book of business with him or her.

CONS

1. Desired compensation may not fit within the firm's existing compensation structure.
2. Clients may not come or materialize.
3. May be issues with cultural fit.
4. Costs may not be justified.

Of Counsel – Various Approaches and Purposes

1. Allows the firm to acquire partner level talent, business, etc. without offering partnership.
2. Provides the firm with a way to acquire a practice of someone wanting to retire.
3. Provides the firm with a way to pilot test new lateral partner candidates and evaluate in a first-phase approach.
4. Provides the firm with a way to partner with other firms.
5. Provides a way for the firm to enter more new market areas.

Other models to be discussed in upcoming posts.

Click here for our article on hiring associate attorneys

Click here for our law firm management articles

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

Sep 02, 2014

Law Firm Staffing and Growth Models – Lateral Associate Staffing & Contract Associate Staffing

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:

1. Grow Your Own Associate Staffing
2. Lateral Associate Staffing
3. Contract – Staff Associate Staffing
4. Lateral Partners (Equity or Non-Equity)
5. Of Counsel (Various Approaches and Purposes)
6. Mergers (Or Small Firm Acquisitions)
7. Branching

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

1. Less training and mentoring time
2. Will become profitable more quickly – maybe a year sooner
3. They will be more acceptable to clients than new untrained associates
4. May be able to charge higher billing rates
5. Tradeoff of higher salary vs. quicker profitability and cash flow – sooner profitability may pay for itself in the short term depending upon the salary differential.
6. May generate new ideas and skill sets/approaches/insights that can benefit the firm.

CONS

1. May have to de-train them. They may bring practices and approaches that are undesirable to the firm
2. Higher salary initially and expectations for more
3. Sooner expectations for non-equity and or equity partnership
4. Clients may not allow you to charge any more for these associates than new young associates
5. May not result in higher profitability and cash flow any sooner than new associates (probably will – but if not costs will be higher)

Contract – Staff Associate Staffing

PROS

1.  Allows the firm to staff up when needed using a project/matter staffing approach
2. Allows the firm to better manage fixed costs and manage contract staffing as a variable cost and match costs to staffing needs
3. Allows the firm to evaluate candidates before committing to full-time positions
4. Can be experienced and seasoned or not

CONS

1. Cost per hour will probably be higher
2. Turnover due to uncertainty as to their future

Other models to be discussed in upcoming posts.

Click here for our article on hiring associate attorneys

Click here for our law firm management articles

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

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