Law Practice Management Asked and Answered Blog
Category: Strategy
« Earlier | Later »Aug 08, 2012
Law Firm Owners and Partners – What is Your Primary Focus – Business Person or Lawyer?
Question:
I am an attorney in Chicago. I am the sole owner of an estate planning practice consisting of 4 other attorneys, 4 paralegals, and 2 administrative support staff members. We have reached a size where I am having problems handling and balancing the demands of serving my clients and managing my firm. It seems I am working day and night and have no time for anything but work. I am frustrated and it is driving my crazy? I would appreciate any thoughts that you may have.
Response:
You are not alone. This is a common problem in law and other professional service firms. I have similar problems in my own firm – it is very difficult to serve two masters – serving your clients and managing your firm. Eventually you have to pick one – client service (doing legal work) or managing and running your business – as the area that receives your primary focus. This is not to say that you should not do both – but you select the primary area that you are going to focus on and get help with the other area.
A question that I typically ask my new law firm clients – what do you want to be or do – be a business person or a lawyer. The answer to the question often provides a hint to how you should structure your firm. If you want to be more of a business person – hire legal talent to help with serving clients and performing legal work and spend more time working on your firm rather than in it. If you want to be more of a lawyer and do legal work and serve clients hire a legal administrator or business manager (this is more than an office manager) to manage and run your firm.
I have more and more owners of small law firms that are managing their law businesses and not practicing law. I believe the appropriate direction is what makes you happy and what type of work you enjoy doing. You practice should support and fulfill your personal goals, what you want out of life and what makes you happy. If that is managing – then manage. If that is doing legal work – do legal work.
Two great books on this subject are – The E-Myth Revisited and The E-Myth Attorney – available on Amazon. The theme of both of these books is:
- Work on your business rather than in it.
- Small business owners wear three hats – entrepreneur (10%); manager (20%); and technician (70%)
Small business owners often spend too much time being the technician (i.e. lawyering) and not enough time managing and innovating.
Think about where you want place the priority of your focus – working on firm (business) or in it.
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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
Often firms are strong on ideas but weak on implementation. Typically, there is lack of management and structure and a general lack of leadership and focus. Communication is generally poor. Partner compensation systems are often not defined nor tied to goal attainment or performance.
What makes strategic management projects so difficult is that they are often complex and results are not immediate and are often delayed into the future. It is extremely hard for a group of attorneys to focus on strategic long term projects when they are up to their elbows in daily crisis. Lawyers must learn how to effectively partition their routines to enable an appropriate focus on long term projects. Lawyers must learn to think differently. This will require changes in skills, behaviors and working relationships.
The primary problems facing law firms are accountability, implementation, follow-up, and a reluctance to explore new ways of delivering legal services. Partners must begin to raise their hands and sign up for special firm management projects and be accountable to other members of the firm.
Any good plan has an action item section with a timeline built into the plan with due dates and names of responsible parties next to each of the action items. Unless there is an action plan with consequences for non-compliance – there is little chance of success.
Also suggest that the firm discuss the issue of accountability in general. A group of lone rangers often have little chance of implementing firm level strategies.
Apr 10, 2012
Using Competitive Intelligence to Support Law Firm Strategy
Response:
All strategic plans should contain a secondary research (competitive intelligence) component. Research objectives might focus on one or all of the following:
1. Identify prospects
2. Spot litigation activity for current and prospective clients
3. Identify emerging litigation issues and trends
4. Improve the quality of your client proposals
5. Identify lateral candidates
6. Identify potential acquisition and merger partners
7. Identify emerging client and industry needs
8. Identify emerging new practice areas
9. Explore expansion into new geographic locations
Mar 20, 2012
Law Firm Staff Investment – A Sound Marketing Strategy
Question:
Our Chicago firm of 14 attorneys has been discussing various marketing investments that we should be considering. We have a very proactive marketing program but want to insure that we are exploring all avenues. What are your thoughts?
Response:
Invest in your people – your staff – your intellectual capital.
I am amazed at the minimal investment that law firms make in their staff. Law firms are in the knowledge business and their product is their intellectual knowledge. While law firms do invest in their attorneys, such is not the case with the staff. Although staff members are often on the front lines in dealing with clients, very few law firms are providing them with skill training in areas such as communication, marketing, client service, conflict management, effective writing and speaking, time management, computer applications, client complaint management, etc. By the way, attorneys need training in these areas as well. Why do law firms hire the cheapest talent they can find to fill the receptionist position when it is the receptionist who often has the initial contact with a new client. I find it amazing that firms spend huge amounts of money on advertising and marketing and they fail to invest in the other tools needed for effective new client intake. Small firms should consider assigning their receptionist the role of marketing coordinator with responsibility for assisting in the management of client relationships and the firm’s marketing program.
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John W. Olmstead, MBA, Ph.D, CMC
Mar 07, 2012
Growing a Law Firm: Issues to Think About
Question:
Our practice is located in Memphis. We have three attorneys, 3 paralegals, and two staff members. We will generate $1,500,000 in legal fees this year. We plan on growing the firm and hope break the $2.5 million barrier in three years. We have a very proactive marketing plan and program. What else do we need to think about?
Response:
Growth will involve more the marketing and getting more clients. Particularly a firm your size. To generate this revenue you will have to add several revenue producers which could almost double your size. Your will become a different firm. Instead of three attorneys – you may have six or seven unless your growth will occur by adding mostly paralegals. Even so, there will be more people. This will impact your physical facilities and physical plant, your systems, your IT infrastructure, approach to talent management, and how the firm is managed. Growth requires investment and puts strain on cash flow. So this needs to be planned for. If you don't have a strategic plan (see our blog under strategy section) I suggest that your consider developing one. A strategic plan will require you to think beyond the marketing plan and getting clients – and address all of the other issues that will impact the firm as you grow.
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John W. Olmstead, MBA, Ph.D, CMC
Feb 21, 2012
Law Firm Strategic Plans: Are They Practical For Small Law Firms?
Question:
I am the managing partner of a 12 attorney firm in Chicago. We have been considering whether we should develop a strategic plan for the firm. We have problems even having partner meetings on a consistent basis and those often yield questionable results. What are firms doing? Does a strategic plan make sense for a firm like ours?
Response:
According to recent surveys, 70+% of the responding law firms (ranging in size from the largest to 45 attorney firms) have formal written strategic plans. Smaller firms have a much lower experience. In our experiences with smaller law firms we are finding that fewer than 15% have formal written strategic plans. I consider success to be achievement of measurable results as evidenced by achievement of the goals and objectives outlined in the plan and actual implementation of action items. Lawyers and law firms seem to do better at planning than they do at implementation. Larger firms usually are more successful in implementation due to availability of management resources, leadership and functional governance. Smaller firms tend to have problems with implementation. In fact, we frequently recommend that a firm address other management issues prior to engaging in strategic planning. If a firm is having problems implementing day-to-day operational decisions the firm will not be effective in implementing strategic planning initiatives.
You might want to get your operational house in order first and resolve day-to-day operational management issues first and then move on to the future.
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John W. Olmstead, MBA, Ph.D, CMC
Jan 10, 2012
Starting a Law Practice: Challenges and Tips – Phase I
Response:
Create a plan before even starting the practice even if it is a one page plan. This will serve as a roadmap for your practice. See Helen Gunnarsson’s article in November 2011 Illinois Bar Journal.
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John W. Olmstead, MBA, Ph.D, CMC
Dec 28, 2011
Goals and Plans For Focusing the Law Firm in 2012 and Beyond
Question:
Our firm, a 12 attorney firm in Detroit, needs to find a way to improve fee revenues and financial performance in 2012. We do not have a business or strategic plan, have never had a retreat, and we don't even have a budget. We believe that we must do something for 2012 and yet we are out of time since 2012 begins next week. Any suggestions?
Response:
Generating adequate fee revenue is the primary challenge for most law firms and this is where I would start for 2012.
I am a strong believer in the power of focused goals and objectives when integrated with a system of accountability. I have clients that have improved fee revenue by 20% (over a two-three year period) with existing headcount simply by establishing production goals for each attorney and paralegal in the firm – reporting, measuring and reporting goal v.s. performance monthly using simple reports, and follow-up with individuals behind on their goal attainment. Solo practitioners can use the same system and use a staff member, spouse, or coach to serve as an accountability partner. You might want to consider the following:
- Ask each attorney and paralegal to provide SMART (specific, measurable, attainable, realistic, and on a timeline – i.e 2012) goals for fee generation, fee origination, billable hours, etc.
- Review and discuss these goals with each member and engineer an agreement (commitment). Insure that there is adequate stretch – but that the goals are attainable.
- Setup a monthly report, spreadsheet if necessary, listing each individual and including their monthly goal number(s), actual performance, variance, year to date goal number(s), actual performance and variance.
- Review and discuss monthly at firm meeting, management committee meeting, or whatever forum is appropriate for your firm.
- Follow-up and meet with individuals that are falling behind. Devise strategies for improving performance or revise goals if unrealistic.
- If the firm has insufficient client work use this as a tool to bring out into the open and create specific business development initiatives to deal with such issues.
- Find ways to tie attainment of goals to compensation.
Try to get this in place by January 1, 2012 and see how this works for you and consider this your first baby step. Down the road you might want to consider a firm budget and eventually a strategic plan. See Helen Gunnarsson's article on strategic planning in the November issue of the Illinois Bar Journal.
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John W. Olmstead, MBA, Ph.D, CMC
Nov 08, 2011
Diversifying a Personal Injury Plaintiff Law Firm
Question:
Our firm is a personal injury plaintiff law firm located in Austin, Texas. We have 4 attorneys in the firm and all are partners who have been practicing for over 25 years. One hundred percent of our practice is PI plaintiff. We have been extremely successful over the years and handled some very large cases, have had some big wins, and handled several class action cases. Our current challenge is cash flow. The cases we are involved with seem to be bigger and more complex with fewer smaller cases that can be resolved quickly and contribute to cash flow. We are getting in deeper to our line of credit. Of late we have been discussing pros and cons of diversifying the practice and adding a non-PI practice area to our practice. What are your thoughts? Have you seen PI plaintiff firm do this successfully?
Response:
More and more of our PI plaintiff law firm clients have been raising this question during the past year. While a lot can be said about specialization – a firm can also sometimes be too specialized. I have seen many hybrid firms over the past 20+ years that have successfully combined a plaintiff personal injury practice with a transactional practice. As one firm told me "us transactional folks bill the hours and pay the bills while we turn the PI folks loose to go after the big hits." Firms that operate the firm as a "firm-first" firm tend to be more successful with such a practice mix than do firms that are "long ranger" firms operating as a collection of individual practitioners. In these firms compensation can become difficult and divisive due to the large swings that can occur in contingency fee work. However, firm-first firms look beyond this year's fee production, carry their contingency fee brothers and sisters when their numbers are down, and share the wealth when the big hits come in. Marketing and advertising came be more challenging – but it can be done. Practice areas might include commercial litigation, employment discrimination, business transactions, etc. High-end family and criminal practices have also been good candidates as well. It is not so much the type of practice as it is the type of practitioner and whether then be a good "cultural fit" with the PI folks.
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John W. Olmstead, MBA, Ph.D, CMC
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