Law Practice Management Asked and Answered Blog

Category: Strategy

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Feb 23, 2011

Times are Tough – How Are Other Small Firms Doing?

Question:

I am a partner in an 8 attorney firm in the Chicago suburbs. Our firm has started having discussions about what we need to be doing differently. This is huge for us – one meeting a year is our typical meeting frequency and then only to discuss how we are going to cut the pie. How have other firms done during the recession? What are you seeing?

Response:

In general small firms in the midwest have fared pretty well during the recession. Last year some firms had the best year ever while others experienced flat or 10% revenue declines. Small firms that had the biggest problems were those that had issues before the recession or were in problem practice areas. Big law firms have had to face unique challenges.

Small firms that have weathered the storm and fared the best were those that:

I believe that law firms that fail to focus their practices, set goals, measure accomplishments, and foster accountability will fall short and not meet their financial objectives. Law firms that fail to plan are planning to fail.

Law firms as well as solo practices need to begin focusing their firms and practices, setting firm and individual production goals, measure accomplishment and implementing systems to instill accountability from all members of the team – attorneys and staff alike.

Consider using budgeting which is a tool that can be used to measure goal attainment and how well the firm is doing.

What gets measured is what gets done.

Click here for our blog on law firm strategy

Click here for my article on creating strategic (business) plans.

 

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

Feb 17, 2011

Starting a Virtual Online Practice

Question:

I am a partner with an 8 attorney firm in central Illinois. Last week I attended the Illinois State Bar Association web-cast that you and others presented on Building and Managing the Virtual Law Firm. I thought the program was excellent. I do have a couple of questions.

  1. I can see how such an approach might make sense for a solo – but why would a 8 attorney firm with a brick and mortar office that has been in practice for 20 years consider such a delivery model?
  2. How would we go about it?

Response:

If your firm has a sufficient volume of work, does not have a need or desire to capture more commodity type legal work that it is either not doing at all now or is losing to lower priced competitors (law firms or content providers), or does not have a need or desire to extend its reach geographically a virtual delivery model make not make sense. However, if your strategic (business plan) requires you to extend your geographic reach or be competitive in a commodity practice area supplementing your brick and mortar practice with a virtual delivery model might warrant consideration.  Also consider that the younger generation that is growing up using the internet to shop, bank, and pay taxes may appreciate and or expect such an option. As we mentioned during the session certain practice areas are more appropriate than others. I have some firms your size that are supplementing their brick and mortar practices with on-line delivery models just to service one practice area that they could not effectively deliver in the traditional manner. Keep in mind the value curve that we discussed during the session.

During the session I illustrated a continuum and we discussed the difference between virtual practices (doing virtual things) and a total on-line virtual practice. Even if you decide that the firm is not ready for a total on-line virtual practice, you may want to consider doing some of the virtual practices (virtual things) that we discussed to offer your clients more delivery options and more flexibility to your attorneys and staff.

Start with your strategic plan and if you don’t have one begin developing your long range plan. If you want to move in this direction you can use my handout as a resource guide.

Click here for our blog on law firm strategy

Click here for my article on creating strategic (business) plans.

 

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

Jan 26, 2011

Law Firm Client Surveys

Question:

I am a legal administrator in a 20 attorney firm in southwest Texas. My partners have been expressing concern about loss of several key clients and wants to know what we can do determine why this happened and what we can do to improve client service? I have been thinking about doing a client survey? What are your thoughts?

Response:

Much can be learned by talking to your clients. Structured telephone interviews and other forms of surveys conducted by a neutral third party can provide many surprises as well as answers. Client satisfaction surveys can be the best marketing investment that you can make. Our law firm clients have found their clients to be impressed that the firm cares about their opinions. It is good business to listen to your clients. Understanding what bugs people about your services and those of your competition can be the most valuable input to strategy development you can get your hands on. Find out what bugs your clients and you will learn to out-think and out-service your competitors.

Before you invest any time, money, or effort in developing an overall strategy for service improvement, you must survey your clients to understand what your clients want and expect from your firm. An initial survey helps you identify the starting point for your service improvement journey.

Planning The Survey

The type of survey that your firm chooses depends on your purpose for doing the survey. Are you looking for some insight into why you’ve lost clients? Are you interested in getting a general idea of how your clients feel about your firm? Following are some of the basic types of surveys that you may want to consider:

Random Client Survey or Census

These surveys are used to measure overall client satisfaction and highlight any widespread service problems and identify new business opportunities. A random survey involves selecting a percentage of your clients (sample), contacting them by phone, mail or in person (or a combination of all three), and asking them to evaluate the services they receive from your firm. A census involves surveying all clients rather than taking a sample.

Lost Client Survey

This type of survey is used if your firm wants to know why you have lost a particular client or group of clients. With this survey interviews are conducted (usually by telephone or in person) with clients that no longer do business with your firm. Let the client know that you are sorry that he or she is no longer doing business with your firm and that you are interested in learning from your mistakes. Understanding your client’s reason for leaving will help you make improvements for future clients. One of the greatest benefits for this type of survey is that you are often able to discover the specific reason a client left.

Key Client Survey

Rather than doing a random survey of your client base, you may want a more targeted and focused survey of a particular client group. For example, if 80 to 90 percent of your business comes from ten clients, you may want to create a survey that is specifically targeted to them. The advantage of a targeted key client survey is that it is limited in scope and precisely focused. Before you commit time and resources to a client survey identify your purpose and establish specific goals and objectives.

Develop a survey plan. Insure that a follow-up strategy is incorporated into the plan.

Click here for our blog on client service

Click here for our article on the topic

 

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

Jan 18, 2011

Law Firm Profit Improvement

Question:

Our firm is in its second generation. While we are proud that we have been in business for over 60 years we also believe we need to re-examine our practice and embrace changes that may be needed for the firm to move forward and remain competitive. We are a 16 attorney firm located in Wisconsin. We have 12 partners and four associates.

Response:

More and more law firms are re-examining their business models and approaches and running the practice as a business. You may want to begin by conducting a management review or audit to determine where the firm is presently and where the firm needs to head in the future. 

Start by Asking the Following Questions:

  1. Are firm members frustrated with the amount of money they are making and taking home?
  2. Are firm members unsure whether the firm is competitive with other law firms?
  3. Is the firm taking advantage of some of the management “Best Practices” being used by successful law firms and possibly your competitors?
  4. Are firm members concerned about getting a handle on and controlling the financial aspects of the firm?
  5. Are firm members uncertain about the future and long-term direction of your firm?
  6. Are firm members frustrated with the lack of accountability of other attorneys and staff?
  7. Is everyone effectively managing their time?
  8. Are members concerned about the firm getting and keeping clients?
  9. Are members concerned about work-life balance?
  10. Are members concerned about the succession and exit of key partners?

I suggest that you conduct a practice management review that will provide you with a clear assessment of the firm’s practices and performance and outline a plan for implementing “Best Practices”. The assessment should focus on:

Click here for our blog on profit improvement and other topics

Click here for articles on other topics

 

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

Jan 12, 2011

Changes and Challenges Ahead For Law Firms and Lawyers

Question:

Our firm is conducting a planning retreat next month. We have had retreats in past years that have focused on “touchy feely” programs for the attending partners. This year we really want to focus on a strategy and plan for the future. What do you see as primary changes and challenges ahead for law firms and lawyers?

Response:

The internet as well as advances in information technology has and will continue to be the key driver forcing change in the legal marketplace as well as other segments and our daily lives as well. Being the king of the hill or the biggest is not the strategic advantage that it once was. The internet is leveling the playing field in many industries as well as law firms.  There are new opportunities and new competitors. Consider the following:

  1. Everything is being commoditized. More practice areas are moving down the value curve and prices are becoming more price sensitive.
  2. Disintermediation of traditional delivery channels. The internet provides new access to information and is eliminating the middleman. It is impacting how we shop, bank, conduct business, and pay our credit cards and taxes. It is also impacting how clients locate and select lawyers and how legal services are delivered.
  3. Our society is becoming – more and more – a DIY (Do it Yourself) nation.
  4. Lawyers competitors are just a click away whether they be legal process outsourcing providers (LPO) in India, other lawyers in your state – but further away and servicing clients remotely, legal publishers, or online form providers.
  5. New client opportunities for your may also be just a click away.

Challenges and Questions to Think About

  1. How do you deal with commoditized transactions?
  2. How do you tie yourself to your client in an online world?
  3. How do you compete with new models and approaches to the delivery of legal services?
  4. How do you compete with virtual law firms?
  5. Would you consider adding a online delivery component to your traditional brick and mortar practice?
  6. Should you embrace legal process outsourcing and begin forming alliances and relationships or should you wait until your clients take the initiative themselves?

Click here for our blog on strategies

Click here for articles on other topics

 

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

Dec 15, 2010

Ideas for a Successful 2011

Question:

Our firm, a 12 attorney firm, in Detroit, is having a partner meeting next week focused on thinking about what we can do different in 2011 in order to have a more successful year. While we have a few ideas what are your thoughts?

Response:

The economy is still posing challenges for many law firms and will continue to do so in 2011. Law firms must continue to be dilligent about managing costs but more importantly must really hone in on improving revenues. Here are a few ideas:

  1. Take a serious look at the firm's present position in the marketplace. Review financials, compare against financial ratios, compare with both firm past history and against law firm benchmarks. Examine how well the firm is competing. Is the firm too dependent on a narrow base of clients? Is the practice at risk? Conduct a client survey and obtain client feedback both on firm performance as well as possible unmet needs and opportunities. Consider a comprehensive management review.
  2. Formulate business goals and develop a strategic business plan as a roadmap for the future. Design and simplify business reports designed to measure the goals identified in the strategic business plan. Strive for a one page summary as the primary report.
  3. Require all timekeepers in the firm to submit personal one page business plans which in addition to outlining goals for the year provided fee revenue goals with an element of stretch. The goals should have a stretch component but yet be realistic and attainable. These plans should be approved by the Executive Committee, Managing Partner or the Partnership.
  4. In all of our client engagements we typically discover that the root cause of most problems is poor internal and external communications. Poor client service, attorney and staff competency and morale, interoffice conflict, and client defections typically can be traced back to poor communications. Work on improving internal communications with firm personnel and external communications with clients and prospective clients. Yes, you have to have meetings now and then. Devise systems to improve communications and implement properly. If a meeting is required – conduct it properly, use agendas and take minutes. Use your email systems. Match the richness of the communication method with the nature and depth of the message to be communicated.
  5. Improve relationships with your clients. Studies show that each year 'lack of responsiveness' has been the number one reason for client dissatisfaction.
  6. Find ways to focus the firm and foster accountability from all.
  7. Undertake a few projects at a time that can be realistically accomplished. Delegate tasks across the firm. All firm personnel should have marketing responsibilities – from the receptionist to the senior partners and everyone else in between. Databases must be maintained, newsletters and articles written, presentations given, clients to be wined and dined, etc. There is work for everyone.
  8. Law firms must adopt management structures that enables the firm to act decisively and quickly. Structures that do not support such a culture must be replaced.
  9. Come to grips with the fact that times are changing and law firms are going to have to change and reinvent their firms dramatically in the next few years.
  10. Begin exploring new business models such as virtual approaches to the delivery of legal services.

Click here for articles on other topics

Click here for our archive blog on strategies

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

Nov 02, 2010

Getting Law Firm Partners Onboard

Question:

I am the managing partner of a 90 attorney firm in Chicago. We have 45 equity partners, 20 non-equity partners, and 25 associates. We have a three member executive committee as well as other committees in place in addition to the managing partner. Five years ago we formulated a strategic plan and have been attempting to successfully implement it since that time. We have had limited success. We don't seem to be able to get our partners "on board" with the actual implementation. I will tell you – I am truly herding cats here. Any ideas on how to get these guys and gals on board?

Response:

Getting your partners on board is always a challenge. The obstacles are almost too numerous to outline. Yet if law firms want to be successful in this turbulent environment they must embrace change and get their partners not only behind new strategies but often they must also be the ones to implement these strategies as well.

Managing lawyers in general is like herding cats. But trying to manage "star partners" is a real challenge. They are the "hitters" upon which a firm's future often depends. True star partners are:

  1. Building enduring client relationships
  2. Consistently performing up to their full potential
  3. Putting the firm first and implementing strategic imperatives

Star and other partners in the firm must continually balance their roles as producer, manager, and owner. Often, these roles may be in conflict. Also there are personal strategies and agendas as well.

Actually, I don't think they can be managed – but they can be led. There is a difference. But in order to accomplish this the following need to be well designed, in alignment and balanced:

Strategy

The personalities, emotions and needs of your partners constrain a firm's ability to design and implement strategy. Keep in mind that firm leadership cannot order the troops forward; instead the troops (partners) must essentially vote with their feet to pursue a new strategic direction. Absent a crisis, partners tend to stay on track and support only modest adjustments to strategy.

Organizational (Structure, Governance, HR Systems)

When organizational characteristics – structure, governance, and HR systems (recruiting, training and mentoring, performance management, and compensation) are aligned with the needs of the partners and the strategy of the firm, they create the conditions under which strategy can be implemented effectively. Matrix and team structures are the norm.  Collegial partnerships, consensus based governance, and leadership at the pleasure of the partners, rules the day. The cats have the power and the leader serves to a large extent at their pleasure.

  1. Look for ways to build consensus and create buy-in
  2. Involve all partners in major decisions – more than input – but a say
  3. Implement a first-rate partner performance management/review/evaluation system
  4. Review and insure that your compensation system is fostering alignment
  5. Provide as much transparency as possible
  6. Review your organizational structure

Culture

The firm's culture deals with its underlying core of beliefs and values, which shape the behavior of the firm. Nothing can weave new strategic and organization choices together and hold them in alignment better than culture. A strong culture can also provide enormous help in attracting, retaining and motivating stars. A strong culture is the glue that helps a firm overcome major obstacles, it can help foster major changes in strategy and or organization, and it can be a strong force for unity and coherence. 

  1. Work at building and managing the firm's culture.
  2. Recruiting, compensation, training, mentoring, performance management – should also be deployed to reinforce the firm's culture.
  3. Guard the firm's culture and keep in mind the impact that laterals, mergers, etc. might have upon it. 

Leadership 

As the firm's leaders you and the other leaders in the firm are serving at the pleasure of your partners. You are probably elected by them. Your positional power is limited – sort of like the President of the United States and the Congress. As a result exceptional leadership skills are needed and each of you must master the skills of building consensus and facilitating decisions so your partners will agree with and support them.

  1. Pick the right priorities
  2. Pick the right fights and fight the right battles
  3. Build support and coalitions through integrity and trust

For a good read on this subject – the book “Aligning the Stars” by Jay W. Lorsch and Thomas Tierney is an excellent resource.

Good luck! 

Click here for articles on other topics

Click here for our blog postings on partnership and governance

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

 

Oct 19, 2010

Law Firm Year End Planning Retreat

Question:

Our firm is a 25 attorney IP law firm located in Washington D.C. Metro area. We are planning our year end firm retreat to plan for next year. This will be our third retreat. While we believe we have achieved some positive results from the last three retreats – we believe that we need to accomplish much more. What are your ideas or thoughts on the matter?

Response: 

We find that many law firms try to use their retreats to be an extended version of their regular partnership meetings. They simply try to do too much. The agendas are loaded down with far too many topics. As a result there is a lot of debate and discussion on often day-to-day operational items and no focus on the more complex-strategic issues that often have been ignored or pushed under the rug.

This year try to do less and achieve more! Consider narrowing down the topic agenda and focusing on one of the following areas of concentration: 

Concentrate on an area and come out of your retreat with specific action plans which can be implemented and put in place.

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

Oct 06, 2010

Characteristics of Successful Law Firms – Basic Building Blocks – Block 7 – Marketing

For the past six weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:

Partner relations, leadership, management, partner compensation, planning, and client service blocks have been discussed. 

The seventh and final basic building block is marketing. Successful firms have an effective marketing infrastructure and program in place.  

Gone are the days when attorneys simply practiced law. Today, they face increased competition, shrinking demand for services and increasing supply of professional talent, availability of service substitutes, and marketing of professional services. Marketing can no longer be ignored if small law practices are to survive in the future.

Based upon our observations working with client law firms over the past twenty six years we have concluded that marketing is poorly understood and ineffectively implemented in many small law firms. In addition, the following obstacles are at play:

Time – There is no time for marketing or any firm developmental activities. Production is king and non-billable activities such as marketing are discouraged.

Uneasiness With Marketing – Attorneys are uncomfortable with marketing. This is primarily due to lack of understanding, training, and experience with the process.

Lack of Marketing Understanding – Many attorneys confuse marketing with advertising. Marketing is not advertising. Marketing activities can exist without any promotional components such as television advertisements, radio spots, tombstone magazine advertisements, or direct mail. Marketing is the broader process concerned with the development and delivery of legal services and is part of the firm's long range planning process. It provides answers to the questions what are we selling and to whom are we selling. It involves maintaining relationships with existing clients as well as creating new relationships with prospective clients. In fact, a major objective of many successful marketing plans is obtain additional business from existing clients.

Focus and Accountability Problems – Frequently law firms experiment with marketing and engage in isolated promotional activities not integrated with the firm's business plan with the expectation of immediate results after the one-shot activity. The firm engages in fits-and-start activities that are completely unfocused, unrelated to an overall plan, unmeasured, inconsistent and often inappropriate.

Cultural Issues – The typical culture of many law firms discourages investment in long-term developmental activities. The focus is on billable hours and production. Everything else is of secondary concern. The consensus governance model typical in law firms hinders change and timely decision-making at the firm level. In addition, effective marketing in law firms requires marketing at the firm, practice group, and individual attorney levels. This requires effective training, mentoring, follow-up, and accountability at each of these levels.

Reward and Compensation Systems – RMost reward and compensation systems focus on short-term production and discourage participation in longer term (non-billable) firm investment activities or projects.

Click here to read one of my articles on marketing

Click here to read my blog postings on marketing

I hope you have enjoyed the series. Next week I will resume posting questions and answers received from law firms. 

John W. Olmstead, MBA, Ph.D, CMC
www.olmsteadassoc.com

Sep 28, 2010

Characteristics of Successful Law Firms – Basic Building Blocks – Block 6 – Client Service

For the past five weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:

Partner relations, leadership, management, partner compensation, and planning blocks have been discussed. 

The sixth basic building block is client service. Successful firms deliver exceptional client service. They don't just meet client expectations – they exceed them. 

This is the decade of the client. Clients are demanding and getting – both world-class service – and top quality products. Many law firms have spent too much energy on developing new clients and not enough retaining old ones. For many law firms, obtaining new work from existing clients is the most productive type of marketing.

Delivering great client service is extremely important in today’s legal marketplace. More and more lawyers and law firms are competing for fewer clients while client loyalty continues to drop. It is no longer sufficient to simply be competent or an expert in today’s competitive legal environment – law firms must distinguish themselves by the service they provide. Lawyers and law firms must strive for 100% client satisfaction. Service is how many clients can tell one lawyer or law firm from another. 

Clearly, from what law firms' clients are telling us, lawyers and law firms need to improve client service by integrating a client-first service focus into everyday practice and getting feedback on performance.

Most clients can’t evaluate the quality of your legal work. What they can and do is evaluate the experience of working with you. 

Lets face it – customer and client expectations have changed across all industries. It is a buyers market and they know it. Today clients want it all – better, faster and cheaper. If you can’t provide it they will go somewhere else.

The key is to management client expectations – underpromise and overdeliver.

Click here to read my article series on client service.

I will address each of the other building blocks in upcoming postings.

John W. Olmstead, MBA, Ph.D, CMC
www.olmsteadassoc.com

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