Law Practice Management Asked and Answered Blog

Category: Trends

Sep 02, 2026

Law Firm Management – What is Keeping Law Firm Owners and Managing Partners Awake at Night

Question:

I am the managing partner of a ten lawyer firm in Kansas City, Missouri. There are five partners and five associates in the firm. We are an insurance defense firm and our clients are a handful of insurance companies. Our cases are primarily slip and fall, premises liability, and auto accident cases. I have been the managing partner for two years and frankly I am getting burned out on the position and none of the other partners want the job. I am working 60-70 hours a week and am spending so much time on administrative matters that I don’t have time to practice law. I would be interested in what is keeping managing partners in other insurance defense law firms awake at night and how they are dealing with the challenges.

Response:

Managing partners in small insurance defense firms are telling me that the following top five challenges and concerns are what are keeping them up at night:

1.Finding and Retaining Experienced Lawyers and Staff

This is the biggest issue facing many firms. Gone are the days when you could place an ad and have a position filled within 30 days. I have client law firms that it has taken over a year to find and hire experienced (3-5 years) lawyers. Billable hour requirements of 1800 – 2000 hours are conflicting with work life balance goals of many young lawyers. Retention is also a issue. Losing a strong partner or associate can mean lost revenue, disrupted client relationships, and months of recruiting and training.

You must plan on a longer recruiting timeline and use all avenues available to you. For example:

Multiple channels for placing job ads.
Career center on the law firm’s website.
Ad on Indeed
Ad on Linked-In
Ad on state and local county bar associations website’s career centers
On campus recruiting at law schools
Using a recruiter when all else fails.

You must offer competitive benefits, work life balance and flexibility. Some form of remote work has become a major requirement and failure to offer schedule flexibility and remote work has resulted in many law firms losing candidates to other law firms.

2. Client Concentration

Insurance defense firms often have too few clients and many insurance defense firms are held hostage by these clients. I have some law firm clients that only have one insurance company client and if that client were to start using another law firm the law firm would be in dire straights. The client controls the amount of case assignments that the firm receives, the bill rate, and the amount of hours that can be charged for various tasks. The firm is so busy working on client files that no one has time to market and try to get additional clients. Partners often know they need a more predictable pipeline but don’t have time—or a repeatable system—for generating new clients. It sounds like your firm depends heavily on a handful of clients. Losing one major insurance company client can materially change the firm’s economics.

Insurance defense firms must find ways to invest the time and other resources to add additional clients to their client roster resulting in less dependence on one or a few clients and move their practice up market with improved hourly rates in areas such as insurance coverage, corporate representation, and self insured clients. Such diversification has made many firms less dependent on 2000 plus billable hours and more attractive you new lawyers. Many insurance defense firms have effectively done this.

3. Cash Flow and Collections

It has often been said that businesses are killed by inadequate cash flow. A firm maybe profitable on the profit and loss statement but is cash always tight?” Slow-paying clients, write-offs, uneven matter flow, and payroll/overhead create constant pressure.

4. Technology and AI

Law firms are trying to figure out where AI can genuinely improve operations and lower operational overhead without creating confidentiality, accuracy, ethics, cybersecurity, or malpractice risks. What tools should the firm be using? Costs? Time to implement? Fear of AI reducing the need for lawyers?

You need to attend all the CLE seminars, webinars, etc. that you can and get up to date on AI. This is moving very fast.

5. Succession Planning

What happens when founding partners want to slow down and retire?” How does the firm fund buyouts? Smaller firms frequently have fewer obvious successors. Do the younger attorneys in the firm want to have equity and own a law firm and will they be willing to step forward?

You need to begin addressing this sooner than later. Our blog library has an entire section on this topic.

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

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:

Were focused
Had a sense of where they were and where they were heading
Had a vision and a strategy
Had business and financial plans
Had goals and measured attainment
Fostered accountability from self and others
Were proactive
Worked the books and managed the RULES (Rate, Utilization, Leverage, Expense Control, Collection Speed)

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.

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