Law Practice Management Asked and Answered Blog
« Earlier | Later »Jun 13, 2012
Law Firm Merger – Challenges Implementing a Small Firm Merger
Question: Three years ago our firm merged. The merger involved three solo attorneys and their staff merging into one firm. Now the firm consists of three partners and six staff members – a firm of nine people. While the firm is doing well financially and we are on a growth track we are having issues involving conflict among the partners and staff. In some ways we are still operating as three law firms. Staff are not working well together and they refer to old firm and new firm. They are resistant to change and they have created personal fiefdoms. We merged to create one firm – not three – but we fear that we are still functioning as three law firms. Do you have any suggestions?
Response:
The people issue is often the major hurdle that law firms face when implementing a merger. In your situation you are now a firm of three lawyers and six staff members – nine people – a firm three times the size of the individual firms. You are now a law firm – not solo practitioners – and you must adjust you management and communication styles accordingly. Partners must begin to think in terms of firm-first rather than their individual practices or me-first. Roles need to be spelled out for the partners regarding management and leadership of the firm (structure and management plan). Roles and performance expectations should also be spelled out for the staff as well. While conflict can result from personality clashes and having the wrong people on the bus – often conflict results from unclear roles and expectations and poor communications. Fix these issues and you often will reduce the conflict. If you are not having frequently scheduled team meetings I suggest that you start having them. This will do a lot to improve communications.
You must also review your work processes and practices and consolidate as much as possible into a set of firm – rather than three firm's sets – of policies and procedures and everyone should conform to these rather than the practices of the past.
Consider:
- Partners sitting down, discussing whether they want a firm-first v.s. a me-first firm and what they need to do to set the tone – the example – for the firm.
- Partners clarifying how they want to manage and lead the firm – specific roles and responsibilities for management, etc.
- Job descriptions outlying roles and expectations for staff.
- Annual performance reviews for staff. Working together and teamwork should be one of the measures.
- Monthly team meetings with an agenda and minutes taken.
If the conflict is due to personality or behavioral issues – confront the behavior and if necessary put the individual off the bus.
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John W. Olmstead, MBA, Ph.D, CMC
May 28, 2012
Improving Law Firm Management Team Performance
Question:
Our firm has 24 attorneys. We are managed by a management team consisting of a managing partner (25% of his time), a full-time office administrator, controller, and marketing director. I am currently serving as the managing partner. Recently we have been having conflict between various members of the management team. Our team meetings are stressful and I fear that our effectiveness is being compromised. Do you any suggestions?
Response:
I suggest you start by identifying some of the causes. Poor communications often can be the root cause of such problems. Interview each of your team members individually and probe. What do they think? Is communications a problem? Are roles, duties, and responsibilities clarified? Lack of clarity can in these areas can lead to turf wars. You may want to design a team charter as well as job descriptions for each employee and clarify roles, duties, and responsibilities for each team member. Conduct short weekly team meetings to enhance communications. Use agendas. Take minutes of the meetings. Advise each team member of your expectations including all members working together as team members. Let them know that working together as a team is a performance factor that will be considered in performance evaluations and reviews. Conduct periodic performance reviews. Counsel and take action against problem team members.
Take stock of your performance as well. Are you micro managing the team or second guessing team members? Have you honed your leadership skills? If not – work on your management and leadership skills as well and consider coaching and leadership training if necessary.
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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.
May 09, 2012
Using Financial Dashboards to Manage the Law Firm’s Pipeline
Question:
Our firm is an 8 attorney general practice firm in Kansas City. In addition to hourly work we have a heavy mix of contingency fee work as well. Other than our monthly profit and loss statement and a report of hours produced we have no other financial reports that we use. I have read about financial dashboards. What might we use them for in our firm?
Response:
In these economic times effective pipeline management is becoming more and more important in law firms – especially in those firms that do a lot of contingency fee work. This might be a good place to start using some dashboard metrics.
Pipeline management is a term used in the management consulting profession to refer to the process by which you continually evaluate your active opportunities (prospective clients to booked clients) for their balance of QUALITY and QUANTITY. The goal is to continually stay on top of the overall health which is a full pipeline. Pipeline management allows client relationship managers to more accurately forecast fee revenues, better staff and manage client engagements, and close more client business.
I often also refer to Pipeline Management in law firms in the context of using financial dashboards by which the individual charged with financial management responsibilities is continuously aware of significant changes in the firm's Pipeline (from prospects to cash):
- Number of new business inquiries for the month
- Number of pending prospective clients
- Number of open client matters
- Dollar value of Unbilled Work in Process/Age
- Dollar value of Accounts Receivable/Age
- Dollar value of billings
- Dollar value of unearned retainers
- Dollar value of fee receipts/collections
By comparing these dashboard statistics to a prior month, quarter, or year – you are able to measure the effectiveness of your marketing and avoid financial surprises down the road.
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John W. Olmstead, MBA, Ph.D, CMC
May 01, 2012
Problem Partners – Do You Have the Right Folks on the Bus?
Question:
I am managing partner for a 16 attorney firm in Minneapolis. We have been having problems with one of our senior partners. He is our highest fee generator – both origination and generation. He operates as a "lone ranger" and refuses to work as a team member with others. He won't follow firm policy or play by the rules. We are trying to build a team based practice and this one partner is holding up our progress. Do you have any thoughts or suggestions?
Response:
Getting and keeping the right people on the bus is a key challenge for law firm management and dealing with "maverick partners" is always a challenge. Of course they seem to always be the heavy hitters and this makes it that much more difficult as often there are major clients and large sums of money at stake – at least in the short term. This can also be major issues and large sums of money at stake in the long term if you don't deal with the maverick partner as well. In addition you won't be able to achieve the vision and goals the firm is trying to achieve.
- For starters – if you have not already – create a well understood set of firm core values or code of conduct that governs behavior in the firm. For example, in most firms people are expected to work hard, be honest, and treat each other with respect.
- Partners as well as all other attorneys and staff should behave in a collaborative, cooperative, and team-orientated manner.
- Partners as well as all other attorneys and staff should comply with all firm policies and procedures.
- Enforce firm policies for all – no exceptions.
- Consider coaching, counseling or other forms of outside assistance if they could prove helpful.
- Lay down the law – confront and deal with the problem partner sooner than later – even if it means he or her leaving the firm.
Many firms have had to deal with the problem of a maverick "huge business generator" who just wouldn’t cooperate with firm policies and caused conflict and tension in the firm. It is an unpleasant task – but in the end – worth the investment. In the end he or she either conforms or leaves the firm. We have been advised by our clients that even though they may have struggled in the short term as the result of the loss of a major fee producer – in the long run the firm was better off and should have done it earlier.
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John W. Olmstead, MBA, Ph.D, CMC
Apr 25, 2012
Law Firm Partner Compensation – Why Change If We Are Happy
Question:
I am a partner in a 16 attorney firm in Memphis. Our firm has had the same partner compensation system for 20 years and we are generally happy with it. It is an eat-what-you-kill system. Since we are generally happy why should we consider changing it?
Response:
You can start with the following firm – self-test. Has the firm experienced or is it experiencing:
- Partner defections
- Firm splits and breakups
- Personal fiefdoms
- Maverick partners
- Hoarding work
- System perceived as unfair
- Problems acquiring and retaining top legal talent
- Low productivity
- Low profitability
- Client dissatisfaction
- Low morale
- Disputes with former partners
If your firm is experiencing or has experienced the above symptoms, it is time to really examine where the firm is headed and what messages your compensation is sending out to your partners. Is the firm trying to be a firm or merely a group of lone rangers? Even though your partners are content your compensation system may be holding the firm back from becoming all that it desires to be. Contentment may not be the best measure of success.
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John W. Olmstead, MBA, Ph.D, CMC
Apr 18, 2012
Law Firm Succession: Using Affiliation As a Phase I Pilot Test
Question:
I am sole owner of a law firm in Chicago with an elder law practice. I have two paralegals and two legal assistants. Although I want to continue to practice as long as I can I am in my late 60s and am beginning to think about what to do with my practice. I have recently had several discussions with another sole owner that is interested in buying my practice. Since I want to practice as long as I can I am concerned about the timing of selling my practice due to the current ethical rules. I also want to insure that the other firm would be the right fit for my clients and staff. Do you have any thoughts or suggestions?
Response:
Making the right decision concerning the "Who" is usually more important than the "What" or the "How". Take your time to do the proper due diligence regarding the other firm. Get to know the owner as well as the employees of the other firm. Ascertain practice, client, and cultural compatibility. If you both determine that a a deal might make sense – then move to the "How". Even though you have done the best due diligence you can – you won't really know about the other firm until you try working together. So before you jump – consider taking a few baby steps first. You might start with an affiliation arrangement (Of Counsel) as a Phase I pilot test for six months. Under this arrangement you can both refer work to each other as well as have the other attorney work on some of your client matters at your office. Outline the details of the relationship in an affiliation (Of Counsel) agreement. After six months review the success of the arrangement and whether it makes sense to take the next step. If it does – a Phase II step might be to enter into a more formal practice continuation/transition arrangement with the other firm. Phase III would be either the eventual sale of your practice or merger with the other firm. Taking a phased approach allows you learn more about the other firm which will increase your odds of a successful transition and buys you time before actually selling your practice if that is the direction you should go.
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John W. Olmstead, MBA, Ph.D, CMC
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
Apr 03, 2012
Using A Law Firm Key Account Survey to Access Client Satisfaction and Your Competitive Profile
Question:
I am the managing partner of a 16 attorney firm in Santa Monica, California. We represent large energy companies located on the west coast. We are contemplating developing our first strategic plan. We would like to obtain insight from our clients, receive their feedback, and use this information to access our level of client satisfaction and our competitive profile. However, we are not sure whether we should conduct a random survey involving selecting a percentage of our clients or a census involving surveying all clients rather than taking a sample. Please advise as to your thoughts.
Response:
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.
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John W. Olmstead, MBA, Ph.D, CMC
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