Law Practice Management Asked and Answered Blog

« Earlier | Later »

Jul 15, 2008


How Do We Prepare Our Law Firm For a Merger

Question:

We are a 25 attorney firm and we are discussion the possibility of searching for merger partners? What is the process?

Response:

You start with determining your merger objectives. Why do you want to merge? What do you hope to achieve? Is merger compatible with your strategic plan? What size of firm are you considering?

Once you are sure that merger exploration – in general – makes sense – you should insure that your house is in order. In other words – can anything be done to enhance the value and/or marketability of your firm? For example:

  1. Do you have a business or strategic plan? If not – how will you convince a potential merger partner that you have a plan for the future and know where you are going? Maybe now is a good time to work on that plan.
  2. Work on and clean up your financials. Improve the financial performance of your practice. Eliminate deadwood. Writeoff uncollectable A/R and WIP.
  3. Avoid entering into long term committments that might make your firm undesirable to another firm. (new long term leases, risky client matters/cases, loans, admission of new partners, unfunded partner buyouts/retirements, etc.
  4. Enhance firm image where you can.
  5. Develop a first class firm profile.

Next, develop a merger marketing plan and begin working the plan. Try to generate enough leads that you can explore merger with several firms rather than engaging in "random merger talks" which often result in isolated merger offers with you having no framework for comparison.

Use an outside consulting firm if you need help organizing, identifying candidates, and managing the process.

Once you have merger candidates identified – the real work begins. Here is a general outline of the process:

Merger Accessment (Due Dilligence)

People

Philosophies, personalities, life styles, do the partners like each other, why does the deal make sense.

Firm Name
Conflicts
Economics
Partner Compensation System Comparisons
Retirement, Voluntary Withdrawl, Expulsion Policies
Management Structure
Practice Compability
Practice Philosophies
Work Ethic
Firm Structure
Associate Management

Merger Implementation

If the two firms decide to proceed with a merger – then the process of merger implementation begins. A merger agreement is executed and a merger implementation plan it put in place. Then you begin working the plan. If the merging firms are of similar size (as opposed to a large firm acquiring a smaller firm) a lot of infrastructure work will need to be done – ranging from IT systems, management structure, space, etc. to accomodate the larger entity.

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

Apr 08, 2008


Succession: Obtaining Maximum Value for Your Practice

Question: I am the sole owner of a 12 attorney practice. I am 55 years old and am beginning to think about retirement. The other attorneys are associates in the firm. What do I need to be thinking about in order that I can transition out of my practice and have money for retirement. While I have put some money in a 401k, I am not yet financially secure enough to retire.

Response:

You are not alone. As the baby boom generation ages – more and more attorneys are asking this question. Unless you have an appropriate Exit Planning Strategy and put in place a sound Exit Plan, it is doubtful that you will be able to cash in on the full value of the goodwill that you have created. To exit successfully you need:

You will need to consider whether you should consider merger, sale of the practice to an outside buyer, or sale of the firm to the other lawyers in the firm. You need to find ways to institutionize the firm so that in additional to professional goodwill (your personal reputation and goodwill) you develop practice goodwill (goodwill of the firm that will remain after you have left the firm). Develop your lawyers and create a desire and motivation for them to want to be owners/partners in the firm. Develop your staff and practice systems. Diversify and stabilize your client base.

If you decide to sell to attorneys in the firm – begin the process early so that most of the buy-in is completed before your actually leave the firm. The longer the planning horizon – the easier they buy-in burden will be for others

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

Apr 08, 2008


Change

Question: I am a legal administrator with a midsized firm in the southwest. Our firm has recently lost two major clients and we have not acquired any new major clients for many years. Other problems regarding failure to innovate also exist. I am concerned that if the partners do not change their ways that we may not still be in business in the next few years. The firm need to change. Where do we start? How can I teach old dogs new tricks?

Response: This is a common problem being reported to us by several of our clients. Institutional clients are now shopping for legal services. They are looking for innovative solutions to their problems. They are looking for law firms that they can partner with and that becomes in essence a part of their team. The old ways of conducting business is no longer working with institutional clients. Law firms need to rethink their business and perhaps reinvent their practices. This will not be an easy task for many law firms. Change does not come easy and it cannot happen unless the firm sincerely desires to change and do things differently. In many cases law firms cultures will need to be changed to a client orientated model. This will take time and patience. Legal administrators will play an instrumental part in this process. The firm may want to start by getting out of the day-to day management rut and begin a process of long term strategic planning. Only then will the roadmap to change be able to be formulated.

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


Jan 21, 2008


Management Ideas for 2008

As you begin 2008 here for getting started.

  • 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.
  • 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.
  • 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.
  • 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, 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.
  • Improve relationships with your clients. Studies show that each year 'lack of responsiveness' has been the number one reason for client dissatisfaction.
  • Find ways to focus the firm and foster accountability from all.
  • 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.
  • 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.
  • Jan 21, 2008


    Strategies For Surviving In The Present Economy

    As law firms begin to plan for the new year we suggest the following key strategies:

    Research indicates that three of the biggest challenges facing professionals today are: time pressures, financial pressures, and the struggle to maintain a healthy balance between work and home. Billable time, non-billable time or the firm’s investment time, and personal time must be well managed, targeted and focused.

    Today well-focused specialists are winning the marketplace wars. Trying to be all things to all people is not a good strategy. Such full-service strategies only lead to lack of identity and reputation. For most small firms it is not feasible to specialize in more than two or three core practice areas.

    Based upon our experience from client engagements we have concluded that lack of focus and accountability is one of the major problems facing law firms. Often the problem is too many ideas, alternatives, and options. The result often is no action at all or actions that fail to distinguish firms from their competitors and provide them with a sustained competitive advantage. Ideas, recommendations, suggestions, etc. are of no value unless implemented.

    We suggest the following:

    Jan 10, 2008


    How Can We Determine If Our Law Firm Partner Compensation System Is Working

    Question: Do you have any suggestions concerning how we can determine if our compensation system is functioning properly?

    Response:

    You can start with the following firm – self-test. Has the firm experienced or is it experiencing:

    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.

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

    Jan 08, 2008


    Law Firm Client Satisfaction Surveys

    Question:

    We have recently lost a key partner, several key institutional clients, and we don't know why. We are considering doing a client satisfaction survey to insure that we are not falling asleep at the wheel and providing the best service possible. We also want to make sure we understand current client needs and whether our services are still adequate. What are your thoughts? 

    Response:

    For institutional clients we would recommend telephone interviews, face-to-face interviews, or a combination of both.

    Typically, when we work with a client we establish the initial research objectives of the project and then the best way to achieve them. For example, do you just want obtain feedback from your top 10, 25, or 50 institutional/busines clients or your entire client base?

    In the case of a study population of your top 10, 25, or 50 clients we usually recommend a telephone interview technique. We shoot for a 90%+ response/participation rate. We develop the questionnaire with the client and then conduct the interviews and compile a report consisting of both statistical metrics (grades if you will) and client commentary/narrative. Often it is the narrative commentary that provides the most actionable information. Recently, when conducting interviews of an insurance defense law firm's insurance company clients a client advised us that they had stopped sending new files/cases to the firm because of poor communication and status reporting. Based upon our interviews the firm was able to resolve the internal issues and repair the relationship with the client. The law firm was also contemplating implementing a blended billing rate structure and wanted us to obtain the client's reaction. We also obtain feedback from these clients on what topics they wanted presented in seminars that the law firm put on for their insurance clients – both in group sessions with other insurance company clients and private onsite sessions for individual insurance company clients.

    Before conducting the interviews we ask the law firm client to contact the client and solicit (sell them on) their participation in the study. We then contact them, make the appointment, and conduct the interview. In our proposal for these services we pledge client confidentiality and are willing to sign a confidentiality agreement with the firm as well.

    For individual clients, due to the number of clients, a paper mailed survey is typically used. The response rates will be less (30% tops usually), these will less narrative/commentary, less actionable information, and there will be no ability to probe. In these cases we develop the questionnaire, the law firm mails out the questionnaires for us, the returned questionnaires come to us directly in the provided reply envelope, we compile the data and the report and provide to the firm.

    If you decide to handle the project in-house rather than outsourcing a similar approach would be recommended. Just insure that you staff and resource the project properly.

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

    Oct 04, 2007


    Tips for Staying Energized and Productive

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

    I am often asked to help law firms design and implement strategic business plans. I also coach many solo and small firm attorneys in career as well as personal and professional life balance issues. In both situations the starting point is the same.  Begin by taking inventory of your personal life goals. Only then can you effectively begin planning an effective career strategy or law practice. Unfortunately, may attorneys start with the law practice and take care of business first and fail to take care of their personal lives until it is too late. It is much easier to begin your life and career with balance that it is to try to bring your life back into balance later in life.

    Ask yourself the following questions:

    1. Do you find yourself spending more and more time on client and firm work-related projects?

    2. Do you often feel that you don't have any time for yourself or your family and friends?

    3. Does it seem that every minute of every day is always scheduled for something?

    4. Do you sometimes feel as though you've lost sight of who you are and why you chose law as a career?

    5. Can you remember the last time you were able to find the time to take a day off to do something fun — something just for yourself?

    6. Do you feel stressed out most of the time?

    7. Can you remember the last time you used all your allotted vacation and personal days?

    8. Does it sometimes feel as though you have never even have a chance to catch your breath before you have to move on to the next client project/crisis?

    9. Can you remember the last time you read — and finished — a book that you were reading purely for pleasure?

    10. Do you wish you had more time for some outside interests and hobbies, but simply don't

    11. Do you often feel exhausted — even early in the week?

    12. Can you remember the last time you went to the movies or visited a museum or attended some other cultural event?

    13. Do you do what you do because so many people (children, partners, parents) depend on you for support?

    14. Have you missed many of your family's important events because of work-related time pressures and responsibilities?

    15. Do you almost always bring work home with you?

    If you answered with non-positive responses to more than five questions your life is out of balance and you need to take steps to correct the situation.

    Here are some ideas:

    Keys To Happiness

    Tips For Staying Energized And Productive

    TIP #1: Develop a Personal Life Plan and a Career/Practice Business Plan.

    TIP #2: Use and work your plan.

    TIP #3: Work smarter not harder. Improve your time management skills.

    TIP #4: Create your life balance expectations for you clients and your superiors in the firm. When interviewing for a new job or position let your future employer know your expectations upfront.

    TIP #5: Tend to your physical health. Insure that you address prevention and treatment of diseases, weight control, physical fitness and stress management. Schedule and keep annual physicals. Exercise daily.

    TIP #6: Begin looking for ways to implement alternative billing. Look for alternatives to billable hours.

    TIP #7: Take time for yourself and family. Take vacations.

    TIP #8: Define what is important to you and define your personal-professional life balance boundaries.

    TIP #9: Enjoy life and get involved in activities other than the practice of law. Pursue hobbies and other interests.

    TIP #10: Know your personal and professional goals.

    TIP #11: Learn to relax. Take time everyday for meditation, prayer, yoga or some other activity that is focused solely on relaxation.

    TIP #12: Schedule time for relationship building and maintenance.

    TIP #13: Never eat alone. Use mealtime to network with referral sources, potential clients, and other professionals.

    TIP #14: Turn off e-mail notifications, pagers, and cell phones.

    TIP #15: Develop a personal and business budget and follow it.

    TIP #16: Network, Network, Network both inside and outside of the firm.

    TIP #17: Develop your conversational skills.

    TIP #18: Eliminate clutter at home and at work. Develop a filing system for your personal papers and business files and documents. Open and review your mail immediately and discard anything that you do not intend to keep.

    TIP #19: Use technology to streamline your work.

    TIP #20: Delegate work.

    It takes 30 days or longer to form new habits. PRACTICE, PRACTICE, PRACTICE. Celebrate your successes, reward yourself, and continually strive for improvement.

    Oct 04, 2007


    Suggested Practice Tips For Today

    1. Never eat lunch alone. Have lunch everyday with clients, prospective clients, referral sources or members of your team.
    2. Take our time management self test. Begin working on your problem areas one behavior at a time. Time is money.
    3. Enter you time daily into you time and billing system – both billable and non-billable – as you work. Don't go home until you have accounted for an entire day. You may be dropping 10-25% potential revenue.
    4. Look for ways to brand yourself – dare to be different. With the internet you really can expand your base beyond your local community.
    5. Set a few goals and hold yourself and your team accountable.

    Jul 02, 2007


    Client Satisfaction Surveys

    Question:

    We are becoming more and more concerned about the firm’s future? Recently we have lost a couple of our insurance defense clients and others may be sending us less files? Do you have any suggestions?

    Response:

    Our firm recently completed client satisfaction interviews for several of our insurance defense law firm clients. Here are a few quotes and a summary of what these insurance company law firm clients told us:

    Much can be learned by talking to your clients. Structured telephone interviews conducted by a neutral third party can provide many surprises as well as answers. Client satisfaction interviews can be the best marketing investment that you can make.

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

      Subscribe to our Blog