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Oct 27, 2010

Hiring Lawyers that are Children of Firm Owners or Partners

Question:

I am an owner of a 5 attorney law firm in the upper midwest. There are 4 associates in the firm and I hope to eventually make them partners. I have two children that will be finishing law school in the next year or two and they have expressed an interest in joining the firm. Is this a good idea? I have heard horror stories about such arrangements? What are your thoughts?

Response:

I have seen it go both ways. Many firms have brought children and other family members into the firm and have had excellent results. Others have not. In general I believe that law firms do a better job at this than do other business firms. Your situation is more complicated since you have associates in place that may feel threatened and uncertain as to their futures when you bring in family members. I believe that if you lay the proper foundation and go about it correctly you can successfully bring your children into the firm. Here are a few ideas:

  1. Recognize that for the family members there will be a family system, the family law firm, and an overlapping of these systems. This can be fertile ground for conflict if clear boundaries between the family role and the firm (business) role are not clear. Establish clear boundaries. Family dynamics and business dynamics seldom mix. Your objective should be to draw the clearest possible distinction between the two and make sure that everyone understands that the firm (business) is the firm and the family is the family.
  2. Children should not be brought into the firm unless they want to be involved and satisfy your standard hiring criteria for lawyers. I believe that before your children join the family law firm it is a good idea for them to work for another firm or organization. When they do join the family firm they can bring with them that experience, a supply of new ideas, a network of contacts, and a number of other benefits acquired.
  3. Make it clear to your children that they must "earn their stripes" and come up through the ranks in the same fashion as other associates in the firm. No special privileges. Make it clear that they must earn the respect of other attorneys and staff in the firm.
  4. Put your associates and staff at ease. Make it clear that your children are expected to "earn their stripes" and they will not be promoted to partner over other associates on family status alone. (Unless this is your intent)
  5. Clearly define the role of all parties.
  6. Monitor your own behavior. Don't take sides – either between your children if both join the firm or between your children and other employees in the firm.
  7. Be careful with compensation and other rewards. Compensation should be based up performance and results and consistent and competitive with other law firms of similar size and type.
  8. Put in place a succession plan sooner than later with a workable buy-sell agreement.
  9. Communicate, communicate, communicate – your intentions, roles, etc. before and after your children join the firm.

Click here for other articles

Click here for my blog postings on succession

Good luck! 

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

Dealing with Difficult – Maverick Partners

Question:

Our firm has been discussing how to handle one of our partners. We are are 25 attorney firm. One of mid-level partners who is one of our highest fee producers and best business getter's simply won't follow firm policy or play by the rules. He won't turn in time-sheets in a timely manner, he is argumentative with others in the office, and not a team player. He is "me first" while the rest of the partners in the firm are mostly "firm first". 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 on how we should handle this?

Response:

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.

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 unplesant 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.

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

 

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

Sep 22, 2010

Characteristics of Successful Law Firms – Basic Building Blocks – Block 5 – Planning

For the past four 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, and partner compensation blocks have been discussed. 

The fifth basic building block is planning. Successful firms have a long range business or strategic plan in place.   

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.

Well designed business plans are essential for focusing your firm. However, don’t hide behind strategy and planning. Attorneys love to postpone implementation.

  • Elements of an effective business plan should include:
    • Decision as to direction of the firm
    • Data collection and review
    • Data collection and review
    • Action plans
    • Implementation and follow-up mechanisms

    Failing to plan is planning to fail.

    Click here to read my article on the topic.

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

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

    • Sep 14, 2010

    Characteristics of Successful Law Firms – Basic Building Blocks – Block 4 – Partner Compensation

    For the past three 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 building, and management blocks have been discussed. 

    The fourth basic building block is partner compensation. Successful firms have a good partner compensation in place. Partners frequently advise us in confidential interviews that they are more dissatisfied with the method used to determine compensation than with the amount of compensation itself.

    How much and how partners are paid are probably the two most challenging management issues that law firms face. Many law firms are struggling with compensation systems that no longer meet the needs of the firm and the individual partners. Failure to explore alternatives to failing systems often result in partner dissatisfaction leading to partner defections and disintegration of the firm.

    In many law firms compensation systems have been counter-cultural and failed to align compensation systems with business strategies. As more law firms move toward teams many are incorporating new ways to compensate partners in order to develop a more motivated and productive workforce. Team goals are being linked to business plans and compensation is linked to achieving team goals. Such systems reinforce a culture that significantly advances the firm’s strategic goals.

    People tend to behave the way they're measured and paid.

    What gets measured and rewarded – is what gets done.

    However, be advised that compensation does not drive behavior – it maintains status quo. Motivation requires leadership which can have a greater impact upon a firm than anything else.

    Compensation systems should do more than simply allocate the pie – they should reinforce the behaviors and efforts that the firm seeks from its attorneys. Many firms are discovering that desired behaviors and results must go beyond short term fee production and must include contributions in areas such as marketing, mentoring, firm management, etc. to ensure the long term viability of the firm.

    Click here to read my article on the topic

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

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

     

    Sep 08, 2010

    Characteristics of Successful Law Firms – Basic Building Blocks – Block 3 – Management

    For the past two 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 and the leadership building blocks have been discussed. 

    The third basic building block is management. Successful firms have a good governance and management structure in place and effectively manage the firm. A major problem facing many law firms is the lack of long range focus and the amount of partner time that is being spent on administrivia issues as opposed to higher level management issues. Time spent in firm governance and management, if properly controlled, is as valuable as, if not more valuable, than the same time recorded as a billable hour. (client production time)

    There is a difference between management (governance) and administration.

    Partners and law firm owners should be focusing their time on the management issues rather than administration.

    Management includes:

      – Productive activities, including those of individual lawyers and the firm as a whole.
      – Quantity, quality, and economic soundness of the work.
      – Development of lawyers and future leaders of the firm.
      – Formulation of policies that will determine the firm’s character
      – Financial planning, both short-term and long-range.
      – Marketing and business development.
      – Partner compensation and profit distribution systems

      – Other decisions requiring partner approval

    Almost everything else is administration.

    Hire an office administrator, manager or assistant for the administrivia matters so the partners can focus on the management concerns of the firm.

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

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

     

     

     

     

     

    Almost everything else is administration.

    Hire an office administrator,office manager or assistant for the administrivia matters so the partners can focus on the management concerns of the firm

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

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

     

     

     

     

      

     

     

    Aug 31, 2010

    Characteristics of Successful Law Firms: Basic Building Blocks – Block Two – Leadership

    Last week I discussed the characteristics of successful law firms and introduced the basic building blocks that successful firms typically have in place. These are:

    Last week we focused on partner relations as a core foundational building block.

    The second basic building block is leadership. Successful firms have good leadership in place. This may be a single individual or a core group of individuals. Leadership does not always come from the formalized management structure of the firm.

    Leadership is one of the major problems facing law firms. Leaders are needed for managing partner posts, executive committee chairs, and practice group heads.  

    Leadership behaviors include:

    Leadership skills will need to be included in compensation systems.

    Seven traits of effective leaders include:

    1. Make others feel important
    2. Promote a vision
    3. Follow the golden rule and establish trust
    4. Admit mistakes
    5. Criticize others only in private
    6. Stay close to the action
    7. Walk the talk.

    Leadership is what makes things happen and propels the firm forward, facilitates new directions and attainment of strategic goals, and provides the firms the resiliency needed in today's challenging competitive climate.

    Law firms without leadership are easy to spot. They are the firms that are "stuck-in-a-rut", unable to reach agreement or concensus on new ideas, stagnating profitability, partner defections.

    Firm must pay attention to this key area and develop leaders for all roles mentioned above.

    Click here to read my article on leadership

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

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

     


     

     

    Aug 23, 2010

    Characteristics of Successful Law Firms: Basic Building Blocks – Block One

    Question:

    My partner and I just started our firm two years ago. We have one associate attorney and one staff member. As we grow our firm what should we keep in mind so we don't repeat some of the mistakes that I have seen in other firms that have not been successful?

    Response:

    I often refer to what I call the Basic Building Blocks of Successful Law Firms which are:

    Lets take the first one – Partner Relations. This is the foundation (bedrock) of a successful firm. A successful firm has a healthy partner culture – a good marriage. In such a culture partners share common vision and purpose, respect one another, shoot straight with each other, and have difficult conversations and discussions when needed and deal with issues and problems. In many firms this is not the case and these firms often are characterized by the following:

    Such firms are often doomed from the start. Firms that don't get this foundational building block right will build a firm on a shaky foundation. Before forming a partnership – go slow and get to know the other lawyer or lawyers and insure that the marriage makes sense, that you share similar goals and values, that you will be compatible, and you will be good partners. Once you have made the commitment – communicate, communicate, communicate and deal with issues in real time.

    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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