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Sep 27, 2016

Law Firm Marketing – Client Development for an Insurance Defense Firm

Question:

I am the managing partner of a thirty attorney insurance defense firm in Arlington, Texas. While we are still in our first generation – several of our partners are approaching retirement and some of our relationships in our insurance company clients are also retiring. We are looking for ways to shore up and expand our client base. We would appreciate your suggestions.

Response:

You need to get on more "approved lists" of insurance companies. Once you are on these lists you have to entice claims manager to use you as opposed to other law firms that are on their approved lists. In other words establish relationships with numerous claims managers throughout the company. This is harder than it used to be due to policies that many companies now have prohibiting various forms of networking such as dinners, gifts, ball games, etc. Now days it seems that educational venues is one of the few formats that is not frowned upon. 

Here are a few ideas to get started:

  1. Become involved in every possible organization that involves insurance claims, ACCA, and other such groups.
  2. Join and become actively involved in these groups.
  3. Offer to give speeches and presentations to these groups.
  4. Develop relationships with news reporters and have an effective public relations program that insures that you get all the PR you can when you have successful outcomes in your cases.
  5. Speak at ACCA and RIMS (Risk Insurance Management Society) conferences.
  6. Form alliances with bigger regional and national insurance defense firms.
  7. Research target companies and make application to get on their approved lists.
  8. Obtain listings in A.M. Best and Martindale.
  9. Get on the speaker list with seminars groups that target the insurance industry client industry – for example Perrin Conferences.
  10. Have a quality website that demonstrates expertise and a e-newsletter that provides information that will help claims managers and adjuster be more successful.

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

May 10, 2016

Law Firm Client Relations: Lost Client Survey

Question:

I am a member of our firm's executive committee. We are a 16 attorney business transactional firm in Seattle. Recently the firm has lost several key clients and we want to know what we can do determine why this happened and what we can do to improve client retention. I would appreciate your suggestions.

Response

I would conduct a 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.

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

Apr 12, 2016

Law Firm Client Satisfaction – Exceeding Client Expectations

Question:

I am owner of a four attorney firm in Amarillo, Texas. We represent both individual and institutional clients. Recently, we have had numerous complaints from clients advising us that our services took longer than expected and fees were also higher than expected. I would appreciate your thoughts?

Response:

Based upon client satisfaction surveys (telephone interviews) that we do for law firms we find that one of the biggest problems is that the attorneys are doing a poor job of managing client expectations. Your clients get frustrated when you promise one thing (timeline or fees) and the result is very different – especially when the work takes longer than promised or the fees are higher. Even though you don't structure it as a promise your clients take it that way. The key is to under promise and over deliver. I suspect that upon the initial client meeting you are under estimating the timeline and low balling the fee range. Reduce the promise – increase the - timeline and fee range and then shoot to deliver under that range. This will do wonders for improving the client relationship.

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Jul 28, 2015

Law Firm Compensation – Client Origination Guidelines

Question: 

I am the managing partner of a 25 attorney firm in Charleston, South Carolina. Our practice is limited to insurance defense. We have eight equity partners and four income partners, and five associates. Our firm is in second generation and virtually all of our clients were originated by first generation partners that are no longer here – they have since retired. Our compensation system focuses totally on working attorney dollars. I believe that we must begin to stress the importance of origination of new clients and factor that into the equation. I would appreciate your thoughts.

Response: 

Origination of new client business is important in any firm. Many insurance defense firm are too dependent on four or five insurance companies and need to diversity their client portfolio. Origination should be at least a factor in compensation systems – whether treated objectively or subjectively. There are pitfalls and you will need to establish specific rules, guidelines, and a policing committee. 

Here is an example of origination guidelines that some law firms have implemented:

  1. Firm Employee or Employee Referral. Whenever the firm is employed by one of its non-lawyer employees or by a client referred by such employee, the client should be considered a firm client and no origination attribution aware should be made.
  2. Employee of Existing Client. When an employee of an existing client (other than a principal) becomes a client of the firm, the presumption will be made that the employee is a client of the attorney to whom the employer is attributed. There may be extenuating circumstances calling for a different result, and these circumstances should be brought to the attention of the Attribution/Compensation Committee.
  3. Martindale and Similar Lawyer Lists. Referrals generated by Martindale and other such lawyer lists should always be considered clients of the firm.
  4. Clients Resulting from Prior Clients. In the case of a client attracted to the firm by reason of a lawyer's prior representation of another client, the new client shall be presumed to be the client of the lawyer to whom the existing client is attributed unless the new client was demonstrably attracted by the lawyer representing the existing client.
  5. Direct Referral by Existing Client. In the case of a referral by an existing client of Lawyer A to Lawyer C (by reason of Lawyer C's particular expertise), the client shall nevertheless, in most instances, be deemed to be the attributed client of Lawyer A.
  6. In-Town Referrals. Referrals by lawyers in (name of city) resulting from conflicts of interests should be considered firm clients. However, some referrals to our firm are made by other lawyers who have recognized the particular expertise of one of the lawyers in the firm. All in-town referrals should be first referred to the Attribution/Compensation Committee prior to any attribution being made.
  7. Out-of-Town Referrals. In Most instances, out-of-town referrals (other than from lawyer lists) are the result of friendships and professional associations between lawyers. The attribution should properly be awarded to the lawyer to whom the referral is made.
  8. Paralegals. All dollar amounts resulting from the work performed by paralegals shall be attributed entirely to the attorney to whom the client is attributed.
  9. Contingent Fee Cases. Upon receipt of the firm's share of amounts payable under a contingent fee contract, the originating attorney should be attributed ___% of the fee and the remaining ___% should be spread among the lawyers in proportion to their hours of service on the case, taking into consideration their respective hourly rates.
  10. Joint Referrals. The affected lawyers should meet in an attempt to resolve their respective sharing. If, however, the matter is not resolved, it should be referred to the Attribution/Compensation Committee for a binding decision.
  11. Retiring Partners. The clients of retiring partners are presumed to be firm clients.
  12. Attribution/Compensation Committee. All origination attributions should be reviewed by the Attribution/Compensation Committee in the same fashion that it reviews new clients. Independent inquiry should be made of new clients where there may be some question as of the appropriateness of attribution.

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

 

 

 

Jun 02, 2015

Law Firm Partner Compensation and Client Origination Credit

Question:

Our firm is an 8 attorney general practice law firm located in Kansas City, Missouri. Five of the attorneys are equity partners and the other three are associates. The two founding partners are the only ones in the firm that bring in clients – the other partners are just workers. Currently the partners are paid based upon their collections for cases/matters to which they are assigned. They are also credited for work that others do on their assigned matters as well. We are concerned that in a general practice firm such as ours, everyone must be bringing in clients and we are considering changing our compensation system to factor in credit for client origination – bringing in clients. I would appreciate your thoughts.

Response:

All law firms need a mix of finders, minders, and grinders. Finders (client originators) are needed to provide sufficient work to keep the workers busy. Minders (responsible matter attorneys) are needed to manage the portfolio of client work. Grinders (working attorneys) are needed to service and produce client services.  While there are exceptions, in most firms partners must hit on all three of these cylinders. In other words, most of the partners must do well at finding, minding, and grinding. Partners may perform some of these roles better than others, however overall they should be competently performing each of the roles. Very few firms can afford the luxury of having several senior partners only bringing in business without being required to maintain personal production levels as well. Partner compensation research concludes that the most a law firm can afford to pay a rainmaker – over and above his or her own billable hours (fee collections) is the marginal profit derived from the associates the rainmaker can keep busy, regardless of how many partners he or she occupies. The most valuable partners are those who offer a balance of skills: worker, delegator, supervisor, and rainmaker.

Since origination of new clients is the lifeblood of any firm it is a key factor that should be recognized in any compensation system. The exact weight that it is given will depend upon the firm and how dependent it is upon constant client replacement, only a few institutional clients, turnover of clients, leverage ratio, etc. A firm that has a well diversified base of institutional long time clients will typically weigh client origination much lower than a firm that has to constantly replace individual clients.

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

 

Feb 11, 2015

Law Firm Succession – Client Transition Plan

Question:

I am a founding partner in a 17 attorney firm with nine partners and eight associates located in Chicago west suburbs. We represent business firms and other institutional clients. I am the primary rainmaker in the firm. I am 60 and am planning on retiring when I am 65. My concern is how to effectively transition clients. I would appreciate your thoughts.

Response:

Successful client transition – moving clients from one generation to the next – is a major challenge for all law firms. Shifting clients is not an individual responsibility but a firm responsibility. To effectively transition clients the individual lawyer, with clients, must work together with the firm to insure the clients receive quality legal services throughout the transition process. Both the individual lawyer and the firm must be committed to keeping clients in the firm when the senior attorneys retire. Potential obstacles include:

Transitioning client relationships effectively can and where possible should take a number of years – preferably five years – typically not less than three years. 

The following client transition plan might be an approach you could take to transition clients over a three to five year period:

  1. Review your Top Client List and develop and implement a detailed action and milestone plan for each significant client.  
  2. In consultation with the Firm Executive Committee, designate one or more Co-Responsible Attorney(s) for each existing client, and each new client as to which you are the Responsible (Primary) Attorney. You, in consultation with the Firm Executive Committee, may for cause adjust or amend the Co-Responsible Attorney(s) designation as to any Transitioning Client. The stated goal in designating one or more Co-Responsible Attorneys for each client is to facilitate the transition and retention of your clients upon your retirement and phase-out from the practice of law. You will agree to introduce the Co-Responsible Attorney(s) to the client when you are reasonably available, and work with the Co-Responsible Attorney(s) to transition the client and client matters to the Co-Responsible Attorney(s). You and the Co-Responsible Attorney(s) shall meet to discuss and evaluate the timing for the transition of each client. However, notice to clients shall be solely at your discretion. The Co-Responsible Attorney(s) may, at your discretion, prepare all invoices for legal services rendered. You will review and approve all invoices unless you agree to the contrary in writing. The client’s wishes shall be paramount in the designation or selection of any Co-Responsible Attorney(s) and client satisfaction shall at any time allow for change of the designation of same.    
  3. You will perform such duties as the Firm Executive Committee of the Firm may from time to time determine to be in the best interest of the Firm and which are agreeable to you. You will  agree that your professional procedures will be in accordance with the rules and regulations promulgated by the Firm Executive Committee. You will also maintain the records as reasonably required by the Firm Executive Committee. 
  4. Of Counsel. After the conclusion of the final transition year, the firm may enter into an “Of Counsel” relationship with you. In that event, you would be listed as “Of Counsel”. The relationship would be subject to both parties agreeing on the terms and conditions of the “Of Counsel” relationship.

Effective client transition takes time so start early. Clients hire lawyers not law firms.

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

 

 

 

 

Aug 04, 2014

Law Firm Client Telephone Satisfaction Interviews in Insurance Defense Law Firms

Question:

I am the chair of our firm's marketing committee. We are a 24 attorney insurance defense firm in Houston. While we solicit feedback from some of our larger insurance company clients at lunch and face to face meetings – the sessions are not structured, data is not really tabulated, and only a handful of clients are usually involved. We have been thinking of embarking on a more structured process. I would appreciate your thoughts:

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 in-house law firm marketing employee or outside third party can provide many surprises as well as answers. Client satisfaction interviews can be the best marketing investment that you can make.

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

 

Jul 08, 2014

Law Firm Partnership – Client Origination Expectations for New Associate Attorney

Question:

I am the sole owner of a four attorney general practice firm in Rockford, Illinois. I am 58 and realize that in the next few years I will need to begin implementing a succession and exit strategy by probably bringing in a partner. Two of the associates have no interest in partnership. However, the newest associate hired, who had his own practice for several years, does have such an interest even though he was recently hired. He is off to a good start as far as his production. However, I believe that he must be able to originate and bring in client business as well. So far his energy and focus has been totally on performing legal work. I want to get him started on the right track in order that I can make him a partner in a few years. Please provide any thoughts that you may have.

Response:

I agree that in a practice such as yours that client origination is important. I suggest that you start by laying out and discussing with him your expectations. In other words what will it take for him to become a partner – production, quality of legal work, billings, client satisfaction, and origination of new client business? Be specific and set specific goals for him and your expectations for him but also your timeline for partnership consideration. I would suggest five years. Personally, I believe his client origination goal at the five year point should be between $300,000 and $500,000 or higher. Establish baby step goals for origination – say $50,000 after year one, $100,000 after year two, $200,000 after year three, $300,000 after year four, $400,000 after year five. This will require that you track origination fee dollars in your billing/accounting system. Specific guidelines and rules regarding the attribution of origination credit should be developed. In other words an attorney should not receive origination because a client calls as a result of the firm's brand, advertising, etc. and he is passed the call because he is the only attorney in the office to take the call.

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

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