Law Practice Management Asked and Answered Blog

Category: general

Aug 26, 2014

Law Firm Attorney Staffing/Growth Models – Overview

Question:

I am the managing partner of a 16 attorney insurance defense firm in Chicago Southwest Suburbs. We have 4 partners and the balance of our attorneys are associates – many of which have been with us for several years. We are on a growth spree and needing to hire more associates to handle client assignments. Associate hiring, mentoring, and training has always been a challenge for us and our clients are restricting us in the way we use associates on their files. I would appreciate your thoughts.

Response:

Attorney staffing/growth models include:

Grow Your Own Associate Staffing
Lateral Associate Staffing
Contract – Staff Associate Staffing
Lateral Partners (Equity or Non-Equity)
Of Counsel (Various Approaches and Purposes)
Mergers (Or Small Firm Acquisitions)
Branching

I will address the pros and cons of each model/approach in upcoming postings. I will begin by addressing the first one.

The traditional staffing model for insurance defense firms has been Grow Your Own Associate Staffing.

PROS

Large available supply of new lawyers.
Lower salary than experienced lawyers.
Better odds of integrating them into the firm's existing culture.

CONS

Takes time training, mentoring, getting them ramped up.
May take 2-3 years before they are profitable.
Once they become profitable you may lose them to another firm.
No business comes with them so you must have enough work to keep they busy.
Clients may be unwilling to allow you to use them or dictate how you use them.
Clients may be unwilling to allow them to train on their dime.
Will have to bill them out at lower billing rates than lateral associates or lateral partners.

Click here for our article on hiring associate attorneys

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

Jun 11, 2014

Law Firm Accounting – Structure of General Ledger Chart of Accounts

Question:

I am the newly elected managing partner of a twelve attorney business transactional firm in St. Louis. The firm is trying to implement a more disciplined approach to financial management. I have been charged with developing our first budget and I am having difficulties due to the overall structure of our general ledger. Our system was setup by our outside accountant and the expense accounts lump too many expenses into too few categories. Do you have any suggestions?

Response:

This is a typical problem that I see in many firms. Accountants often setup law firm accounting systems to facilitate preparation of income tax returns as opposed to systems designed to facilitate internal management accounting, budgeting, etc. Often too many expenses are lumped into single categories or are not assigned to categories based up cost behavior. The attached sample general ledger chart of accounts has been a standard recommended for use in law firms for many years by law firm management consultants, the Association of Legal Administrators, and others. Click here for a sample general ledger chart of accounts

Click here for our blog on financial management

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