Law Practice Management Asked and Answered Blog

Category: Have

Sep 19, 2019

Do You Have “Stars” in Your Partner Ranks?

Question:

Our firm is a second generation insurance defense firm in Bakersfield, California. We have fourteen lawyers, nine of which are partners. While all of the partners are great trial lawyers, work hard, and bill the required lawyers none of our partners are good at business development, leadership, or management. Our business comes from the client that we inherited. Any thoughts would be appreciated.

Response:

Successful law firms need at least a few star partners in their ranks.

“People are our most important asset” is a standard phrase heard in business. A more accurate and honest statement in many industries might be” competent people are a necessary component of our success.” However, as important as the company’s people are, they are somewhat expendable. The reason is simple. In most businesses the company’s competitive advantage does not rely on the retention, motivation, and behavior of particular individuals. Instead, it turns on shelf space, brand strength, core position, distribution systems, price, technology, product design, location, or any number of other variables that can exist apart from individuals who created the product or service. So except in the long term, most companies profit does not necessarily correlate with their people assets.

This is not the case for law firms. A law firm’s success depends not just on its people assets but on stars. Who are an organization’s stars? They are the individuals who have the highest future value to the organization, the men and women critical jobs whose performance is central to the company success. In a law firm, if a star leaves, the firm and its clients notice the difference. If enough stars leave the firm’s financial performance suffers. In a law firm, partners for significant clients, practice areas and offices are its stars.

In law firms stars are typically partners, but not all partners are stars nor are all stars partners. What what makes them law from stars is that they propel the business model along all three of its dimensions – building and enduring client relationships, performing up to their full potential in putting the firm first, and implementing strategic imperatives. Because they are so accomplished other members of the firm emulate their behavior.

You need to either develop or eventually recruit a few star partners that have the leadership, management, and client development skills that help the firm grow or stagnation will develop over time. I have seen make practices such as yours limp through second generation and dissolve in third generation.

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

Sep 07, 2016

Law Firm Profitability – How Do I Know if We Have Enough Work for the Attorneys?

Question:

I am the owner of an eight attorney estate planning firm in Jacksonville, Florida. Our firm handles estate planning and estate administration. For this entire year our financial numbers are way down and I am getting concerned. For example, compared to last year:

Our revenues are down by 30%
Our expenses are lower.
Net income is down by 30%

I would appreciate any ideas on what I should do next.

Response:

Several of my estate planning/administration firms from different areas of the country are advising me that business is way down this year and they can't put their finger on the problem other than demand and timing.

I would start by:

Take a look an your new matter intakes for the year – month by month.
Examine the referral and marketing sources as to where this business is coming from.
Prepare a open matter inventory report by attorney and matter type to get a count of the number of matters each attorney is handling
Examine billable hours, non-billable hours, collected working attorney fees and realization rates for each attorney.

Compare each of the metrics above with last year and prior years. Meet with all of the attorneys and review their matters in progress and discuss their workloads. Also review your marketing budget and marketing programs to see if changes are warranted.

This should give you a feel for what is going on. You could have problems in the following areas:

Attorneys simply not putting in the hours
Attorneys have time management and timekeeping problems and need to improve these skills
Attorneys do not have enough work.

While you may find that you have problems in each of the above areas I suspect that your biggest problem is that attorneys do not have enough work and your business is down. If this is the case I would question how they are using their non-billable hours – are they doing more business development and marketing – or they simply pacing their time so they fill an eight hour day.

If your problem is lack of work you are going to have to see if additional marketing can generate the business needed to support the attorneys you have on board or reduce your attorney headcount.

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