Law Practice Management Asked and Answered Blog

Category: Planning

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Oct 10, 2019


Finding and Training in a New Estate Planning Attorney

Question: 

I am the owner of an estate planning firm in the Western Chicago suburbs. My practice is a specialized practice that focuses on estate planning, estate administration, estate litigation, and elder law. While I was a solo practitioner for many years approximately four years ago I brought in an associate that had three or four years experience with an other estate planning firm. Unfortunately, he just gave me his notice and advised that he was leaving to join another firm. We have too much work for me to handle by myself and I am going to need another attorney with estate planning experience. How do I go about finding this person. Any suggestions that you have will be appreciated.

Response: 

I have assisted several of my Chicagoland estate planning law firm clients as well as clients in other parts of the country and I can tell you that experienced estate planning/administration and elder law attorneys are like gold and hard to find. This was even the case during the 2008 recession when recent law school graduates and experienced attorneys with other skill sets were having difficult times finding jobs. Now, with the current job market, finding experienced estate planning/administration and elder law attorneys is even more difficult. Many of these attorneys tend to work in small firms, are loyal to their firms, and less mobile. They tend to stay put and often remain with one law firm for their entire careers.

I would start your search for an experienced attorney by:

  1. Putting the word out through your professional network. Ask around.
  2. Prepare an ad for the position
  3. Post the ad with www.indeed.com, ISBA.org Career Center, LinkedIn, local suburban bar associations, and local law schools.
  4. Have resumes come to you electronically.
  5. After initially reviewing resumes and narrowing down to candidates of interest use a telephone interview as your first interview and face to face for a subsequent interview if appropriate.

If after thirty days or so you are having no luck you might have to consider using a local headhunter or simply looking for a recent law graduate and investing the time to train a new attorney.  Several of my estate planning/administration and elder law clients are having to hire new law graduates and train them. Many have been quite satisfied with the results and now believe it is the best way to go. Recent law graduates start with a clean slate and do not bring in any baggage or bad practices or habits picked up in other law firms. They are often more loyal and stay with the firm longer.

A few suggestions concerning recent law school graduates:

  1. Look for candidates that took elective courses in estates/trusts/elder law.
  2. Look for candidates that had meaningful clerking experience with law firms specializing in estate planning/administration and elder law. Not running errands but meaningful experience.
  3. Develop a comprehensive training plan with specific timelines designed to get the attorney billable and productive as soon as possible in easier forms of work (possibly guardianship) and then gradually move the attorney into simple estate plans and more complex areas over time.
  4. Be patient – the process will take time – consider it an investment.
  5. It will take time for you to make money from the new associate. Be happy if you cover the cost of the associate in the first year.

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

Aug 21, 2019


Law Firm Strategic Planning in a One Day Planning Retreat

Question: 

Our firm is a twenty-attorney litigation firm in Miami, Florida. We are managed by a three-member management committee supported by a firm administrator. While our committee and our firm administrator are entrusted to make many of the operational decisions, all partners must weight in on and vote on all major decisions as outlined in the firm’s management plan. Currently we do not have a strategic plan and our firm administrator has suggested that we can accomplish this in a one day off site retreat with all the partners. Is this realistic?

Response: 

This is a little bit aggressive and optimistic. The strategic planning process is as important as the end result – the strategic plan document, so you don’t want to rush the process. Two sessions a few weeks apart would be better as it would give some time for the ideas and discussion from the first session to cook and simmer until the second session. However, you might find that one session is all that you are going to get. If this is the case you need to do some homework before the retreat. I suggest the following:

  1. Solicit feedback from all your partners using a questionnaire. An online questionnaire such as SurveyMonkey would be preferred. Questions should include general attorney demographic information as well as issues and challenges facing the firm and suggested solutions, future direction of the firm, succession planning, talent management, practice area expansion or contraction, etc.
  2. Develop a retreat planning session agenda and workbook with all relevant supporting materials such as questionnaire results, financial reports, recent relevant articles, draft strategic plan with at least a mission, vision, goals, objectives, and issues sections completed in rough form. This should be developed by the management committee beforehand.
  3. Provide all your attorneys with the agenda and workbook at least two weeks prior to the planning retreat to allow them to come to the retreat fully prepared.
  4. Keep the retreat focused on strategic issues with day to day operational items discussions being off limits. Discuss the questionnaire results then use the draft Strategic Plan as an outline for the session. Try to get consensus on mission, vision, goals, objectives, and issues by the halfway point of your session. Focus the remainder of the session on developing specific strategies dealing with issues and goals outlined.
  5. After strategies have been developed, develop specific action items for each strategy with start and completion target dates for each action item with the name of the person that will be responsible for completion.

Once the retreat is over the management committee should finalize the rough notes from the planning session into a initial draft of the strategic plan and circulate to all partners for review and comment. Hopefully, the management committee based upon comments can finalize and launch the strategic plan within thirty days, if not a partner meeting should be scheduled for additional discussion.

Using an approach to similar to what I have outlined will improve your chances of a successful one day planning retreat.

Good luck.

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

May 07, 2019


Law Firm Succession Planning in a Fourteen Attorney Firm – Internal vs External Strategy

Question:

I am the managing partner in a fourteen attorney firm in Austin, Texas. Our firm represents hospitals in their defense against malpractice claims. We have four equity partners, six non-equity partners, and four associates. The four equity partners started the firm thirty years ago and we are all in our late fifties and early sixties. We plan on working another eight years and then plan on retiring approximately at the same time. We may remain on as Of Counsel. Of our six non-equity partners, five are in their early and late sixties. We are considering making one an equity partner in the near future. Our associates are all recent law graduates that we hired right out of law school and all have been with the firm less than five years. What is our best succession strategy – merger or growing our own future partners?

Response: 

Most firms, and I agree with this, prefer an internal strategy and would like to grow their own and leave a legacy of the firm. Mergers can be fraught with problems and are often not successful. Depending on the size of the other firm, many firms are not willing to provide any compensation for practice goodwill beyond the compensation and benefit package. It sounds like you have had your independence for thirty years and you may not be comfortable giving that up and working in a merged firm environment for eight years.

However, a merger is often easier. You have a challenge on your hands since you have to replace four partners and only have one possible future equity-partner candidate on deck. In part it will depend upon the age and the experience of the one non-equity partner. Is he even willing to step-up to equity, invest in the firm, and buyout your interests? My experience these days is that a lot of non-equity partners are saying “no” to equity. With your type of clients you probably need at least three or four seasoned partners in order to convey to the clients that you have adequate “bench strength”. When the four of you retire unless you can build up the bench strength the firm will be also lacking leadership and firm management experience.

You have five years in which to build up your talent pool. You will have to first see if you can recruit and bring in some lateral talent – attorneys in their forties with fifteen to twenty years experience. Look for attorneys that want to be more than just worker-bees – that want to have future equity interest in a firm. If this strategy works out, begin bringing them into equity as soon as possible to ensure that the commitment is there by having them buy shares upon admission. Begin client and management transition no later than three years prior to your retirements.

If you are not able to bulk-up your talent pool or you have no one interested in equity ownership, then you will have to consider a merger strategy. I would begin a merger search three years prior to your retirements.

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

Dec 19, 2018


Strategic Planning Retreat – Need for Specific Action Plans

Question: 

Our firm is an eight-attorney firm in Cincinnati, Ohio. We have been together for fourteen years. There are four partners and four associates in the firm. Over the years we have traditionally had a year-end attorney planning retreat with limited success. This year we have decided that we want to dedicate the entire time to developing a strategic plan for the firm. What can we do to ensure that our strategic plan leads to actual implementation?

Response: 

Implementation should be planned in the retreat and the strategic plan itself. One of the biggest problems that firms have with strategic planning retreats and strategic plans is they end up on the shelf and there is no accountability for implementation.

Be sure you come away from the retreat with a strategic plan that includes an action plan section with  a specific plan for follow-up on every strategy/action plan item. Specific strategic plan action items should be broken down into specific tasks. It is critical that individual task assignments and target dates for reporting and completion be made explicit. These assignments should be documented in the strategic plan action plan section and in the retreat minutes or notes. In addition, a system of post retreat follow-up meetings to access progress is suggested to maintain the momentum achieved at the strategic planning retreat.

Many firms benefit by incorporating specific strategic planning action items on a firm master calendar as well as individual calendars and review progress quarterly.

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

Jul 24, 2018


Law Firm Succession Planning – Getting Partners to Discuss their Future Plans

Question: 

I am the firm administrator for a twenty-five attorney firm in Baltimore, Maryland. We have fourteen partners and nine are in their sixties. We have no succession or transition plans in place for senior partners. Every time I bring up the topic there is a resistance to even discuss the topic. I would appreciate any help that you can provide.

Response: 

A decade ago, only the more proactive, well-managed law firms had in place programs and provisions for senior partner succession and transition. A majority of firms simply had not addressed or even given serious thought to the eventual retirement and exit of their senior partners. However, in the last five years, I have seen a lot of interest in succession, transition, and exit planning. The avalanche of baby boomers reaching retirement age has fueled this interest. Firms from the largest to the smallest are getting proactive and actively addressing succession and transition of senior partners. Some are putting in place formal programs, while others are at least addressing succession and transition informally using ad hoc approaches.

A recent Altman Weil Transition Survey gives us a glimpse of what other law firms are doing. Here are a few highlights from their survey concerning responding law firms.

Many other law firms are finding it a major challenge to get senior attorneys to talk and share their plans concerning retirement. In many cases the families of senior attorneys are having the same challenges. Coming to terms with aging is a difficult topic. In the case of law firms, often senior attorneys simply don’t know their future plans themselves, need the income, fear that others shareholders/partners will steal their clients, or the firm simply does not have a mechanism in place that mandates transition planning. Some firms are implementing mandatory retirement and others are putting in place financial incentives to motivate early transition of clients. Client loss is the most significant concern.

Keep at it and don’t give up but it may take a series of baby steps. Educate your partners on the risks of “doing nothing”. Provide them with articles and other resources and keep the topic on the agenda.

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

Jun 12, 2018


Law Firm Strategic Planning – Culture as an Essential Ingredient

Question: 

Our firm is a twelve attorney firm – eight partners and four associates in Phoenix, Arizona. The firm was founded by the present partners twenty years ago. We are an eat-what-you- kill firm – partners are allocated their fees, overhead is allocated, and their compensation is their individual profit. While we have a firm administrator that handles the day-to-day management of our operations, we have done a poor job of long-term management and planning. One of our partners has suggested that we develop a strategic plan. However, I believe this would be difficult for us given that we never meet, have different ideas of our future, have never been able to agree on any major decisions, and unwilling to be accountable to each other and have a general attitude of mistrust. I don not believe we even have a firm culture – in essence we are eight separate practices operating under the guise of a partnership. Your comments are most welcomed.

Response: 

It is very hard for partners in an eat-what-you-kill firm to come together and implement a strategic plan when the partners have no common values, goals, or objectives. Eat-what-you-kill firms more often than not have no culture at all. Three components that are linked, reinforce each other, and must be balanced are strategy, compensation, and culture.

Culture is the outcome of how people are related to each other in a law firm, thrives on cooperation and friendship, and defines the firm’s sense of community. Culture is the glue that holds a firm together and is built on shared interest and mutual obligation. A firm’s culture boosts a firm’s identity as one organization and prevents disintegration and decentralization. Without a common culture a firm lacks values, direction, and purpose.

You firm is a fragmented or confederation culture and as such will find it difficult to even get started on a strategic planning process unless you are willing to change. You might want to spend some time addressing the question of whether you want to continue operating as lone rangers or whether you want to become a firm-first law firm. This will require that the partners give up some independence and be accountable to each other.

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

Jun 06, 2018


Law Firm Succession Planning – Getting the Conversation Started

Question: 

Our firm is a seventeen attorney business law firm in Chicago. Our clients consists of mid-size companies and a few Fortune 500 companies. There are eight partners and nine associates in the firm. Four of the eight partners are in their early sixties and the other four partners are in their forties and fifties. The four senior partners are the founders of the firm. Consequently, we have not had to deal with succession of partners until now. While we realize that we need to be thinking about succession planning we have not made much headway. The senior partners are reluctant to discuss their retirement plans and timelines. We would appreciate your thoughts and suggestions.

Response:

Client transition, management transition, and talent replacement are the major succession planning issues for law firms. Such transitions take time, especially with clients such as yours, and law firms can not wait until a senior partner comes forward, announces his intentions, and gives his required notice. Law firms should begin having conversations with senior attorneys and begin transition planning five years prior to a partner’s actual retirement. Having these conversations can be difficult. Senior attorneys may not know their plans themselves and may not have even discussed this topic even with their family. In some cases there can be trust issues at the firm and in other situations the firm’s compensation system may be a barrier. Law firm management must force the issue by institutionalizing a transition program and requiring conversation and discussion at a certain age. Some firms have mandatory retirement and others have a five year phase-down requirement with a formal client and management, for those partners that have management roles, transition program. Personally, I prefer the phase-down requirement with an individual tailored transition plan over the phase-down period. I suggest that transition plans be tailored for each retiring partner and reflect partner, firm, and client perspectives. Use compensation to reward successful client transitions.

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

Mar 28, 2018


Law Firm Growth Planning

Question:

I am a partner in a six lawyer firm in Jackson Mississippi. There are three partners and three associates in the firm. The firm is a insurance defense litigation firm. Our firm has been at its present size for many years, revenues have been flat, and profits have been shrinking. The partners have been discussing the pros and cons of growth and we would like to significantly grow the practice. A couple of our insurance company clients have asked us to open offices in other states and we are giving this consideration. Initially, we would open two other offices and we anticipate that this would require us to hire six additional attorneys. We appreciate any thoughts that you have.

Response: 

This is a huge step and I suggest that you give it careful thought. Here are a few of the issues you should consider:

  1. Firm Size – opening two branch offices and hiring six additional attorneys all at once is a major undertaking. This would double your firm size. A twelve attorney firm is quite different that a six attorney firm and requires a different approach to management, structure, etc. This would tough enough if the expansion were not in remote offices but in remote offices I believe the growth is too aggressive. I would start with one branch office and phase in the work and attorneys. Hopefully, you have a commitment from more than one client to send you work for a given location.
  2. Branch Office Staffing – staffing the office, especially with attorneys, will be a major issue. Unless you have attorneys in your office now that are licensed in these states you are going to have to hire local talent. How will you integrate the cultures of the two firms, prevent the remote offices from operating as separate silos, and keep the new offices from splitting off in a few years and starting a competing firm. Quality attorney talent will be hard to find and those that you do find will be reluctant to want to work for a small firm with no footprint in the local area. It is always preferable to staff a branch office, at least initially, with attorneys from the home office.
  3. Structure and Management – a larger firm will require a more sophisticated structure and approach to management. Will the attorneys hired for the remote offices be partners or associates? Will you need to create a non-equity tier? Who will manage the remote offices? Will you need to hire a firm administrator?
  4. Cash Flow – Growth will put a strain on the firm’s cash flow and will require additional working capital. Your partners will have to invest additional capital or the firm will have to take on debt.
  5. Systems – Growth will require you to examine your IT systems and software that you are currently using. They may not be sufficient. Consider how you will connect the computer system of the main office to the remote offices. How will phone systems be connected?
  6. Policies and Procedures – policies, procedures, and protocols will need to be developed and documented.
  7. Compensation – You present attorney compensation system may no longer be adequate. Consider whether a new approach will be required to attract new attorney talent.
  8. Financial Management – Your approach to financial management may need to be more formal that it is now. Budgeting will be a necessity.
  9. Facilities – Office space will have to be located and leases signed unless you start out with an executive suite type of arrangement, such as a Regus office. There are pros and cons to starting this way. One the one hand it provides a low risk way to enter a new market but on the other hand it signals that you are not committed to the market and you have just one toe in the water.

These are just a few of the issues that you will need to consider. Do your homework and due diligence on this before you jump feet first.

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

 

 

 

Dec 20, 2017


Law Firm Associate Billable Hours – Estate Planning and Probate Firm

Question: 

Our firm is a six attorney estate planning/probate firm in Mesa, Arizona. There are three partners and three associates in the firm. We have had associates for the last eight years and have never made money from our associates. Last year we decided to implement a billable hour expectation of 1800 hours for the associates. A year later no one is even close. Only one associate will even reach 1500 hours. Is our expectation reasonable? You insight is appreciated.

Response: 

The national norms for all practices is in the 1700 range for associates. Litigation firms range from 1800-2000 hours and up with most firms having a 1800 or 2000 minimum billable hour requirement.

I believe that 1800 billable hours is high for a small estate planning/probate firm if the attorneys are only expected to work forty hours a week and the firm does not charge for initial consultations or intake interviews. Many of the estate planning/probate law firm’s that I am working with are struggling to get to 1500 billable hours – many associates and partners alike are under 1400 hours. I believe that an estate planning/probate practice should be able to expect 1600 billable hours.

I think that a forty hour work week expectation for attorneys is part of the problem. Most professionals service providers (attorneys, CPA’s,  management consultants, etc.) work more like fifty hours – not forty. It is hard to be a successful professional with a forty hour a week attitude. In addition to billable hours non-billable time has to be spent on client development, continuing professional education (CLE for attorneys), and firm administration.

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

Oct 04, 2017


Personal Injury Law Firm Strategy & Strategic Planning

Question: 

I am a partner in a four attorney personal injury plaintiff in downstate Illinois. Three of us are partners and we have one associate attorney. We handle run of the mill slip and fall, vehicle and premises accidents, and products liability cases as well as workers’ compensation cases. We have a very aggressive advertising and marketing program. We are having issues with reduced case flow and dwindling and diminishing profits and earnings. For the past year the partners have been living off our credit line. We believe that we need to be thinking about doing something different and are not sure as to what that should be. However, we have agreed to start doing some long term planning. We would appreciate your thoughts.

Response: 

I believe that the very process of developing a strategic plan would be very helpful, beneficial, and enlightening. Strategic planning does not need to be the involved and complicated process that sometimes it becomes. It a nutshell it is nothing more than a series of logical steps. The process is often more important than the written plan. Most workable strategic plans are put in writing at the end of the process, and then often in summary or outline form. Generally, the steps include:

  1. Develop the mission statement
  2. Develop the vision statement
  3. Develop the long range goals statement
  4. Develop specific objectives
  5. Gather information – internal and external – identify the firm’s strengths and weaknesses
  6. Identify key issues
  7. Formulate strategies
  8. Develop detailed action plans
  9. Write-up the plan
  10. Implement the plan and monitor

Your first step will be the mission statement – you should take a hard look at who are you as a firm and who are you serving as clients? Many of our personal injury law firm clients across the country are facing similar problems that you are and they have been forced to take a hard look at their their practice and geographic area segments. Some firm’s have tried to balance the cash flow ups and downs of contingency fee work by adding time billing practice areas that provide consistent cash flow such as employment, family law, criminal, and bankruptcy. Other firms are extending their geographical reach through additional offices and some are getting involved in mass-tort cases.

I think this is the most important step if you don’t do anything else. You may have to consider expanding and diversifying your practice.

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

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