Question:
I’m a second generation attorney (about 5 years’ experience) at a small liability defense firm in Southern, California. My father is the managing partner and we have three total attorneys. My father and his partner probably have 5-7 years left practicing. We only do California workers’ compensation defense. I’m planning on taking over the practice but am concerned about trends in the industry that will affect profitability, such as more stringent billing guidelines/bill audits, cuts to travel time, etc. What are the characteristics of a successful liability defense firm that I should strive towards? (i.e., # of attorneys, leverage, overhead ratio, revenue per lawyer, etc.)
Response:
I appreciate your concerns. Both workers’ compensation defense and civil insurance defense firms have a real challenge with the performance pressures placed on them by their clients, billing guidelines and audits, and low billing rates. I have civil insurance defense firm clients across the country billing at rates averaging from $175 to $225 per hour and workers’ compensation defense firm clients billing at rates averaging from $140 to $175 per hour. Some firms are being required to take on more work on a flat fee basis.
Here are a few thoughts concerning characteristics of successful liability defense firms that you should strive towards:
Here are links to two articles on defense firms that you might find interesting.
https://www.olmsteadassoc.com/resource-center/trapped-in-a-insurance-defense-practice/
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John W. Olmstead, MBA, Ph.D, CMC
Question:
I am a newly appointed managing partner for an eighteen attorney law firm in Dayton, Ohio. We are a employment law litigation firm that represents plaintiffs on a contingency fee basis. We have been in business for five years and we are facing severe cash flow and profitability challenges primarily due to lackluster contingency fee outcomes. Do you have any guidelines or suggestions as to what we should be aiming for?
Response:
In general I find that successful contingency fee law firms are:
I would use this as sort of an initial performance checklist. You may need to examine your case portfolio and your contingency fee case risk profile and look for ways to diversify your case mix.
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