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Best Practice Tips

  • July 6, 2018 | Practice News
    Best Practice Tips: Lawyer Performance and Setting Expectations

    Asked and Answered 

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

    Q. I am the owner of a real estate practice in Rockford. I have two offices – one in Rockford and the other in Chicago. I started my practice 20 years ago and have had my associate for the past five years. He works in the Chicago office and I work in the Rockford office. Prior to this associate I had two other associates that did not work out. My present associate has 14 years’ experience and worked in three other law firms. I am not happy with his performance. The legal assistant that works with him has advised me that he often does not come into the office until 10 a.m. and often leaves in the middle of the day. Clients have complained that he does not return phone calls or emails. His production is low – his annual billable hours have never been above 1,200 hours. I am paying him a salary of $98,000. I have had numerous conversations with him about these issues to no avail. Frankly, I am sick of it – I don’t trust him and things need to change. What should be my next step?

    3 comments (Most recent July 9, 2018)
  • June 27, 2018 | Practice News
    Best Practice Tips: Elder Law Firm Expanding into Personal Injury and Other Areas

    Asked and Answered 

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

    Q. I am a partner in a four-attorney law firm in a small town south of Waco, Texas. We have two partners and two associates. Our practice is limited to elder law, estate planning, and estate administration. The practice was formed 30 years ago by the two partners. The firm has built a strong brand, does a significant amount of business in several other counties, and is doing well financially. Our main problem is that we are overwhelmed with work and we need to hire an additional attorney. We have interviewed an attorney with some limited experience in small business corporate work and estate planning. However, most of his experience is in personal injury plaintiff, criminal, and family law. If he joins our firm, he wants to continue to develop these practice areas as well as bring his personal injury, criminal, and family law cases with him. Bringing him on board could solve our lawyer staffing issue as well as increase our business. Should we bring him on board?

  • June 20, 2018 | Practice News
    Best Practice Tips: Associate Attorney Compensation and Motivation

    Asked and Answered 

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

    Q. Our firm is based in Springfield, Ill. We have four partners and four associates. We are a general practice firm. All of our associates have been with the firm for more than 10 years, and they receive $100,000 base salaries plus discretionary bonuses. Our associates are excellent attorneys; however, none of them bring in any business and their production numbers are low. Annual billable hours are below 1,200 and working attorney fee collections are below $300,000. We have not given raises or bonuses for the last several years. We are losing money on some of our associates and not even covering our overhead, alone making any profit from our associates. We are at a loss at what to do. Please share any thoughts or ideas that you might have.

  • June 13, 2018 | Practice News
    Best Practice Tips: Law Firm Strategic Planning – Culture as an Essential Ingredient

    Asked and Answered 

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

    Q. Our firm is a 12-attorney firm – eight partners and four associates – in Phoenix. It was founded by the current partners 20 years ago. We are an eat-what-you-kill firm – partners receive their fees, overhead is allocated, and their compensation is their individual profit. While we have an administrator who 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 about our future, have never been able to agree on any major decisions, are unwilling to be accountable to each other, and have a general attitude of mistrust. I do 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.

  • June 6, 2018 | Practice News
    Best Practice Tips: Law Firm Succession Planning – Getting the Conversation Started

    Asked and Answered 

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

    Q. Our firm is a 17-attorney business law firm in Chicago. Our clients consist 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 60s and the other four partners are in their 40s and 50s. 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.

  • May 30, 2018 | Practice News
    Best Practice Tips: Outsourcing Appellate Work

    Asked and Answered 

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

    Q. We have a six-attorney insurance defense firm in Kansas City. For the last few years, our associate attorney costs have gotten out of control and in some cases, revenues generated by particular attorneys are not even close to where they should be considering their costs. We have one associate attorney who we pay a base salary who only does appellate brief work. He does not like litigation and does a poor job doing our “bread-and-butter” litigation work. We simply don’t have enough appeals to keep him busy. We are paying him a base salary of $100,000 a year. Last year his working attorney fees collected were $110,000. I welcome your thoughts.

  • May 23, 2018 | Practice News
    Law Firm Financial Management: Using Credit Line to Purchase Equipment

    Asked and Answered 

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

    Q. I am the financial partner with our 16-attorney firm in Indianapolis. The firm has had a rough couple of years. We had several partners leave the firm and they took several corporate clients with them. Unfortunately, this was consistent retainer and time bill work. While we still have some retainer and time bill corporate work, a much larger mix of our work is now contingency fee work. As a result, we have had some cash flow challenges and for the first three months of this year there was no money to pay partner draws. We have a credit line with the bank of $125,000 that we have not used. We only use our credit line for long-term equipment purchases. We would appreciate any suggestions that you have.

  • May 16, 2018 | Practice News
    Law Firm Client Surveys: How to Collect and Report the Data

    Asked and Answered 

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

    Q. We have a 16-attorney firm in Chicago. Our marketing committee has been discussing implementing a client survey program. We are not sure where to start or how best to collect and report the data. Your thoughts would be appreciated.

  • May 9, 2018 | Practice News
    Of Counsel Arrangement as a Law Firm Exit Strategy

    Asked and Answered 

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

    Q. I am the owner of a solo real estate practice in Merced, California. I have two staff members that work for me. I am the only attorney in the firm. I am sixty years old. While I am concerned about the long-term exit from the practice, I am also concerned about office coverage in case something would happen to me in the short term. I appreciate any recommendations that you may have.

  • May 2, 2018 | Practice News
    Law Firm Overhead and Profit Margins

    Asked and Answered

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

    Q. I am an attorney in New Orleans who has been in practice for ten years. I practiced with a small firm for eight years as an associate and then opened my own firm two years ago. I primarily work from home supplemented with a virtual pay-as-you-go office. I do not have any staff employees. I have been approached by a 14-attorney firm that would like me to join their firm as a partner. Their offer includes a salary that I feel is low and a bonus based upon a percentage after covering my salary, other direct costs, and indirect firm overhead. The overhead allocations seem extremely high to me. In my practice, I am bringing in around $100,000 in gross fees and my overhead averages $10,000-$15,000 per year. My profit margin is around 90 percent. I feel like I am better off building up my practice rather than accepting their offer. What are typical overhead and profit margins for law firms?