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Best Practice Tips

  • September 1, 2010 | Practice News
    Best Practice: Characteristics of successful Law firms: Basic building block No. 2
    Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Last week I discussed the characteristics of successful law firms and introduced the basic building blocks that successful firms typically have in place. These are:
    • Partner Relations
    • Leadership
    • Firm Management
    • Partner Compensation
    • Planning
    • Client Service
    • Marketing
    • Last week we focused on partner relations as a core foundational building block.
    The second basic building block is leadership. Successful firms have good leadership in place. This may be a single individual or a core group of individuals. Leadership does not always come from the formalized management structure of the firm. Leadership is one of the major problems facing law firms. Leaders are needed for managing partner posts, executive committee chairs, and practice group heads. Leadership behaviors include:
    • Developing people
    • Being able to influence others
    • Encouraging teamwork
    • Empowering people
    • Using multiple options thinking
    • Taking intelligent risks
    • Being passionate about work
    • Having a strong clear vision.
    • Leadership skills will need to be included in compensation systems.
    Seven traits of effective leaders include:
  • August 25, 2010 | Practice News
    Best Practice: Characteristics of successful law firms - Basic building block 1
    Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. My partner and I just started our firm two years ago. We have one associate attorney and one staff member. As we grow our firm what should we keep in mind so we don't repeat some of the mistakes that I have seen in other firms that have not been successful? A. I often refer to what I call the Basic Building Blocks of Successful Law Firms which are:
    • Partner Relations
    • Leadership
    • Firm Management
    • Partner Compensation
    • Planning
    • Client Service
    • Marketing
    Lets take the first one - Partner Relations. This is the foundation (bedrock) of a successful firm. A successful firm has a healthy partner culture - a good marriage. In such a culture partners share common vision and purpose, respect one another, shoot straight with each other, and have difficult conversations and discussions when needed and deal with issues and problems. In many firms this is not the case and these firms often are characterized by the following:
    • Partner Defections
    • Firm Splits and Break-ups
    • Personal Fiefdoms
    • Maverick Partners
    • Hoarding Work
    • Lone Rangers
    Such firms are often doomed from the start. Firms that don't get this foundational building block right will build a firm on a shaky foundation. Before forming a partnership - go slow and get to know the other lawyer or lawyers and insure that the marriage makes sense, that you share similar goals and values, that you will be compatible, and you will be good partners.
  • August 18, 2010 | Practice News
    Best Practice: Should we change our partner compensation system?
    Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. We are a three attorney law partnership that does primarily business transactional work. My partner and I have been in practice together for four years. We are equal partners (50% each) as far as our partnership interests and we use these same interests for determining partner compensation. In other words we receive the same compensation. We recently have been discussing whether we should look into a different method for determining partner compensation. Currently we produce about the same level of fee revenue. What are your thoughts? A. I could write a whole book on compensation systems - but here are a few thoughts:
    1. Over the past 30+ years I have seen just about every form of compensation system that there is - from "even steven" systems such as yours to "eat-what-you-kill", other formula systems, profit center systems, objective systems, etc. No particular system is better than another system. It depends upon the firm - the culture - strategic goals - and the environment.
    2. If the system is working - sometimes it is better to leave it alone. There is nothing wrong with an "even steven" system as long as the contributions (fee generation, fee origination, firm management, and otherwise) made by both of you to the firm are perceived as equal. Frequently, partners start out making even contributions and down the road contributions change (often due to life or family changes) and are no longer in alignment.
    3. When perceived contributions get out of alignment partners are reluctant to have the candid discussions that need to occur as well as changes in the arrangement or compensation system.
  • August 11, 2010 | Practice News
    Best Practice: Boosting personal injury law firm profits
    Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. We are a 5 attorney (all partners) personal injury plaintiff law firm in Central Illinois. We are all working hard, are extremely busy, but we don't seem to be seeing the results of our hard work in our earnings and compensation. We are making hefty marketing investments - in fact we are spending around 6% of revenue on marketing. What are your recommendations on how we can improve our profitability? A. It is hard for me to comment specifically with the limited information that you have provided. There are numerous variables that need to be examined. However, in general terms:
    1. How long have your lawyers been in practice? If over 10 years - you ought to be taking home $200,000+. Many lawyers aren't - but if they have tuned and focused their practices they should/could be.
    2. Each lawyer should be collecting $300,000+ per year in fees. If not, examine case production hours, quality of cases being accepted, effective rate per hour as well as realization. (Assumes time is being kept on contingency fee cases)
    3. Firm's margin should be in the range of 35-45%. (Net Income - excluding owner salaries divided by Gross Fee Revenue)
    4. Is the firm (high volume low dollar PI firms) investing 8-10% of fee revenue on marketing? Many high volume PI practices are spending much more.
    5. Are you measuring the ROMI (return on marketing investment)? This is critical. Not all marketing investments produce fruit - some fail. You must actively measure, manage, and fine tune marketing programs. Identify those that don't work and kill them. Dashboard reports are crucial.
  • August 4, 2010 | Practice News
    Best Practice: 5 tips to improve profitability
    Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. Everyone seems to be working hard in our firm but it seems like we are not making any money. Do you have ideas or tips on what we can do better? A. Regardless of firm size, focus is the key to success and improved profitability. It is hard to serve two masters – clients and the business of your firm. Here are a few ideas.
    1. Never eat lunch alone. Have lunch every day with clients, prospective clients, referral sources or members of your team.
    2. Take our time management self test. Begin working on your problem areas one behavior at a time. Time is money.
    3. Enter you time daily into you time and billing system - both billable and non-billable - as you work. Don't go home until you have accounted for an entire day. You may be dropping 10-25% potential revenue.
    4. Look for ways to brand yourself - dare to be different. With the internet you really can expand your base beyond your local community.
    5. Set a few goals and hold yourself and your team accountable.
    John W. Olmstead, MBA, Ph.D, CMC, (www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics.
  • July 28, 2010 | Practice News
    Best Practice: Networking and joining organizations
    Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am having problems with effective client development. I believe that I need to do more networking and become involve in professional organizations. Suggestions? A. Definitely. However, here are a few ideas and guidelines.
    • Have a real interest in the organization you are joining.
    • Attend meetings regularly. Miss three monthly meetings in a year and you might as well have skipped them all. Get on a committee and into a leadership position. This lets you establish credibility with prospects and referral sources.
    • Evaluate the culture of the organization and confirm that networking and marketing is acceptable within the group.
    • After a few years there will be a point of diminishing returns and that is when you should move on and start the process all over.
    • Don’t just join legal organizations – join a trade that your client belongs to and become active in the group.
    John W. Olmstead, MBA, Ph.D, CMC, (www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.
  • July 21, 2010 | Practice News
    Best Practice: 10 cross-selling tips
    Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am a partner in a 21-attorney firm in Northern California. Our partnership has been discussing the need to do a better job of “cross-selling” and referring clients to others in the firm for different types of matters. We have had limited success. Any ideas? A. My experience and our surveys of our clients and their clients has shown similar results. Cross-selling is talked about a lot and seldom implemented. Cross-selling can be an effective strategy - but it is not easy and it requires trust, commitment, communication, hard work, dedication and organizational alignment. Here are a few ideas for improving the odds: No. 1: Stop giving cross-selling lip service - if you are serious - put in place organizational systems that will facilitate the process. No. 2: Ensure that firm communication systems support cross-selling initiatives. No. 3: Ensure that the firm compensation system does not encourage hoarding of work and discourage a cross-selling program. No. 4: Foster a culture of "giving to get" in which professionals in the firm uphold a "firm first" attitude and are willing to invest the time and effort to foster relationship building and cross-selling efforts. No. 5: Find ways to create, foster, and support trust building in the firm. No. 6: Provide relationship management and client service training to all attorneys in the firm. No.
  • July 14, 2010 | Practice News
    Best Practice: Work-life balance challenges for female attorneys
    Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am a female non-equity partner in a 14-attorney firm in Central Kentucky. I have recently been considering approaching the partners in the firm about a reduced work schedule. The firm has no policy in place regarding “part-time partners”. Frankly, I am leery as I am afraid they will consider it a lack of commitment on my part and may have a negative impact upon my future with the firm. What are your thoughts? A. According to ABA studies, almost half of surveyed lawyers feel that they do not have enough time for themselves or their families. Almost three-quarters of lawyers with children report difficulty balancing professional and personal demands. The number of women who doubt the possibility of successfully combining work and family has almost tripled over the past two decades. Only a fifth of surveyed lawyers are very satisfied with the allocation of time between work and personal needs. A desire for more time to meet personal and family needs is one of the major reasons lawyers consider changing jobs, and it is a more important consideration for women than for men. Our law firm clients tell us that personal and professional life balance is their greatest challenge. Time is becoming more important to people than money. While it may be a battle for you in your particular firm – inroads are being made with regard to part-time partners in law firms – for both women and men. Here are a few ideas: No. 1: First and foremost - Develop the courage to ask and have the determination to say no. Create your life balance expectations for your clients and your superiors in the firm. When interviewing for a new job or position let your future employer know your expectations – upfront. No. 2: Create A Personal/Professional Life Plan. Establishing personal and professional priorities and making correct choices is crucial. You must begin by determining what’s important in life – make a list of what’s truly important in your life, establish boundaries and priorities, and formulate a plan. Typical elements that should be on your list include:
  • July 7, 2010 | Practice News
    Best Practice: Leveraging your practice to get to the next level
    By John W. Olmstead, MBA, Ph.D, CMC Q. I am a solo attorney and have had my practice for 15 years. I have one secretary that has been with me 14 years. I have heard you and others state that solo and small firm practitioners need to work on getting to the next level. What is the next level? A. The next level is when your practice begins to build synergy – when one plus one equals three or four rather than two. It is when you have a sufficient consistent volume of work that you are able to add additional layers of attorneys and staff. When lawyers start out their practices, most support themselves on their own work or time production. However, eventually there must be others in the firm who generate more profits than they consume and thus provide additional income to the owners. This is leverage. Leverage can come from junior level owners, associates, paralegals, and legal assistants. The important takeaway here is eventually a structure must exist within the firm whereby each owner can make a reasonable income but not have to provide all of it himself or herself. This must come to pass if the senior lawyers are to spend more time on firm investment activities (non-billable matters) such as generating new business, training and mentoring new associates, or managing the firm. While the getting to the next level can improve profitability if done right – new challenges and frustrations come into play as well. You must now manage others – motivate them, hire and fire, and retain quality lawyers and staff. You are now a manager as well as a lawyer – like it or not! John W.
  • June 30, 2010 | Practice News
    Best Practice: Dealing with office conflicts
    Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am the managing partner in a three attorney firm and am having problems with office staff members getting along. Office conflict is rampant. Any suggestions? A. You must begin by identifying some of the causes. Poor communications often can be the root cause of such problems. Interview each of your staff members individually and probe. What do they think? Is communications a problem? Are roles, duties, and responsibilities clarified? Lack of clarity can in these areas can lead to turf wars. You may want to design job descriptions for each employee and clarify roles, duties, and responsibilities for each employee. Conduct short weekly staff meetings to enhance communications. Use agendas. Take minutes of the meetings. Advise everyone of your expectations including all members working together as team members. Let them know that working together as a team is a performance factor that will be considered in performance evaluations and reviews. Conduct periodic performance reviews. Counsel and take action against problem employees. John W. Olmstead, MBA, Ph.D, CMC, is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.