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July 2011

Jul 26, 2011

Law Firm Succession and Retirement Options

Question:

I am the senior partner in a six attorney firm in Los Angeles. I am 68 years old and thought that it was  about time I begin thinking about retirement and begin discussions with my other partners. We have no partnership agreement and no plans in place to effect the transition of partners. What are some of the methods being used by law firms effect the retirement of partners?

Response:

There are almost as many approaches as there are law firms – ranging from partners that just leave and give their practices to the others partners to various methods for buying out the departing partner's interest in the partnership. In the final analysis the optimal approach is what makes everyone happy and a solution that everyone can live with. Here are a few illustrations:

Fully Funded Retirement

50 Percent Wind Down Option – Then Retirement Payments For Live 

Pension For Life

Mandatory Wind Down

Five Year Retirement Benefit Payout Based On Earnings

More and more firms are avoiding payouts for life and even moving toward funded buyouts.

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

Jul 18, 2011

Law Firm Management Projects & Implementation

Question: 

I am the managing partner of a 35 attorney firm in Washington D.C. Governance consists of the full partnership on some management matters, myself at the next level, and a firm administrator. The administrator and I meet regularly to review accomplishments – but it seems like initiatives take forever to get implemented or never get implemented at all. Some are initiatives on my plate and some are initiatives on the administrator's plate. What are your thoughts?

Response: 

I assume that you are a part time managing partner and that you are also servicing clients full time as well. It it difficult serving two masters – the firm (non-billable time) and your clients (billable time). Firm management issues always seems to take a back seat to client priorities. To do otherwise requires that you be very focused and effective time manager. You must balance both balls at the same time. Your administrator has a similar problem. His or her priorities are often focused on day-to-day operations management and there never seems to be time – especially large chunks of time – for long term projects. Law firms have a hard time getting long term initiatives or projects such as the following implemented:

  1. Firm strategic plan
  2. Partnership agreement
  3. New partner compensation system
  4. Case management system
  5. Website
  6. Employee handbook
  7. Standard Operating Procedures Manual (SOP)

A starting point is to recognize that managing long term projects such as those listed above requires a different approach and tools than does day-to-day operations management. Projects involve all the work that is done one time and ongoing operations represents the work we perform over and over. Every project has a beginning and an end. They unique and temporary. Work that is unique and temporary – projects – requires different management disciplines.  

Successful projects are those that:

  1. Schedule – Are completed on time according to a schedule or timeline
  2. Cost – Are on budget
  3. Quality – High quality – meet expectations

Suggest that you and your administrator read up on project managment and try to apply some of the concepts to your longer range projects. A good book on the topic is "The Fast Forward MBA in Project Management", by Eric Verzuh, available at Amazon.com in book or e-book format. Another good book is "Legal Project Management: Control Costs, Meet Schedules, Manage Risks and Maintain Sanity", by Steven B. Levy, available at Amazon.com in book form. You may also want to consider using an online project management system such as Basecamp or Teamwork We use secure onling project management software to manage all of our projects and provide client access to their projects on the portal.

Your long term initiatives must be managed as projects and managed differently than ongoing operations. 

Click here for our blog on project management

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

Jul 12, 2011

Expanding Law Practice into Insurance Defense

Question:

I am an 11-year attorney practicing at a small firm on the west coast. We currently focus on business litigation, employment litigation, corporate formation, bankruptcy, wills and trusts, and personal injury. We are trying to expand our practice into the area of insurance defense.  To that end, I have been sending out correspondence to insurance companies offering my services in defense of general liability, property/casualty, and employment practices claims.  My goal would be to develop a regular stream of business from these types of cases, and to cross-market our other services to clients that come through insurance defense referrals. I am not sure if I am going about this the right way, and would like to seek your counsel.

Response:

In all honesty I  have more firms asking how to diversify out of insurance defense into more self-insured and direct representation work. If you want to pursue this market you will need to become part of the club and do more than just dabble in this area. You will have to get on the "approved lists" of the various insurance companies. Once you are on these lists you have to entice claims manager to use you as opposed to other law firms that are on their approved lists. In other words establish relationships with numerous claims manager throughout the company. This is harder than it used to be due to policies that many companies now have prohibiting various forms of networking such as dinners, gifts, ball games, etc. Now days it seems that educational venues is one of the few formats that is not frowned upon. You may also find that some companies reluctant to work with a firm your size. I have advise by insurance companies that they like to see a certain level of bench strength (backup). The firm does not have to be a large firm but often the insurance company likes to see a minimum of four or five lawyers in a firm. You will have to have a track record of success, understand the business, and be able to accomodate the unique billing (including electronic LEDES billing), case management, and reporting requirements that insurance companies require.

Here are a few ideas to get started:

  1. Become involved in every possible organization that involves insurance claims, ACCA, and other such groups.
  2. Join and become actively involved in these groups.
  3. Ofter to give speeches and presentations to these groups.
  4. Develop relationships with news reports and have an effective public program that insures that you get all the PR you can when you have successful outcomes in your cases.
  5. Speak at ACCA and RIMS (Risk Insurance Management Society) conferences.
  6. Form alliances with bigger regional and national insurance defense firms.
  7. Research target companies and make application to get on their approved lists.
  8. Obtain listings in Best and Martindale.
  9. Have a quality website that demonstrates expertise and a e-newsletter that provides information that will help claims managers and adjuster be more successful.

Good luck on your journey.

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Click here for our article on insurance defense practice strategies

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

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