Law Practice Management Asked and Answered Blog

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November 2013

Nov 26, 2013

Law Firm Non-Equity Partners – Compensation and Perks

Question:

Our law firm is a New Orleans 14 attorney firm that focuses its practice on business representation in both litigation and transactional matters. We have four equity partners. The other ten attorneys are associates. We have been discussing implementing a non-equity partnership tier and how we should handle compensation and other perks. We would appreciate your thoughts and suggestions.

Response:

I believe that the non-equity partnership tier should be meaningful and distinctive – both internally and externally. Consider the following:

  1. List non-equity partners as partners on the firm's website and other firm marketing collateral material. If you feel you must make a distinction list the equity members as managing partners.
  2. Allow non-equity partners to attend some partner meetings and have input as non-voting partners into management decisions.
  3. Allow one non-equity partner to be elected to the Executive Committee as a non-voting partner.
  4. Allow non-equity partners to serve on firm committees.
  5. Pay dues to a Country or other similar club for the non-equity partner.
  6. Tie a portion of the non-equity partner's compensation to a bonus based upon firm performance.

While you want to create incentives – status and economic – for the non-equity partnership tier be careful that you don't diminish the desire for future equity partnership.

Click here for our partnership blog

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

Nov 19, 2013

Law Firm Geographic Expansion – Additional Offices

Question:

Our firm is an estate planning firm in the northwest suburbs of Chicago. We are a three attorney firm. We are a very "marketing orientated" practice and invest a lot of money and time into marketing and advertising. Still we are not getting the volume of work we need to reach our financial goals and targets. Most of our work is coming from our local city and a surrounding city or two. We are beginning to think that – for the most part – we now have all the work we can get from these communities and we need to expand and establish a presence (offices) in other target cities. Your thoughts would be appreciated.

Response:

For your type of practice this could very well be true. Spending more marketing time and money targeted in the same area won't help if there is no more work to be had. Here are a few thoughts:

  1. Do a little "do-it-yourself" market research on other surrounding communities. Go to the U.S. Census website or to local websites for the communities of interest. Review the demographics and growth trends and projections for the communities. Then review websites of law firms that serve these communities. Try to get a feel if there is room for you in these markets.
  2. Select a target centralized community where you want to establish a presence.
  3. See what is available for office space for new client intakes. Consider an Executive Suite arrangement (i.e. Regus). Another option might be an office sharing arrangement with a law firm that has excess space. Look for an arrangement that does not tie you into a long term lease.
  4. Resist the temptation to setup a "real office" – a production office if you will. Use your home office as the production and client communications center.
  5. Use the remote office for client intakes only and do not staff with support staff in the initial phase.
  6. If you have a VOIP phone system – have the calls from clients go to the main office and transfer any calls that may come in for an attorney working at the remote office.
  7. Use GoToMeeting and other electronic tools to communicate with clients after the relationship has been established.
  8. Use face to face meetings only when they are really necessary.

The cheaper you can launch and maintain remote (branch) offices the more markets you can expand in to.

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Click here for our archive blog on strategies
 
John W. Olmstead, MBA, Ph.D, CMC

 

Nov 12, 2013

Law Firm Succession – Motivating Senior Partners to Embrace Retirement

Question:

i am the managing partner of a 12 lawyer firm in Rochester, Minnesota. I am in my early 50s. Two of my partners are in their 60s and two are in their 70s. None of them want to discuss retirement – in fact they jokingly state that they would like to work forever. Do you have any thoughts regarding encouraging/motivating senior partners to embrace retirement?

Response:

I am working with more partners and firm owners in their 50s that have clearer ideas about their retirement timeline (often at age 65) than partners in their 60s and 70s. These partners are often the firm founders that built their firms and have a different attitude toward work and life than their partners that are in their 40s and 50s. Work/life balance is often a foreign concept to this older generation of lawyers.

Often "the firm" has been the primary – or only interest – for some of these partners at the exclusion of family and other outside interests. In other cases, the partner's spouse may have passed away and the firm is the partner's LIFE. In such situations bringing up the subject is often difficult.

While this is a difficult subject – not discussing the non-discussible because the topic is uncomfortable – is not the answer. Here are a few ideas:

  1. If the firm does not have a partnership or operating agreement or has one that does not adequately address retirement of the partners – use this to approach the subject of retirement. Approach the topic from the vantage point of "all partners" and not to single out solely the older partners.
  2. Consider a mandatory retirement at say age 70 provision but also incorporate an "Of Counsel" option that allows senior partners to continue to contribute to the firm in possibly a different role after retirement.
  3. For those partners that want and need to be able to continue to come to the office and contribute to the firm – make it clear, that if approved by the partnership, retirement does not mean that they have to leave. They can still have a place within the firm.
  4. Rome was not built in a day – take baby steps by having periodic partner open and frank discussions about retirements and succession.
  5. Provide retirement planning assistance to those senior partners that desire it. Such assistance might also include helping partners develop other outside interests and hobbies.
  6. Provide incentives in the retirement-buy-out plan to encourage earlier retirement and management and client transition.

Click here for our blog on succession

Click here for out articles on various management topics

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

 

 

Nov 05, 2013

Law Firm Personal Injury Firm – Key Metrics and Dashboards

Question:

I am the managing partner of a 6 attorney personal injury plaintiff firm in San DIego. We are a high volume/small case firm that depends heavily on advertising. We have 1200 open files and are currently are spending 17% of our revenue on advertising. While our case management system provides us with numerous reports – what are key reports that we should be using?

Response:

Many of the billing and case management systems do a poor job of providing key metrics and dashboards that can be used to manage and control actual operations going forward. In a firm such as yours it is critical that you actively manage your inventory of cases, your pipeline, manage workflow, and insure that you are obtaining adequate return on your marketing investment. Here are a few thoughts:

  1. Think about what you need to know to manage your operations.
  2. What summary metrics (10 or less) should be on your dashboard and will serve as indicators as to whether you are on course?
  3. Use a spreadsheet to develop a dashboard report of these key metrics that are extracted from your accounting and case management systems. Include charts and graphs.
  4. Assign someone the responsibility for preparing the report on at least a monthly basis on the same day of the month.
  5. Use the report as control tool, investigate problem areas, and take corrective action in real time.

Click here for sample dashboard

Click here for our blog on financial management

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

 

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