Law Practice Management Asked and Answered Blog

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October 2014

Oct 28, 2014

Law Firm Marketing – Should We Advertise?

Question:

I am the managing partner of a six attorney general practice firm located in Arlington Heights, Illinois. We have been in practice for ten years. In the past most of our business has come to us through client and attorney referrals. We have not advertised. However, several of our attorneys are pushing us to embark on an extensive advertising program. I am interested in your thoughts.

Response:

Keep in mind that advertising is only one form of promotion and promotion is only one of the four elements of a firm's marketing mix. Other elements such as service strategy, pricing strategy, and service delivery strategy are often more important to the firm than its promotion strategy. For firms that are providing commodity type legal services such as personal injury, divorce etc, extensive advertising can work very effectively. However, for firms that are providing customized differentiated legal services this form of promotion is usually not effective nor appropriate. This is why it is so important for law firms to formulate their business and marketing strategies and plans before implementing specific marketing promotional programs.

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

 

 

 

Oct 21, 2014

Law Firm Insurance Defense Work – Opportunity or Commodity?

Question:

I am the managing partner of a 5 attorney general practice firm in Kansas City, Missouri. My book of business is down and I have been considering taking on insurance defense work. During the past year  I had the opportunity of working as co-counsel on a couple of insurance defense matters and enjoyed the experience and the work. It seems to me that representing insurance companies would represent a steady flow of work. I would appreciate your thoughts.

Response:

Insurance defense work can be a blessing and a curse. Working for insurance companies often does result in a steady flow of work but at the following costs:

  1. Low billing rates – often in the range of $145 – $175 for partners and even lower for associates – auto mechanics and plumbers often fare better
  2. Unrealistic controls.
  3. Mandated billing guidelines regarding what can, what cannot, and how much time can be billed
  4. Strict litigation guidelines that dictate how the case is handled and managed.
  5. Case budget requirements
  6. Audits of your legal bills
  7. Limited loyalty and inability to develop close relationships with the client due to centralized claims offices and restrictions on social activities

So, in exchange for a flow of cases you may be selling your freedom, independence, and your soul. It is hard to be successful if you dabble in insurance defense. You either need to be in or out and if you are in you would have to leverage the practice in order to be profitable at the lower billable rates. Be careful about relying on a large volume of work from one just one company. Consider diversifying your case portfolio to include a mix of higher stakes cases, if you are able, such as professional liability, products liability, medical malpractice, commercial litigation, and major construction defects.

Realize going in that insurance defense work is commodity work and insurance companies are shopping for the best deal and the best price – so is your competitive strategy to be a low cost provider?

https://www.olmsteadassoc.com/blog/category/strategy/

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

Oct 14, 2014

Law Firm Client Service Standards

Question:

I am the managing partner of a 14 attorney business law firm in Baltimore, Maryland. Our marketing committee has been discussing marketing initiatives and is planning on a client service initiative. Where do you suggest that we start?

Response:

You might want to start by putting in place some basic client service standards. For example:

Look for ways to become your client's trusted advisor rather that their hired gun that they only call on when they are in trouble.

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

 

 

 

Oct 08, 2014

Law Firm Succession – Consequences of Waiting Too Long

Question:

I am a solo practitioner in an estate planning firm in Carbondale, Illinois. I am the only attorney in the firm. I have one legal assistant that has worked for me for ten years. I am 72 years old. I suppose it has always been my goal to practice forever as I have been in denial about my age. I have done nothing concerning the eventual transition of my practice and I don't even have anything in place in the event that I would become ill and out of the office due to illness. I am beginning to have more and more health problems and as a result I am coming to the realization that I must address the transition of my practice. Please share your thoughts.

Response:

Age denial is a common problem that I see with senior attorneys that are continuing to practice into their 70s and 80s. They often tell me – "I want to practice forever." However, eventually the clock catches up with them and often they have not prepared for the transition of the practice. Waiting too long can have the following consequences:

  1. Reduced mental and physical competencies resulting in substandard services rendered to clients.
  2. Stress of the practice as a result of having no one available to cover the practice.
  3. Inability to take an extended vacation or time away from the practice.
  4. Inability to explore other outside interests, hobbies, etc.
  5. No coverage or "back-up plan" – practice continuation plan if you will in the event that you become ill.
  6. Risk of loss of control over the future of your practice – clients – employees – exit value in the event that you become incapable of adequately serving your clients and Illinois Supreme Court Rule 7.76 is invoked whereby the court takes over your practice and a appoints a temporary receiver, clients are notified, arrangements are made, and files are assigned out to various attorneys.

You need to get started on finding someone that can eventually take over your practice even if you eventually just close your doors. You still have client files and records, clients that will need ongoing or future representation, and an employee that may need a job.

You may want to start with an Of Counsel arrangement with another attorney and put in place an Of Counsel – or Practice Continuation Agreement – whereby you each agree to cover each other practices in the event of illness or vacation.

A practice continuation arrangement is an arrangement – typically in the form of an agreement or contract – made between an individual lawyer or a small law firm and another lawyer or law firm. The arrangement describes a course of action to transfer a lawyer’s practice and sets payment for its value. In the event of vacation, temporary or permanent disability, or death, a practice continuation arrangement protects the practice, the business interests of the lawyer or law firm’s clients and the financial interest of the lawyer and his or her family. There are different kinds of practice continuation arrangements. Typically a lawyer enters into a one-on-one agreement with another sole proprietorship, partnership, limited liability company, or professional corporation in the community. Agreements can range from simple “dual coverage for each other” for vacation or other temporary absences to sale of the practice in the event of long term disability or death.

While your initial need may be a practice continuation arrangement in the event of illness or vacation – you should also begin looking for someone that you can transition your firm to in the long run as well via practice sale, Of Counsel relationship with another firm, merger, etc.

Good luck on your journey!

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

 

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