Law Practice Management Asked and Answered Blog

« October 2016 | Main | December 2016 »

November 2016

Nov 29, 2016

Law Firm Retainer Management – Replenishment

Question:

Our firm is a five attorney estate planning/administration practice located in Kansas City. Our estate planning work is handled on a flat fee basis for our clients. We collect one half of the fee upon acceptance of the signed engagement letter and the other half upon signing of the estate planning documents. This has worked well for us. However, we are not doing so well with our estate administration work. This work is time billed against a retainer. We do a good job collecting the initial retainer but then we fail to ask for replenishment retainers and when we bill for the remaining work we have collections problems. We have are over six hundred and fifty thousand dollar in accounts receivable over 120 days old. We would appreciate your thoughts.

Response:

This is a common problem that I see in estate planning/administration and family law practices. Here are a few suggestions:

  1. Assign someone in the firm to review a Summary Work In Process Report or similar report that shows the dollar value of unbilled work in process and the dollar value of used retainer at least once a week. (Some firms do this daily)
  2. Flag matters that are at 90% of retainer (unbilled work value to unused retainer) and bill clients for retainer replenishment in accordance with firm policy.
  3. Advise responsible/billing attorney of the retainer status, that a bill has been sent for replenishment, and again when the payment of the additional has been received.
  4. Responsible/billing attorney should consider the retainer balance status when scheduling work on specific matters that have reached 90% of retainer balance.
  5. Send retainer replenishment bills as frequent as necessary. It is easier for clients to pay small bills than very large bills.
  6. Stay on top of your receivables – smile and dial (call) after bills have been outstanding for thirty days. Reminder bills and statements are a waste of time.
Click here for our financial management topic blog

Click here for our law firm profit improvement blog

Click here for articles on other topics

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

 

Nov 22, 2016

Law Firm Billable Hours – Attorneys Not Meeting Expectations

Question:

I am a partner with a fourteen attorney business litigation defense firm in Los Angeles. I am the member on our three member executive committee that is responsible for financial oversight. This year we put in place an 1800 annual (150 hours per month) billable hour expectation for associate attorneys. No one has ever reached 150 hours. Are our expectations unrealistic? What is our problem? I would appreciate your thoughts.

Response:

I do not think that a 1800 annual billable hour expectation is unrealistic. Litigation defense firms typically have an expectation of 1800 to 2000 annual billable hours. Many litigation defense firms that I am currently working with have a 2000 billable hour expectation with many attorneys working 2200 billable hours.

Typical causes for an attorney not meeting expectations are:

  1. Not working or putting in enough hours.
  2. Not enough work.
  3. Poor time management habits.
  4. Poor timekeeping habits.

I suggest that you meet with each associate and discuss each of these possible causes.

Since this seems to be an across the board problem I suspect that the firm may not have enough work to support these billable hour expectations. Many of our clients are having this problem. They are hiring more attorneys that they actually need, have overcapacity, and simply don’t have the work to support billable hour expectations.

Click here for our financial management topic blog

Click here for our law firm profit improvement blog

Click here for articles on other topics

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

 

Nov 15, 2016

Law Firm Client Development – Using Social Media

Question:

I am the partner recently put in charge of marketing in our eight lawyer general practice firm. For years we have simply relied on referrals from past clients, lawyers, and other referral sources as our sole means of client development. A few years ago we invested in a website. We are now considering whether we should invest in social media. I welcome your thoughts.

Response:

A recent survey conducted by FindLaw reports that a majority of consumers says that social media plays a major role in deciding which attorney to hire and they would be likely to hire an attorney who has an active presence on social media such as Facebook, Twitter, and LinkedIn.

The FindLaw survey found that 84 percent of American adults use at least one form of social media, with Facebook the most popular (73 percent), followed by Instagram (28 percent), Twitter (27 percent), LinkedIn (21 percent), and SnapChat (16 percent). Fifty-four percent of consumers say they would be likely to hire an attorney who is active on social media. This is particularly true for younger consumers. Sixty-nine percent of survey participants between the ages of 18 and 44 would hire  attorneys who are active on social media.

Since your firm is a general practice firm I assume that a majority of your clients are individuals rather than businesses. If this is the case you should have an active Facebook presence for this audience and an active LinkedIn presence for your professional audience. Your LinkedIn profile should be updated periodically. You should post to your Facebook account at least once a week.

Your biggest investment is your time and you can get carried away. Some of my clients outsource Facebook postings to their website providers or others that provide such services.

Click here for our blog on marketing 

Click here for articles on other topics

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

Nov 08, 2016

Law Firm Retirement – Planning Retirement

Question:

I am a partner in a six-attorney firm in downtown Chicago. I am sixty four and starting to think about retirement and would appreciate your thoughts on how where to start.

Response:

Begin to visualize getting older, your mortality, and retirement. Think about the amount of time that you have left on this earth. If you are sixty-five you may live to be eighty. Thus, you have fifteen years left and this is your planning horizon.

Retirement planning is deciding on how to use this time. It is about the process of deciding what you will do in your retirement and putting a plan into practice. As the amount of time left to you decreases, its value increases to the point where it will be more valuable than monetary assets.  It will be more valuable that a new house, a new car, a new boat, or a chest full of cash. Time enjoying life, being with your family, and spiritual renewal will become more important than earning money. The greatest change when you retire is how you will use your time.

Retirement planning begins with taking the time to think about how you will use you time. If you live fifteen years beyond your retirement your will have 28,800 hours that will have to be filled with retirement activities. (five days a week, eight hours a day, 48 weeks, for fifteen years)  Start by creating an interest activity list, a time plan, and then DECIDE, PLAN, and ACT.

You options include:

1. Continue working in your present situation;
2. Continue to work for compensation but in another occupation; or
3. Retire and pursue recreational and other retirement activities without compensation.

Click here for our blog on succession

Click here for out articles on various management topics

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

 

 

 

Nov 01, 2016

Law Firm Associate Compensation – How to Deal With Overpaid Associates

Question:

I am the managing partner of a twelve attorney defense litigation firm in Santa Monica, California. We have four partners and eight associates. Associates are paid a salary. We have several associates that are being overpaid – they are being paid $150,000 – $180,000 and just barely generating $300,000 in working attorney fee receipts. I would appreciate your thoughts.

Response:

Do they have enough work? Do they put in enough hours? Are they good time managers and good timekeepers? If they have enough work – then meet with each of them – lay out the expectation of 1800 hours and consequences for non-achievement. If they have issues with time management or time keeping impress upon them the importance of improving these skills – in the meantime they may have to simply put in the extra time to get in the hours.

Suggested consequences:

  1. For those not meeting expectations. Manage and coach them in real time- but be firm about your expectations. You are paying them a salary for a certain level of expectations and performance. If there is not enough work reduce their working hours and compensation. Consider production in future salary reviews and bonuses. Don't pay them an incentive bonus to perform the work you are already paying them to do. In worse case situation you may have to reduce salaries.
  2. For those exceeding expectations. Reward them with a performance-based discretionary bonus. But when advising them of the bonus advise them specifically what it is for and that is it a variable bonus and award for specific performance exceeding expectation. 

Click here for our blog on compensation

Click here for articles on other topics

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

 

 

 

Archives

Categories

    Subscribe to our Blog