Olmstead & Associates Law Practice Management Asked and Answered Blog

Law Firm Strategic Plans: Are They Practical For Small Law Firms?

Question:

I am the managing partner of a 12 attorney firm in Chicago. We have been considering whether we should develop a strategic plan for the firm. We have problems even having partner meetings on a consistent basis and those often yield questionable results. What are firms doing? Does a strategic plan make sense for a firm like ours?

Response:

According to recent surveys, 70+% of the responding law firms (ranging in size from the largest to 45 attorney firms) have formal written strategic plans. Smaller firms have a much lower experience. In our experiences with smaller law firms we are finding that fewer than 15% have formal written strategic plans. I consider success to be achievement of measurable results as evidenced by achievement of the goals and objectives outlined in the plan and actual implementation of action items. Lawyers and law firms seem to do better at planning than they do at implementation. Larger firms usually are more successful in implementation due to availability of management resources, leadership and functional governance. Smaller firms tend to have problems with implementation. In fact, we frequently recommend that a firm address other management issues prior to engaging in strategic planning. If a firm is having problems implementing day-to-day operational decisions the firm will not be effective in implementing strategic planning initiatives.

You might want to get your operational house in order first and resolve day-to-day operational management issues first and then move on to the future.

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

 

Law Firm Coaching: When Does A Lawyer Need A Coach

Question:

Our firm of 16 attorneys is trying to make major strides this year in helping our firm design and implement personal business and client development plans. Should we consider hiring coaches? When should a firm consider coaching for attorneys?

Response:

The day-to-day stress of practicing law and serving clients leaves little time for focusing and investing in the future of the firm. When attorneys exhibit the following it may be time for a coach:

• Stuck and unable to move forward on new initiatives
• Indecision paralysis
• Lack of commitment, inertia, self-accountability or follow-up
• Poor implementation skills
• Lack of management, leadership, interpersonal, or other needed skills.

Training and skill development is not easy. Studies reveal that 90 percent of the people who attend seminars and training sessions see no improvement because they don't take the time to implement what they learn. Practice create habits and habits determine your future. Up to 90 percent of our normal behavior is based on habits. The key to skill learning is to get the new skill to become a habit. Once the new habit is well developed it becomes your new normal behavior. This requires practice. Unfortunately, attorneys do not have time to practice and experiment.

The coach's role is that of steward, facilitative leader and teacher. Law firms retain coaches to work with attorneys and staff, mostly on a personal level, to address problems involving lack of commitment, inertia, implementation, self-accountability and follow-up. Firms are using coaching in the following areas:

• Business planning.
• Marketing. Improving performance.
• Organizational skills.
• Firm leadership.
• Achieving balance between work and personal life.
• Clarifying values and goals.
  

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

Why Lawyers Have Problems With Client Development and Marketing

Question:

Our firm has in place a strategic plan as well as a firm client development plan and individual lawyer client development plans as well.  While we have great ideas and good intentions - we seem to be falling short of the mark and not accomplishing much. What are you thoughts regarding our dismal success with our client development efforts?

Response:

Obstacles to Marketing

Based upon our observations drawn from working with client law firms over the past eighteen years we have concluded that marketing is poorly understood and ineffectively implemented in many small law firms. In addition, the following obstacles are at play:

Time

There is no time for marketing or any firm developmental activities. Production is king and non-billable activities such as marketing are discouraged.

Uneasiness With Marketing

Attorneys are uncomfortable with marketing. This is primarily due to lack of understanding, training, and experience with the process.

Lack of Marketing Understanding

Many attorneys confuse marketing with advertising. Marketing is not advertising. Marketing activities can exist without any promotional components such as television advertisements, radio spots, tombstone magazine advertisements, or direct mail. Marketing is the broader process concerned with the development and delivery of legal services and is part of the firm's long range planning process. It provides answers to the questions what are we selling and to whom are we selling. It involves maintaining relationships with existing clients as well as creating new relationships with prospective clients. In fact, a major objective of many successful marketing plans is obtain additional business from existing clients.

Focus and Accountability Problems

Frequently law firms experiment with marketing and engage in isolated promotional activities not integrated with the firm's business plan with the expectation of immediate results after the one-shot activity. The firm engages in fits-and-start activities that are completely unfocused, unrelated to an overall plan, unmeasured, inconsistent and often inappropriate.

Cultural Issues

The typical culture of many law firms discourages investment in long-term developmental activities. The focus is on billable hours and production. Everything else is of secondary concern. The consensus governance model typical in law firms hinders change and timely decision-making at the firm level. In addition, effective marketing in law firms requires marketing at the firm, practice group, and individual attorney levels. This requires effective training, mentoring, follow-up, and accountability at each of these levels.

Reward and Compensation Systems

Most reward and compensation systems focus on short-term production and discourage participation in longer term (non-billable) firm investment activities or projects.

Tackle some of the above issues and you will be on your way to improving your client development and marketing efforts.

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

 

Diversifying a Personal Injury Plaintiff Law Firm

Question:

Our firm is a personal injury plaintiff law firm located in Austin, Texas. We have 4 attorneys in the firm and all are partners who have been practicing for over 25 years. One hundred percent of our practice is PI plaintiff. We have been extremely successful over the years and handled some very large cases, have had some big wins, and handled several class action cases. Our current challenge is cash flow. The cases we are involved with seem to be bigger and more complex with fewer smaller cases that can be resolved quickly and contribute to cash flow. We are getting in deeper to our line of credit. Of late we have been discussing pros and cons of diversifying the practice and adding a non-PI practice area to our practice. What are your thoughts? Have you seen PI plaintiff firm do this successfully?

Response:

More and more of our PI plaintiff law firm clients have been raising this question during the past year. While a lot can be said about specialization - a firm can also sometimes be too specialized. I have seen many hybrid firms over the past 20+ years that have successfully combined a plaintiff personal injury practice with a transactional practice. As one firm told me "us transactional folks bill the hours and pay the bills while we turn the PI folks loose to go after the big hits." Firms that operate the firm as a "firm-first" firm tend to be more successful with such a practice mix than do firms that are "long ranger" firms operating as a collection of individual practitioners. In these firms compensation can become difficult and divisive due to the large swings that can occur in contingency fee work. However, firm-first firms look beyond this year's fee production, carry their contingency fee brothers and sisters when their numbers are down, and share the wealth when the big hits come in. Marketing and advertising came be more challenging - but it can be done. Practice areas might include commercial litigation, employment discrimination, business transactions, etc. High-end family and criminal practices have also been good candidates as well. It is not so much the type of practice as it is the type of practitioner and whether then be a good "cultural fit" with the PI folks.

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

Law Firm Client Development - Obtaining Additional Work From Existing Clients

Question:

I am the chair of our three person management committee. Our firm, now entering second generation, is a 17 attorney firm in Kansas City, Missouri. We represent businesses and other institutional clients. We have several of our founding partners in their 70s and as they phase back and slow down we are discovering that the younger generation of partners have not developed client development skills. What should we be doing to get more business? We are not sure we even know how?

Response:

Research conducted over the years by numerous research organizations has shown that on average it costs five times as much (dollars/time investment) to get new clients than it does to get more business from existing clients. It just makes good business sense to leverage existing relationships.

Institutional clients are reducing the number of law firms that they use. According to BTI Consulting Group, corporations in the Fortune 1000 list are using 20% fewer core law firms than they did a year earlier. As a result fewer firms will be getting work from these companies and they will likely be the firms that successfully cross-sell their practices.

Recommendation From a Fortune 500 Client

Recently I was doing a telephone interview with the general counsel of a Fortune 500 company for our law firm client and I asked him if there was an opportunity for the law firm to get additional work in a practice area in which the company had no experience with the law firm previously and if an opportunity existed what the firm needed to do to earn the business. Here is his response.

"Obviously we currently have other law firms handling that work. However, we have been evaluating those relationships and may be making some changes. There is room for other law firms to earn our business in the practice areas that you have discussed with me."

"I am aware that the law firm does other work other than what we have been using them for - but I am not sure exactly what those areas are."

"In order to begin to forge a relationship into these other service areas:"

1. I need to know specifically what they do.
2. I need to know who does it.
3. I need to know how well the person( s) do it.
4. I need to have a well established relationship with the person - trust, respect, like the individual, etc.
5. I suggest that we start by having the partner in the firm that I have a relationship with begin educating me on the firm's other practice areas and begin introducing me to the other players in the law firm.

We hire lawyers - not law firms.

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

 

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

Effectiveness of Business Cards For Lawyers

Question:

I rarely use my business card anymore. Is there any value for a lawyer to have one anymore?

Response:

The business card is not what it once was. Years (decades) ago, the business card was the totality of your identity and contact information, and sometimes a little more information about you. Your name, firm name, address and phone number was everything needed to do business with you. For some, especially solos proprietors, it was your tiny firm brochure. Times change.

The past few years have seen some changes. Many of us work more virtually than before, communicate by email, and often change job titles and employers almost as fast as we can print up new cards. We pass along our contact information as part of our email signature. Considering the sterile, information-only business card of the past, isn't it time to reconsider what a business card can do for you.

Tip: Rethink (outside the box) what your business card can do for you. Because it isn't as necessary for contact information, use it to convey your brand, your image, your firm or practice "theme." Consider more graphical or iconic representations or other ways to leave an impression, not just information. Also, think about multiple business cards for different uses - maybe one for contact info, one for specific practice areas.

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

Marketing a Personal Injury Plaintiff Practice

Question:

I am a partner in a five attorney PI plaintiff law firm in Central Kentucky. We have three partners and two associates in the firm. We are first generation. Our practice is focused 100% on PI plaintiff cases. While we focus on all types and sizes of PI cases we are not a high volume advertising PI practice. Our practice has been built upon our successes and referrals from past clients and other lawyers. We have never done much in the way of other forms of marketing and advertising other than a small yellow page ad and a Martindale Hubbell listing. We are finding it harder to obtain a sufficient quantity of quality cases as a result of increased competition from the advertising PI firms, statutory changes, tight fisted insurance company claim managers, etc. We believe that we may need to being doing more to market our practice. What are your suggestions?

Response:

We are hearing similiar stories from our PI plaintiff law firm clients across the U.S. Case counts are down, quality of cases are not what they used to be, competition is fierce, and cases are getting harder to settle. The strategy is different from a firm that wants to build a high volume practice (build a factory) from a firm that desires to build a reputation-based practice. In essence you need to determine whether you want to build a high volume practice (a factory) or continue with a high quality reputation-based practice. Assuming that you want to continue your reputation-based practice here are a few suggestions:

1. Develop a long range strategic business plan - 10 pages or less
2. Enhance and broaden the firm-wide marketing program to increase market awareness (referral sources and potential clients) and generate new client business. Review ROI from the firm’s marketing expenditures. Consider increasing marketing budget to 5%-10% of fee revenue. 
3. Develop the firm’s marketing infrastructure to include:

         -    Adequate budget 
         -    First Rate Web Site
         -    Appropriate directory listings 
         -    Inside Marketing Coordinator 
         -    Relationship Management Database 
         -    Capability Materials
         -    E-News Letters via Service
         -    Articles
         -    Testimonials
         -     Public Relations
         -     Accountability by all attorneys and staff

   4.    Develop a program for increasing the firm’s exposure to the newer younger generation non-PI and solo attorneys and small firms.

   5.    Provide excellent client service

   6.   Keep your yellow page ad for now but reduce investment

   7.  Understand the power of PR in Trial Strategy.

   8. Develop a formal lead tracking process and invest in resources

   9. Organize to maximize contact with potential clients.

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

Surviving in an Insurance Defense Law Firm - Reinventing the Practice & Staying in the Game

Question: 

I am the founding partner of a 17 attorney firm in Missouri and I serve as the managing partner. We have 12 partners and 5 associates. Our practice is entirely defense - personal injury and workers compensation. The majority of our clients are insurance companies and third party administrators. We represent a handful of self insured companies. While we have had a successful past fifteen years are firm is now struggling. We have lost market share and our case counts are way down due to the economy and regulatory changes in Missouri. Our profitability has suffered as a result. We need to make some changes but are unsure where to start. Could you share your thoughts?

Response:

The present state of the insurance defense practice presents numerous challenges to the law firm. These challenges simply cannot be ignored – they will have to be faced head-on. The solutions are complex and will require time to sort through. While solutions can come in different varieties, they will take the form of one of two general strategic approaches.

1. Reinvent the Practice - Stay in the Game
2. Exit or Diversify the Practice

The remainder of this post will focus on reinventing the practice and staying in the game.

For some firms the appropriate strategy may be to stay in the game. These will be firms that have a well-established reputation in insurance defense, where insurance defense represents a major source of their revenue, and where adequate leverage and profitability and leverage exist. These firms will not be firms that dabble in insurance work. These firms will be committed to this practice area and will focus on it exclusively. Some of the following actions will be required to reinvent the practice and stay in the game:

1. Get leverage back on track. Tough decisions will be required here. High priced senior associates will have to be let go. Unproductive partners will also have to leave. Paralegals should be hired. Ratios need to get back to 4 to 1.
2. Partnership admission criteria will become more demanding. Time required to make partner will be lengthened.
3. Compensation will be based upon performance.
4. Billable hour quotas will be enforced.
5. Expenses will be tightly controlled.
6. Flat fees and other forms of alternative billing will be commonplace.
7. Unique out-of-the-box solutions will be designed to provide tailored services to meet client needs and differentiate the firm from competitors. The firm will no longer wait for the insurance company to take the lead. The firm will take the lead and provide clients will a menu of service solutions.
8. Technology will be employed to the fullest extent to reengineer work processes. It will not be used just for technology sake or to keep up with the corporate litigation law firms. When technology is employed old outdated practices and processes will be eliminated.
9. Standardized practices and procedures will be developed and used throughout the firm wherever possible.
10. Client focus groups, insurance company councils, and other forums will be formed to open up channels of communications with clients in order to mend the tarnished client relationship and reestablish a business partnership. Innovative insurance defense firms will take active leadership roles in this endeavor.
11. Aggressive marketing and business development strategies and plans will be implemented in order to maintain appropriate growth rates and profitability. Relationships with unprofitable clients will be terminated. Marketing with be done as a team approach as opposed to being a function done at the individual lawyer level. Both firm and individual personal marketing plans will be commonplace.

Click here for my article - Trapped In an Insurance Defense Practice

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

Characteristics of Successful Law Firms - Basic Building Blocks - Block 7 - Marketing

For the past six weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:

• Partner Relations
• Leadership
• Firm Management
• Partner Compensation
• Planning
• Client Service
• Marketing

Partner relations, leadership, management, partner compensation, planning, and client service blocks have been discussed. 

The seventh and final basic building block is marketing. Successful firms have an effective marketing infrastructure and program in place.  

Gone are the days when attorneys simply practiced law. Today, they face increased competition, shrinking demand for services and increasing supply of professional talent, availability of service substitutes, and marketing of professional services. Marketing can no longer be ignored if small law practices are to survive in the future.

Based upon our observations working with client law firms over the past twenty six years we have concluded that marketing is poorly understood and ineffectively implemented in many small law firms. In addition, the following obstacles are at play:

Time - There is no time for marketing or any firm developmental activities. Production is king and non-billable activities such as marketing are discouraged.

Uneasiness With Marketing - Attorneys are uncomfortable with marketing. This is primarily due to lack of understanding, training, and experience with the process.

Lack of Marketing Understanding - Many attorneys confuse marketing with advertising. Marketing is not advertising. Marketing activities can exist without any promotional components such as television advertisements, radio spots, tombstone magazine advertisements, or direct mail. Marketing is the broader process concerned with the development and delivery of legal services and is part of the firm's long range planning process. It provides answers to the questions what are we selling and to whom are we selling. It involves maintaining relationships with existing clients as well as creating new relationships with prospective clients. In fact, a major objective of many successful marketing plans is obtain additional business from existing clients.

Focus and Accountability Problems - Frequently law firms experiment with marketing and engage in isolated promotional activities not integrated with the firm's business plan with the expectation of immediate results after the one-shot activity. The firm engages in fits-and-start activities that are completely unfocused, unrelated to an overall plan, unmeasured, inconsistent and often inappropriate.

Cultural Issues - The typical culture of many law firms discourages investment in long-term developmental activities. The focus is on billable hours and production. Everything else is of secondary concern. The consensus governance model typical in law firms hinders change and timely decision-making at the firm level. In addition, effective marketing in law firms requires marketing at the firm, practice group, and individual attorney levels. This requires effective training, mentoring, follow-up, and accountability at each of these levels.

Reward and Compensation Systems - RMost reward and compensation systems focus on short-term production and discourage participation in longer term (non-billable) firm investment activities or projects.

Click here to read one of my articles on marketing

Click here to read my blog postings on marketing

I hope you have enjoyed the series. Next week I will resume posting questions and answers received from law firms. 

John W. Olmstead, MBA, Ph.D, CMC
www.olmsteadassoc.com