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Asked and Answered

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

Q. I am the chair of the finance committee for our firm - 17 attorney firm in Chicago. We have 6 equity partners in the firm. We are in the process of admitting a new equity partner and are reviewing our capital accounts and trying to determine our capital needs. I would appreciate your ideas and thoughts.

A. There are two categories of capital - short-term or working capital which is used to fund daily operations and long term capital which is used to pay for capital assets such as furniture and fixtures, computers and other office equipment. I guess I am old school but I believe that short term working capital should be funded as much as possible with partner capital and long term capital funded with bank borrowing or leases. I have more and more clients that are funding working capital with partner capital and have no bank debt at all. I have other clients that finance all working capital with their bank line of credit - these firms could find themselves in dire straits if bank credit should tighten in the future.

The amount of working capital needed by a firm depends upon your practice, billing and collection cycles, whether you do contingency fee work, and whether the firm is growing and adding attorneys and staff. As a rule of thumb I suggest that a firm have three times one month's expenses excluding draws in working capital. This would need to be increased if the firm has lengthy billing and collection cycles, does contingency fee work, and is in a growth mode.

Partner capital contributions are usually made proportionately based on partner earnings or ownership percentages.


Michael J. Tardy, Director of the Administrative Office of the Illinois Courts, announced Monday that the Third Judicial Circuit judges voted to select Martin J. Mengarelli as an associate judge of the Third Judicial Circuit.

Mr. Mengarelli received his undergraduate degree in 1989 from Loyola University in Chicago, and his Juris Doctor in 1993 from Northern Illinois University in DeKalb. Mr. Mengarelli is currently affiliated with The Simmons Firm in Alton.


Join us in Chicago OR Fairview Heights on October 13th for an update on recent Appellate Court decisions, AMA Guidelines, and entering evidence to support your client’s case with this advanced-level workers’ compensation seminar! Labor and employment attorneys and workers’ compensation practitioners attending this seminar will better understand: what the Illinois Appellate Court Justices and arbitrators expect from practitioners appearing in court; recent Appellate Court decisions that have affected the workers’ compensation practice; how to get evidentiary materials into the record; whether or not an impairment rating is necessary for a party to prove their case; what to focus on when deposing the physician who provided the impairment rating; and much more!

The seminar is presented by the ISBA Workers’ Compensation Law Section and qualifies for 5.50 hours MCLE credit, including 1.0 hour Professional Responsibility MCLE credit (subject to approval).

Click here for more information and to register for the CHICAGO seminar.


Chief Justice Rita B. Garman of the Supreme Court of Illinois has begun an application process for an at-large Circuit Court vacancy in the Eleventh Judicial Circuit.

The vacancy is created by the announced retirement of Judge Elizabeth A. Robb on December 31, 2014. Judge Robb has been a Circuit Judge since 2000.


DuPage County Chief Circuit Judge John T. Elsner is pleased to announce that following a Sept. 25, 2014 meeting of the Circuit Judges of the 18th Circuit, two finalists for the Office of Associate Judge have been selected and certified to the Illinois Supreme Court. The finalists are seeking to fill the vacancy created by the retirement of Associate Judge Patrick J. Leston.

From these names, the Circuit Judges will select one appointee by secret ballot:

Brian W. Jacobs, J.D.-Boston College of Law, Newton, Mass., 1996; admitted to the practice of law in Illinois, 1996. Mr. Jacobs currently is a Deputy Chief for the DuPage County Public Defender's Office (2001-present). Previously, he was an associate with O'Hagan, Smith and Amundsen (2000-2001) and an Assistant Public Defender for the Kane County Public Defender's Office (1996-2000). Mr. Jacobs is an active member with the DuPage County Bar Association, Illinois State Bar Association, DuPage Association of Women Lawyers and the DuPage County Criminal Defense Lawyers.

Ann Celine O'Hallaren Walsh, J.D.-Chicago Kent College of Law, 1998; admitted to the practice of law in Illinois, 1999. Ms. O'Hallaren Walsh is currently the Supervisor of the Sex Crimes/Domestic Violence and Child Abuse Unit for the DuPage County State's Attorney's Office (1999-present). Ms. O'Hallaren Walsh is an active member of the DuPage County Bar Association, Illinois State Bar Association, DuPage Association of Women Lawyers and Illinois Prosecutors Bar Association.


Q. What is my responsibility to respond to an ARDC request for information?

A. RPC 8.1 provides that a lawyer shall not knowingly fail to respond to a lawful demand for information from the ARDC. Comment [2], however, makes it clear that this responsibility is subject to 5th Amendment protections. In addition, ARDC Rule 53 provides that it is the duty of a lawyer to respond to ARDC information requests.

ISBA members can browse past ISBA Ethics Opinions, access our Ethics Hotline, and other resources on the ISBA Ethics Page.

[Disclaimer. These questions are representative of calls received on the ISBA’s ethics hotline. The information provided below is meant as an educational tool to highlight potentially applicable Illinois RPC or other ethics resources that might help the lawyer answer the question posed. The information provided isn’t legal advice. Because every situation is different, often complex, and the law is constantly evolving, you shouldn’t rely upon this general information without conducting your own research.]


Lawyers can cite magazine articles and blogs in their pleadings and briefs - why can't they cite Rule 23 orders? Read more in the October IBJ.


Illinois Supreme Court Justice Thomas L. Kilbride has announced an application process for appointment to an upcoming resident Circuit Court vacancy in Peoria County in the 10th Judicial Circuit. The vacancy will be created upon Judge Michael E. Brandt's retirement, effective December 12, 2014.


Asked and Answered

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

Q. I am the owner and founder of a 7 attorney personal injury plaintiff firm in the southwest. Over the years we have become the "go to" PI firm in the area. We have an extensive advertising program including TV, radio, and other mediums. I bring in all the business and the other six associate attorneys are primarily worker bees. I have discouraged business development by the associates and now as I approach my retirement years I am realizing that this may have been a mistake and it may take more than a "firm brand" for the firm to transition to the next generation. I would appreciate your thoughts.


The Illinois State Bar Association's Task Force on the Impact of Law School Curriculum and Debt on the Future of the Profession will hold seven open hearings throughout the state. The Task Force was established by President Richard D. Felice and is chaired by Hon. Ann Jorgensen, Justice of the Second District Appellate Court. ISBA members are encouraged to attend these hearings to discuss the core skill sets that new lawyers should have and how law schools can graduate more “practice ready” lawyers.

Those who provide comments should focus on: