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Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am a legal administrator in a 20 attorney firm in southwest Texas. My partners have been expressing concern about loss of several key clients and wants to know what we can do determine why this happened and what we can do to improve client service? I have been thinking about doing a client survey? What are your thoughts? A. Much can be learned by talking to your clients. Structured telephone interviews and other forms of surveys conducted by a neutral third party can provide many surprises as well as answers. Client satisfaction surveys can be the best marketing investment that you can make. Our law firm clients have found their clients to be impressed that the firm cares about their opinions. It is good business to listen to your clients. Understanding what bugs people about your services and those of your competition can be the most valuable input to strategy development you can get your hands on. Find out what bugs your clients and you will learn to out-think and out-service your competitors. Before you invest any time, money, or effort in developing an overall strategy for service improvement, you must survey your clients to understand what your clients want and expect from your firm. An initial survey helps you identify the starting point for your service improvement journey. Planning The Survey The type of survey that your firm chooses depends on your purpose for doing the survey. Are you looking for some insight into why you’ve lost clients? Are you interested in getting a general idea of how your clients feel about your firm?
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. Our firm is in its second generation. While we are proud that we have been in business for over 60 years we also believe we need to re-examine our practice and embrace changes that may be needed for the firm to move forward and remain competitive. We are a 16 attorney firm located in Wisconsin. We have 12 partners and four associates. A. More and more law firms are re-examining their business models and approaches and running the practice as a business.
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. Our firm is conducting a planning retreat next month. We have had retreats in past years that have focused on "touchy feely" programs for the attending partners. This year we really want to focus on a strategy and plan for the future. What do you see as primary changes and challenges ahead for law firms and lawyers? A. The internet as well as advances in information technology has and will continue to be the key driver forcing change in the legal marketplace as well as other segments and our daily lives as well. Being the king of the hill or the biggest is not the strategic advantage that it once was. The internet is leveling the playing field in many industries as well as law firms.  There are new opportunities and new competitors. Consider the following:
  1. Everything is being commoditized. More practice areas are moving down the value curve and prices are becoming more price sensitive.
  2. Disintermediation of traditional delivery channels. The internet provides new access to information and is eliminating the middleman. It is impacting how we shop, bank, conduct business, and pay our credit cards and taxes.
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am a 55-year-old sole practitioner in Chicago. I have two staff employees. I have recently been thinking about what I would do if I became sick or disabled? How would I take care of my clients and my employees? Would you share your thoughts in this regard? A. While many lawyers and law firms are beginning to think about long range succession issues and the need for long range succession plans, many have not yet addressed the shorter range issues. At a recent presentation on succession/exit planning I was asked by a lawyer in the group the following question: “What if something happens to me today or tomorrow – what is my backup plan?" My presentation was focused on the longer term retirement issues but I also need to address issues such as short term illness, disability, death, and even vacations. Many solo lawyers are in “reactionary mode” and have not adequately prepared backup plans in the event that, in the short term – prior to retirement – something would happen to them.
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. Our firm is meeting later this month to discuss year end bonuses and raises for our staff personnel. Due to the economy we did not give raises and bonuses last year. While we have been holding our own with the present economy we have been trying to watch our overhead very closely. However, we want to be fair to our staff and we don't want to lose key employees to our competitors. We are a five attorney firm and have four staff members that have been with us for many years. Do you have any ideas for us? A. Your situation sounds quite familiar. Many law firms deferred raises and bonuses last year and are wondering what to do this year. Here is what we are seeing:
  • Many firms that deferred raises and bonuses last year are doing something this year - raises, bonuses or both.
  • Typically raises are in the 3% range.
  • More firms are examining ways to hold the line on base salary and shift a larger component of compensation into variable pay based upon performance based bonuses.
We are recommending to many of our clients that they use 2010 raises and bonuses to launch new performance base systems for 2011.
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. Our firm, a 12 attorney firm, in Detroit, is having a partner meeting next week focused on thinking about what we can do different in 2011 in order to have a more successful year. While we have a few ideas what are your thoughts? A. The economy is still posing challenges for many law firms and will continue to do so in 2011. Law firms must continue to be dilligent about managing costs but more importantly must really hone in on improving revenues. Here are a few ideas:
  1. Take a serious look at the firm's present position in the marketplace. Review financials, compare against financial ratios, compare with both firm past history and against law firm benchmarks. Examine how well the firm is competing. Is the firm too dependent on a narrow base of clients? Is the practice at risk? Conduct a client survey and obtain client feedback both on firm performance as well as possible unmet needs and opportunities. Consider a comprehensive management review.
  2. Formulate business goals and develop a strategic business plan as a roadmap for the future. Design and simplify business reports designed to measure the goals identified in the strategic business plan. Strive for a one page summary as the primary report.
  3. Require all timekeepers in the firm to submit personal one page business plans which in addition to outlining goals for the year provided fee revenue goals with an element of stretch. The goals should have a stretch component but yet be realistic and attainable.
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am the managing partner of a 14 attorney law firm located in Nashville, Tenn. We have 8 equity partners. The firm represents business and other institutional clients and handles transactional work as well as litigation. Each partner over the years has accumulated "partnership interest" percentages and these interests are used totally to determine annual compensation as well as ownership in the firm. The only numbers that matter in our firm are billable hours -- not dollars -- and billable hour reports are all that we have ever looked at when reviewing associate performance or partner contribution. We are now beginning to question the wisdom of this approach -- should be considering more than hours? A. Billable hours alone is a poor indicator of associate or partner performance and you should include more measures/metrics in the analysis. More and more law firms today realize that partner contribution and value goes beyond and involves much more than “billable hours” and their compensation systems incorporate other factors into the analysis. Billable hours is just one metric in the overall equation. Many law firms focus on various measures of revenue dollars - fees billed, fees collected, etc. The next question is what kind of fee dollars - working attorney, responsible (managing) attorney, or originating attorney. Fees collected by working attorney seems to be the primary focus of smaller law firms. Origination (attorney that brought in the client) attorney fees collected is often part of the mix as well. Very seldom do we see responsible attorney fees collected considered.
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am a law firm administrator with a 27 attorney firm in the southwest. This is my first law firm experience. I have been in my position for 8 months and am frustrated. Could you share your thoughts: A. During the past decade the roles of legal administrators have expanded dramatically. Today legal administrators can be found in firms with less than 10 attorneys. In larger firms, as well as many smaller firms, roles have shifted from day-to-day administration to firm wide leadership. A few large firm administrators are functioning as true CEOs. Large firm administrators are devoting more of their time and attention to strategic vs. administrative matters. Recent studies suggest that, in firms with more than 50 attorneys,there is an an uplifting of the role of principal administrators. Roles that have grown dramatically in recent years are strategic planning and practice management. Administrator’s roles in large law firms are no longer restricted to administrative matters.
By John W. Olmstead, MBA, Ph.D, CMC Q. I am a partner in a 14 attorney firm. We have 9 partners and 5 associates. Currently, the firm is governed by all of the partners voting, usually just consensus, on all management decisions. We are thinking about going to a management committee. What suggestions do you have? A. You have reached a size where it is counterproductive for all of the partners to be involved in every management decision. In a recent posting I discussed the difference between management and administration. There should be a role for all partners in the management affairs of the firm (the partnership) but they do not need to be immersed in the day-to-day administrative concerns. Also, to what extent should a management committee be involved in administrivia. Successful firms have a good governance and management structure in place and effectively manage the firm. A major problem facing many law firms is the lack of long range focus and the amount of partner time that is being spent on administrivia issues as opposed to higher level management. A management committee may be the right direction if properly integrated with a governance/management plan for the firm. There is no "best approach" for structuring a law firm. However, keep in mind that there is still a role for the partnership at large and for your office manager or administrator as well. Here are a few ideas to get you started:
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am the managing partner of a 90 attorney firm in Chicago. We have 45 equity partners, 20 non-equity partners, and 25 associates. We have a three member executive committee as well as other committees in place in addition to the managing partner. Five years ago we formulated a strategic plan and have been attempting to successfully implement it since that time. We have had limited success. We don't seem to be able to get our partners "on board" with the actual implementation. I will tell you - I am truly herding cats here. Any ideas on how to get these guys and gals on board? A. Getting your partners on board is always a challenge. The obstacles are almost too numerous to outline. Yet if law firms want to be successful in this turbulent environment they must embrace change and get their partners not only behind new strategies but often they must also be the ones to implement these strategies as well. Managing lawyers in general is like herding cats. But trying to manage "star partners" is a real challenge. They are the "hitters" upon which a firm's future often depends. True star partners are:
  1. Building enduring client relationships
  2. Consistently performing up to their full potential
  3. Putting the firm first and implementing strategic imperatives
Star and other partners in the firm must continually balance their roles as producer, manager, and owner. Often, these roles may be in conflict. Also there are personal strategies and agendas as well. Actually, I don't think they can be managed - but they can be led. There is a difference. But in order to accomplish this the following need to be well designed, in alignment and balanced: Strategy The personalities, emotions and needs of your partners constrain a firm's ability to design and implement strategy. Keep in mind that firm leadership cannot order the troops forward; instead the troops (partners) must essentially vote with their feet to pursue a new strategic direction. Absent a crisis, partners tend to stay on track and support only modest adjustments to strategy. Organizational (Structure, Governance, HR Systems)