Best Practice: 16 characteristics of a successful contingency fee law firm – a guide for new managing partners
Asked and Answered
By John W. Olmstead, MBA, Ph.D, CMC
Q. I am a newly appointed managing partner for an 18-attorney firm in Dayton, Ohio. We are an employment law litigation firm that represents plaintiffs on a contingency fee basis. We have been in business for five years and are facing severe cash flow and profitability challenges primarily due to lackluster contingency fee outcomes. Do you have any guidelines or suggestions as to what we should aim for?
A. In general I find that successful contingency fee law firms:
1. Are sustainable over the long term.
2. Are disciplined, have order and common vision, and manage the firm like a business.
3. Have long-term talented people that are passionate and team players.
4. Are organized and have structure.
5. Have the right people on the bus and in the right seats.
6. Meet on a structured basis.
7. Have a long-range plan.
8. Have a budget.
9. Have fee goals for each producer.
10. Have a marketing plan.
11. Are consistently profitable.
12. Have solid cash flow.
13. Use metrics to manage the firm.
14. Are financially stable.
15. Have a succession plan.
16. Are diversified, both in practice areas and in case portfolio.
I would use this as an initial performance checklist. You may need to examine your case portfolio and your contingency fee case risk profile and look for ways to diversify your case mix.
John W. Olmstead, MBA, Ph.D, CMC, (www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics and author of The Lawyers Guide to Succession Planning published by the ABA. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at firstname.lastname@example.org.