Law Practice Management Asked and Answered Blog
Category: Starting a Law Practice
Jan 24, 2012
Over the last two weeks I responded to a question concerning starting a new law practice and I outlined the first to phases of start-up. Eventually, you must address and face Phase III.
Phase III – Partnership – Internal/Other Firm
Eventually the question of partnership arises – weather sooner based upon the need or desire to transition an associate into a partnership or to add a practice area by acquiring a lateral partner with his/her book of business. Maybe you are thinking about merging with another firm. Or maybe you have been solo or a sole owner for your entire career and are now contemplating retirement and are looking for a succession/exit strategy and now must either bring in a partner, merge with another firm, or sell your practice. Partnership with another attorney creates another set of interpersonal dynamics and another set of skills that will need to be developed at this stage of your practice.
Phase III Survival Tips
1. Partnership is like a marriage. You must marry the right person. Most partnerships that fail do so as a result of partnering up with the wrong partners. Compatibility is critical. Consider:
a. Long term goals of both parties
b. Work ethic computability
c. Common interests
d. Money and compensation
2. Thinking of merging? Research indicates that 1/3 to 1/2 of all mergers fail to meet expectations due to cultural misalignment and personnel problems. Don't try to use a merger or acquisition as a life raft, for the wrong reasons and as your sole strategy. Successful mergers are based upon a sound integrated business strategy that creates synergy and a combined firm that produces greater client value than either firm can produced alone. Right reasons for merging might include:
a. Improve the firm's competitive position. .Increase specialization – obtain additional expertise.
b. Expand into other geographic regions.
c. Add new practice areas.
d. Increase or decrease client base.
e. Improve and/or solidify client relationships.
3. I would start by thinking about your reasons for wanting to merge and your objectives. Ask yourself the following questions?
a. Do you want to practice in a large firm? If not, what is the largest firm that you would want to practice in?
b. What is driving the desire to merge?
c. If the desire to merge is being driven by a desire to retreat from internal problems – what have you done to address these issues internally?
d. Is your name being part of the firm name important to you?
e. What are your expectations and objectives for a merger?
f. What are you looking from a merger partner?
g. Make sure that you look for a complimentary fit. If you are weak in firm leadership, management and administration – look for a partner that is strong in these areas. Strong leadership, management, and administration may be hard to find in a firm under 25 attorneys.
Are you ready for the challenge?
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John W. Olmstead, MBA, Ph.D, CMC
Jan 17, 2012
Last week I responded to a question concerning starting a new law practice and I outlined the first phase of start-up. Eventually, you must address and face Phase II.
If you are successful in Phase I you will eventually need help whether it be administrative, paralegal, or another attorney. Now you must manage others as well as yourself. More office space will be required – especially if you are currently in a home or virtual office. A new set of skill sets (people skills) is now required.
Some Lawyers Never Develop the Skills Needed or Desire to Go to This Level and Firm Growth is Restricted as a Result.
I refer to this phase as Sole Owner Phase. I have client law firms in this phase than consist of an attorney owner, a handful of employed associates, paralegals, and staff. These firms may have 3 to 4 people or ten or more. I have sole owner law firms with over 100 employed attorneys and staff.
Phase II – Taking the Practice to the Next Level – New Challenges – New Skills Required
1. Additional People
a. Know what to look for
b. Know how to compensate attorneys and staff
c. Decide whether you are looking for long term vs. short term hires and relationships
2. Develop Skill Sets in the Following Areas – Managing Others – Finding, Managing, Motivating, Training and Retaining Talent
a. Hiring and Firing
b. HR Function
c. Devote time to managing others
d. Delegation of work
e. Supervision of work
3. Use the Following HR Tools and Processes
a. Job Descriptions
b. Performance Reviews and Evaluations
c. Office Policies and Procedures
d. Office Meetings (Meeting Management)
e. Personnel Records
f. Payroll and Reporting
g. Salary Administration
Key Challenge in Phase II – Knowing When You Have the Business and You Are Ready for This Phase
John W. Olmstead, MBA, Ph.D, CMC
Jan 10, 2012
Question:
I am an associate in a 6 attorney firm in Cleveland, Ohio. I have been a practicing attorney for four years and have been with my present firm since law school. I am considering starting my own firm. What is your advice for someone like me starting up a practice on a shoestring?
Response:
I receive at least ten calls a week from attorneys that are in solo practice or are the sole owner of a small law firm with similar concerns and frustrations. However, there tends to be different needs and challenges depending which phase of development the firm is in. Here are a few survival tips for the first phase:
In this phase it is all about you. More than likely initially you will not have office staff. If you are a new attorney right out of law school you must learn your trade and develop competencies in lawyering and client service. Your first priority will be to supplement your law school education with nuts and bolts practice skills – and you will have to do it quickly. Since you won’t have a senior partner in your firm to mentor and train you – you will have to reach out to resources outside of your firm. You will not have an accountability partner in your firm. Your second priority will be getting clients. You will have to actively marketing and promote yourself and your practice. Funds may be limited so your largest marketing investment will be your non-billable time devoted to marketing and client development activities. Finally, your third priority will be getting paid by your clients. Self discipline and exceptional time management and time keeping skills are critical success factors.
Phase I Survival Tips
1. Create a business plan (strategic plan)
Create a plan before even starting the practice even if it is a one page plan. This will serve as a roadmap for your practice. See Helen Gunnarsson’s article in November 2011 Illinois Bar Journal.
2. Setup your practice and office
This includes everything from the selecting a suitable name and legal form for your practice; setting up your office whether it be a home or virtual office, a space share arrangement, or lease office space; acquisition of office systems, etc. (I have a start-up checklist available. E-mail me if you would like a copy.)
3. Develop competencies in law and business
a. Find an experience attorney to serve as a mentor. The ISBA Mentor Center has mentor program available for members.
b. Consider a business coach
c. Take all the CLE you can
4. Getting Clients
Time must be developed to business development. To be successful in private practice attorneys must be finders (originate new business), minders (manage client matters and relationships) and grinders (worker bees that work on client matters, provide services, and generate fees). You must manage and balance your time in a way that you cover all three of these bases.
5. Client Development/Marketing
a. Actively network with the general public, other attorneys, and other potential referral sources
b. Ask for referrals
c. Implement a first class website that demonstrates expertise
d. Implement a contact database
e. Develop a personal marketing plan (contact plan)
6. Getting Paid
a. Use engagement letters and fee agreements
b. Ask for retainers and replenish
c. Accept credit cards
d. Establish client selection criteria
7. Financial Management – Work the Books
Learn key metrics and “red flags” for your practice area, set goals, and measure your performance against these goals. Take corrective course actions as needed. Actively manage your cash flow. Remember – profit as reflected on the income statement and cash flow are not the same.
8. Manage Your Self – Self Discipline and Accountability
9. Partner with Other Solos
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John W. Olmstead, MBA, Ph.D, CMC
