Event: Texas Tech University School of Law, Planning to Conquer the Real World of Private Practice (Feb. 24, 2007)
Planning to Conquer the Real World of Private Practice
Panelist, Texas Tech University School of Law
Lubbock, Texas
February 24, 2007
Post Date: February 24, 2007
Event: If Your Firm Doesn’t Have a Website, It Doesn’t Exist (Feb. 22, 2007)
If Your Firm Doesn’t Have a Website, It Doesn’t Exist
Presentation with Luke Gilman
Houston Bar Association, Law Practice Management Section
February 22, 2007
For more details contact Scot Dixon, 713-758-3373, or sdixon@velaw.com
Post Date: February 22, 2007
Trimming Expenses to Fatten the Kitty
Recently I have been getting a number of questions about reducing overhead in law firms, so this article will give you some tips. For a strong first step, get a clear picture of the existing expenses, and determine which of them are necessities, and which are luxuries.
Review and Investigate the Firm Financial Reports
Do you review your firm’s monthly financial reports? Do you really know what the specific numbers on your financial statement represent? Are there some categories that fluctuate pretty dramatically from month to month or year to year? If so, that might indicate some discretionary spending items, and it may be worthwhile to review the expenditures represented by those numbers. It may be appropriate to develop some approval procedures within those categories. Establish a budget and follow-up on over-expenditures to get a real handle on expenses.
By investigating the facts underlying financial reports, lawyers I know have discovered seriously overdue accounts receivable, employees using firm services and accounts for personal purposes, courier services used daily for routine non-urgent transmissions, unnecessary equipment service contracts for nonessential or infrequently used equipment, infrequently used season tickets, and downright embezzlement. (Lawyers are rather common victims of embezzlement.) Some of those expenditures sound deminimus, but with frequent repetition, they add up.
Take Advantage of Technology to Increase Efficiency
Don’t be fooled into thinking that you are stuck with the expenses in categories that don’t fluctuate much, however. Historically, there wasn’t a lot a firm could do to reduce fixed expenses such as rent or staff and associate salaries. Today, however, with the benefit of technology and lawyers and staff who value work/life balance, creative law firm managers have new options. Even though firms complain about the never-ending capital expenditures required by evolving technology, usually equipment and software are a lot cheaper than employees. Further, firms with tech-savvy lawyers and staff tend to have an advantage. They can produce their work quicker and cheaper, making them more attractive to clients. Efficiency can open the door to alternative billing methods that provide a premium to the firm, while making clients happy. To learn more about the technology available to law firms and how to use it, consider attending the video replay of the Bar Tech conference sponsored by the Computer and Technology Section of the State Bar and TexasBarCLE in Houston on December 13, 2006. For more information, go to www.texasbarcle.com/CLE/AABuy1.asp?sProductType=EV&lID=6125
Use Virtual and Contract Lawyers and Staff
Today firms can reduce lease expense without downgrading the quality or location of their offices. They hire virtual associates or staff who don’t actually have an office on premises. Virtual employees work from home primarily or at clients’ offices and connect to the firm’s computers remotely. Law firms can also follow the lead of investment banking firms and consulting firms that use an office “hoteling” concept for employees who travel extensively. The firm has several offices with appropriate support staff assigned to them, which a virtual associate can reserve. Lawyers who occasionally have a need to work on premises, for a closing for example, reserve the use of the office like they would reserve a conference room. The firm can thus accommodate four associates while leasing space for only one office. Often employees that desire flexibility or reduced hours in their schedule for family or lifestyle reasons love the virtual arrangement. Similar arrangements can also help the firm staff up in peak periods using contract lawyers, without incurring ongoing obligations or expenses for benefits and employment taxes. To get some ideas about how to operate virtually, check out the May 2006 issue of The Practice Manager at http://www.texasbarcle.com/CLE/site/LawOfficeMgmtNewsletters/06_05_08.pdf
Cut the Staff per Lawyer Ratio
Many firms now assign three lawyers to an administrative assistant. They expect lawyers to efficiently create rough drafts of documents on their own, leaving the formatting and final touches to the admin. The lawyers usually maintain their own calendar using Outlook or other software that permits appointment setting with a minimum of phone or email tag. They answer their own phones or let them go to voicemail.
Reduce Lease Space by Going Digital
Many firms have practically eliminated lease space for libraries and document storage by going digital. They retain only the executed copies of agreements and scan all drafts, correspondence, pleadings, notes and other routine papers. They transmit documents to clients and other counsel by email, avoiding the expense involved in stationery, postage or courier fees, as well as the staff costs for copying, filing and addressing envelopes.
Address Turnover Problems
Staff and lawyer turnover creates a huge drain on most law firm coffers. In large firms, the cost of a departing lawyer has been estimated to be $200,000. When a lawyer leaves, the firm loses a significant investment. The firm has made out of pocket expenditures for hiring bonuses, moving costs, firm travel costs to interview at law schools or for the candidates to interview at the firm office, recruiting functions, wining and dining and sometimes legal recruiter search fees. Additionally, the firm lost the billing time of productive lawyers for reviewing resumes, traveling to law schools, interviewing candidates, recruiting, providing orientation and training, and supervising subordinates. The firm incurs similar, though less extensive costs and losses when staff person leaves. To reduce these kinds of expenses, firms can use assessments to better match the candidates to the positions, and train lawyers and management level staff how to be more effective managers. Many lawyers are rather oblivious to the impact they have on those they supervise. Firms can use 360 degree feedback surveys to help both the firm and the lawyer get a better picture of how effective their interactions are with subordinates. It has been said that employees don’t leave jobs. They leave bosses.
Seek Employee Input on Cost-Cutting Measures
Employees can provide excellent ideas to the firm on cost-cutting measures. From the ground level they can see wasted resources that the firm management can’t see. Many of them carelessly or even knowingly waste firm resources because they do not have an incentive or motivation to conserve firm assets. Consider awarding a monthly or quarterly prize to the employee who makes the best suggestion for improving efficiency or cutting costs. Make the award ceremony fun, and encourage all office members to attend. The winner might be announced over coffee and bagels in the morning for a large firm or lunch for a small firm. The prizes might include an acknowledgment certificate and a gift certificate to a popular restaurant, the use of the firm’s coveted season tickets, a housecleaning or handyman service for a day, tickets to a family entertainment venue, an MP3 player, or other items the staff would enjoy using. While you may spend a little on the prize and the event, you will gain more motivated employees who take some ownership in the firm’s success, in addition to ongoing cost savings. Further, employees are much more likely to comply with cost saving procedures that they helped design.
These are just a few ideas for reeling in expenses that firms and legal departments have used as they experience competitive pressure to keep legal costs down. What has worked for your firm?
Post Date: February 22, 2007
A Year by Design, or by Default?
A bright and talented lawyer lamented: “Where did all the money go?” He was a charismatic guy and had attracted a few good cases. Because he was a skilled lawyer, he enjoyed some success. However, when profits began to dwindle, at first he didn’t notice. Then he didn’t know how to adjust his strategy, because he didn’t really have one.
In the business world, companies can’t get financing if they don’t have a business plan. That’s because bankers know that owners who run their businesses by the seat of the pants are more likely to fail. A business plan doesn’t guarantee success, but in the process of creating one, we establish goals. We consider ways to achieve those goals and how to address the obstacles to achieving them. We set a clear intention about how we want to spend our resources of time, money and talent. That clarity of intention helps us make better decisions when opportunities or obstacles arise. Sometimes during planning we have thought through the consequences of various options in advance. Other times we can ask ourselves, “Is this opportunity more likely to move me toward or away from my goal?”
I saw that the lamenting lawyer made quite a few impulsive and unwise decisions. He didn’t have a plan or goals to measure the decisions against. For example, he spent a significant amount of money on computer technology that he never learned to use. He lacked interest in it. If he had set even general goals for how he wanted to use his time, talents and money, a review of them could have informed his decision before he wasted his money. He could have been reminded of the things he really wanted to spend his time on, instead of learning about computer technology. Or he could have asked himself whether that technology would really get him closer to his goals, and if so, what further steps he would need to take.
These goal-setting principles apply to other areas of our lives, as well. If we don’t operate by design, we get what comes to us by default. We default to old bad habits when we lose sight of what doing things differently will bring us. We fail to notice opportunities because we don’t have a goal in mind that they will serve. If you have ever bought a new car, you have probably had the experience of suddenly seeing cars everywhere just like yours, that you didn’t notice before. Like those cars, opportunities are all around us that we don’t notice until we set an intention that relates to them.
What kind of intentions do you have for this year? Write them down, and give some thought to what it will take to achieve them. Define what you want to achieve in your law practice, in your relationships, in your physical health, in fun and recreation, in personal growth and in every other area that is important to you. Even if you don’t know how to achieve your goals, write down what you want. Once you commit to specific intentions, you may be surprised at how opportunities to fulfill them show up. If you don’t have enough commitment to your goal to write it down, you aren’t really setting an intention.
For some help in setting and achieving your goals, you can take a look at my article in the January 2005 issue of The Practice Manager archives entitled “Secrets to Actually Accomplishing Your Goals” or read the article on my website. Another resource is http://www.bestyearyet.com/. Click on ”BYYO” at the very top of the page to get to a free online program for setting goals. For help in designing a business plan for your firm, the ABA Law Practice Management Section publishes a software package called “The Lawyer’s Guide to Creating a Business Plan.” You can order it at http://www.ababooks.org/ or purchase it at a discount through the Law Practice Management Program of the State Bar of Texas by calling 1-800-204-2222 x1300. Of course, you can always engage a lawyer-coach to help you get clear about what you want and to design a plan to achieve it.
Authors across generations have extolled the power of committing to an intention. Henry David Thoreau wrote about it in Walden over 150 years ago. Dr. Wayne Dyer wrote a 2004 bestseller called The Power of Intention. One of my favorite quotes about committing to intention was written by W. H. Murray in 1951 in The Scottish Himalayan Expedition. Murray wrote:
“Until one is committed there is hesitancy, the chance to draw back, always ineffectiveness. Concerning all acts of initiative (and creation) there is one elementary truth, the ignorance of which kills countless ideas and splendid plans:
That the moment one definitely commits oneself then Providence moves too. All sort of things occur to help one that would never otherwise have occurred. A whole stream of events issues from the decision, raising in one’s favor all manner of unforeseen incidents and meetings and material assistance which no man could have dreamed would have come his way. I have learned a deep respect for one of Goethe’s couplets:
“Whatever you can do, or dream you can, begin it. Boldness has genius, power and magic in it.”
Nowwill your year be one of design or default?
Post Date: February 19, 2007