Cash reigns supreme
In the May 12th edition of WSJ, Money & Investing Section, the headline says it all: "Cash Flow Reigns Once Again." The article suggests that investment decisions are now being made based on the cash flow of the company whose stock will be purchased.
What a novel concept! In the posting of another blogger, the suggestion was made that only accrual accounting tells an accurate picture of a law firm's financial position. Yet, one can find many businesses that have good accrual financial statements but fail because they lack cash flow to sustain their business. The reverse is true. Businesses can show losses in the accrual system but have great cash flow -- they collect their sales and receivables very quickly -- and survive for quite a long time.
Possibly the first national law firm grew to its prominent position many years ago because of the almost fanatical focus on collecting accounts receivable. Their realization rate was very high. It is essential for lawyers today to focus on this metric to be successful.
Profits are essential, but cash is and has always been the key ingredientt for successful businesses and law practices. It is still true today ... and, as the article suggests, cash reserves will enable the business to continue even through a down economy.
Self-esteem can be built
Paraphrasing Alan Weiss, self-esteem is the single most important challenge facing most people. Those of you who know me, know that cycling is my avocation, my passion. In connection with this, I've just finished reading How Lance Does It by Brad Kearns.
Of particular interest to me is how Lance Armstrong has been able to focus on his journey, not the outcomes, and thereby maintain his confidence and his self-esteem. Not that he would welcome failure, but that failure was not a factor if he prepared himself and his environment for his best effort.
Several quotes I think are particularly worth noting, at least from my perspective:
"Don't take anything personally. Nothing others do is because of you. What others say is a projection of their own reality. When you are immune to the opinions and actions of others, you won't be the victim of needless suffering." (by Don Miguel Ruiz in his The Four Agreements)
Lawyers cannot put their thumb on the scale when weighing meat
The rules of professional conduct, when billing by the hour, prevent a lawyer from billing two clients for the same minute. Thus, you cannot bill one client for travel time and another client for reviewing documents, etc., while en route on the plane. Or, you cannot bill one client for the time waiting in court until his/her case is called and bill another client for other work during that same time.
How about billing clients for time not spent at all doing their work? As a young lawyer, when advised by my mentor, to be liberal with my time sheets, I took this to mean "put my thumb on the scale" when weighing meat in the butcher store. The ABA Journal tells us about a lawyer who did something similar.
Client Relations in a Changing World
I'm proud to announce that I will be one of two speakers at the prestigious Bernard E. Witkin 10th Annual Memorial Symposium on May 20th in Oakland, CA. See the announcement ...
Lawyers can't sell
The telephone is still the best, least expensive marketing and communication tool available to us.
This week, in consecutive phone calls, I was hired for two separate, large engagements. I’m excited about both of them. And in the process, the teachings of my father many years ago came to mind. Stay by the phone. When the phone rings, and you respond, you will be hired. But, if you don’t respond, you won’t be hired. This is similar to the adage that if you don’t swing the bat, you can’t hit the ball. Marketing efforts are designed to make people aware of us and to encourage them to call.
A corollary for me was that I can’t “sell” anything to anyone. I can only hope to make people aware of my skills and availability. If they have a need, and they know who I am, they will contact me to discuss whether my skills match their needs. It is always the buyer who makes the decision, not the seller. With this mind set, then, the “seller’s” obligation is to educate the buyer about the value of the services provided and the benefits to be received ... not the “features” being offered by the seller.
These are lessons learned early in my career that I believe still resonate today.
Strategic planning is key to success
Adam Smith echoes my philosophy -- and discusses the importance of the intake procedure. Collecting Your Fee from Intake to Invoice further echoes the importance of the intake process. I maintain that you can tell at the beginning, from the intake interview, whether you will get paid at the end!
Lawyers should go where the business is
It's time to stop focusing on real estate, construction, banks, mortgage companies and airlines, according to Larry Bodine. Go where the money is: energy, steel, industrial metals, coal companies and railroads. See the 10 Best Performing Industries on MarketWatch.com.
This reminds me of the book written by Harvey MacKay, Dig Your Well Before You're Thirsty or the phrase "... fish where the bass are..."In other words, provide services that your clients need ... If your skills are no longer in hot demand, modify your practice area to adapt your skills to the needs of the clients. If you're in the larger firms, and are practicing real estate law currently, you might be better advised to learn bankruptcy or workouts to adapt your current skills to the needs of the clients. If you're in a small firm or sole practice, this might be more difficult to accomplish with less personal economic impact, but still possible.
The key is to either provide services the market needs ... or to have the capital to sustain the wait until the market comes back to your skills.
Law Firm Fees & Compensation
Michael Brychel, Senior Legal Auditor at Stuart Maue, headquartered in
He says, "For those who accept the premise that “law firms ARE businesses – get over it” this book will be an effective jump start to incorporating that perspective into useful practice."
Legal fees - Value is in the eyes of the beholder
Price and value are clearly not the same when it comes to legal fees. While both are time sensitive (as of any given moment in time), the former generally is set by the seller/lawyer and the latter is generally perceived by the buyer/client. Price can be value, in my opinion, when the client is involved in the setting of the legal fee and price is determined by the value perceived by the client. Some folks call this "value billing."
