Without credit, we won't get out of our morass
Our economy is in the doldrums ... or better said, we're experiencing a depression. Signs abound. From unemployment exceeding 10% and more in some areas, to now thousands of lawyers and staff terminated from the large firms. Who knows how many more there are in small firms ...
One large firm managing partner cited an even more frightening fact: Many lawyers have been given generous severance packages in order to obtain liability waivers/releases and to keep the goodwill of those departing. In other words, they won't feel the impact for 6 to 12 months after leaving. We will see a ripple effect. As bad as it is now, it will get worse .... Unless the federal government is able to pull the rabbit out of the hat.
Our country was built with credit. One of the major thrusts for the Obama administration is to get banks to start lending again. Banks didn't do this with the first half of the major funding passed in the Bush administration. They horded the money to protect their own balance sheet. Will they do it with the second half, and with other bailout handouts?
Today, I had a conversation with a banker. He said that the federal regulators are requiring a higher capital input from the buyer than ever before. "In the old days" (not that long ago), one could buy a building for very little down payment (10%, e.g.), Today, loan to value ratio has to be 30% and in many cases 40 and 50% This is not the way to growth.
With this type of stagnation of credit, one can be assured that the prices for real estate will continue to slide downward with ever greater consequences. And with continued worsening of our finances, law firms and lawyers will be further impact. If we have too many lawyers today for the work available (as discussed in an earlier post), demand will continue to shrink, and additional law firm layoffs will result.
Law firm revenue is decreasing
In this morning's session of large law firm managing partners, a group I've facilitated for more than 10 years, I heard hand-wringing I've never heard before. September 2008 was a watershed benchmark for revenue. Since then, revenues have decreased each month for many of the firms. There are only occasional rays of hope in certain practice areas. There seems to be a significant excess supply of lawyers. This is a significant change. As one lawyer cautioned, though, when the paradigm shifts again (as in the past), there will be an inadequate supply of experienced lawyers available to meet the demand.
How do you see the future both for the profession as well as for your own practice area?
Cycling - A Lesson
.jpg)
Wearing the Bruins logo, I "trucked" up a canyon in the Buellton, CA area last week. It was a great riding week.
Pushing oneself to improve is the essence of our journey here. Helping others is the essence of being a lawyer. And continuing professional education enables us to be better qualified to help others. In one survey after another, staff have said that they make job decisions, all other things being equal, based on the availability of paid education support by the firm for staff as well as for lawyers.
Think about what skills your staff should have to better serve your clients; how can you provide more education to your staff to enhance these skills?
Five cards and three feet
Years ago, a good friend, Denis Campbell, allowed me to interview him. He was an expert marketing director at a major law firm. His topic, titled Five Cards and Three Feet, was the inspiration of this week's vid-cast.
Make a plan -- Trust your plan
I recently returned from a week in the Santa Ynez Valley, CA area. The purpose of my vacation was to ride a bike with 35 others from around the world who were similarly enthusiastic about cycling, plus coaches and staff. The Amgen Tour of California started in Northern California and went south, passing through this area (Solvang, Los Olivos and surrounding communities). I watched the Tour’s time trial held in the valley. It was exciting to see Lance Armstrong and other elite cyclists pitting themselves against the clock to see who was the fastest.
Armstrong finished 12th in the time trial, one of his specialties before retiring 4 years ago. And he finished the overall Tour in 7th. In other words, in two races he's entered (the other last month in Australia), he's finished in the top 10 ... after only a few months of training ... and 2 competitive races! And he is 37 years old, an age past which most cyclists are not seen in competition. What a remarkable achievement.
From a psychological perspective, the man is unhappy at not finishing higher up the ladder, because he has such high expectations of himself. He has to continually be coached to greater success as well as to recognize his progress, to keep reality in place. His plan is working and is on target.
Trust the plan. Work the plan. Good advice for Lance Armstrong, a winner in all respects. And good advice for lawyers wanting to achieve greater success.
Prepare a plan. Work the plan. Trust the plan. Make adjustments where and when appropriate as you progress through the benchmarks of your plan.
Cycling camp
I'm in Cycling Camp this week, a camp run by Chris Carmichael, the former and current coach of Lance Armstrong. This is my 6th year at the camp ... a remarkable experience, run just like the pros.
Today, we rode in the rain and cold, just like the pros did in the Amgen's Tour of California. Being from Southern California, it was particularly hard for me since we have so many warm, sunny days - so few rainy days that I stay in when it rains. Even had to go out and buy rain gear!
But, it's great ... the people are outstanding professionals who understand their customers pleasure in cycling and do everything in their power to address the wants and needs of the customers. Boy, what a lesson lawyers could take from this experience.
Diversity - An amazing story
CBS and Katie Couris brought forward an amazing story about diversity. Perhaps you've seen this clip. It's worth seeing again.
Sour relationship?
When it's time to separate from your spouse, do you think of the cost of doing so? Certainly in community property states, one must. But, a New York firm has gone the extra step in removing the cost of lawyers out of the equation. 60 Minutes Divorce! A brilliant marketing tactic ... and one way to seize an opportunity offered by the sour economy.
Drop in legal revenues predicted
See the ABA Journal that predicts a 20% drop in legal revenues and a 50% drop in associate billings, spurred primarily by technology and client resistance.
There are opportunities in the market. Thinking optimistically may open you to them. Thinking pessimistically certainly will cause you to miss them. How much of today's firm layoffs is because of pessimism, not because of critical analysis of the firm's position and client (and prospective clients) needs? Like much else in the law firm environment, I suspect that this is much of a knee-jerk reaction rather than serious review and strategic planning.
I'm reminded of a statement from one of the recent TED speakers who said pessimism will certainly cause you to retract while optimism will at least allow you to see the opportunities, no matter how few, that are there. Seeing the opportunities is the first step to taking advantage of them.
Opening a Law Office
The California Guide to Opening and Managing a Law Office has just arrived! It's a 600 page power packed treatise that evey sole practitioner should review. It, along with the ABA's Flying Solo, is uniquely designed to raise issues that need answers for success.
Disclaimer: I'm responsible for two of the volume's chapters. There are many contributors and editors who have made this an outstanding reference work.
Client's name is confidential
Heather Milligan provides good advice to both lawyers and marketing folks. Before disclosing the name of a client anywhere, get written consent from the client. Apparently, Quinn Emanuel did not do this ... and is now being sued by the client. They allegedly disclosed what was supposed to be a confidential settlement as part of one of their promotional brochures. A definite "no-no"!
Continue Reading...
Layoff or Buyout
Hogan & Hartson seeks to do something new. They are offering a buyout to the legal secretaries and word processing staff. Their belief is that voluntary action is better, more humane, and yet reaches the same goal of staff reduction as layoffs does. Under the terms of the buyout, the more senior staff selecting the option will receive more compensation. The more recently hired staff will receive less; but the minimum employment must be 5 years.
On the one hand, the firm may be losing significant talent. On the other hand, the more senior is the staff person departing, the higher will be the savings for the firm.
Continue Reading...Economy strikes again
California's Governor is now suing the California Controller. The Gov wants to furlough government employees for 2 days per month, unpaid! He says that will help the cash-strapped state. Funny how top paid folks always look to the lowest paid folks to carry the burden. How about the auto industry flying to Washington to ask for money in corporate jets! Or bank executives getting hundreds of millions of dollars in compensation buyouts ... all the while asking/blaming the ones who least afford cuts to reduce their compensation.
Oh, and the latest! .... California is withholding payment to appointed attorneys in criminal defense matters ... who, among lawyers, gets paid the least, and who, among lawyers, needs the cash flow the most? Appellate lawyers who take on appointments from the State ... Wow! And it's these folks who are now being stretched in receiving payment for services delivered.
New technology tool for flow charts
You still have to have a creative bone in your body ... but it just got easier to create a flow chart and an organization chart. I'm impressed. Check it out.
Law firms making capital calls on partners
Has your firm asked you to pony up money? Have you faced a capital call recently? Are your partner distributions being reduced?
A recent (January 29th) Wall Street Journal article discusses the new phenomenon. Several top law firms are asking their partners to increase their capital accounts and/or are reducing the partner distributions, all in an effort to raise more cash for the law firm. Why? Because the new focus is on reducing law firm debt and increasing liquidity in an era where banks are restricting their loan portfolios, even for "favored customers." With revenues and profits constricting, law firms are wise to review their debt structure.
When the law firm cannot open the bank's loan window, or doesn't want to abide by the many restrictions and covenants that are attached to any bank loan, the firm will look to partners. And, for those partners who are themselves financially thin, they may have to be the one asking the bank for help in order to satisfy the capital call. To get the personal loan needed to fulfill the capital call, the lawyer may have to mortgage his/her home, pledge other assets as additional collateral or even get guarantors.
Solo and small firm lawyers experience the peaks and valleys of compensation as a normal course of business. To survive tough times such as we currently are experiencing, reduced debt and a reservoir of savings is essential to survival.
Perhaps it is not unreasonable to ask yourself the question, "Do I really want to be a law firm partner?" Do the benefits outweigh the risks?
Alltop is watching us
I just found out that Guy Kawasaki's AllTop has recognized us and is watching us!
Life's Lessons from the Superbowl
Mimi Donaldson is a football fan (who knew?), but a major fan! She was glued to the television and, while the game was on, came up with the following life's lessons from the game:
Immediate need:
What do we do for money right now?
Here are 3 tips we can learn from last Sunday's Super Bowl to help us manage in these troubled times.
#1: FOCUS
Ben Roethlisberger, the winning quarterback, extended many plays with tremendous focus and presence of mind. Larry Fitzgerald, a brilliant wide receiver, turned the game around with a long touchdown run because he looked for an opening and never looked back.
Lesson – We need to focus on the value of our product and service, stay calm in the face of doubters, and look for an opening for success -- and never look back!
#2: INTERCEPTION
At the end of the first half, James Harrison intercepted the ball and returned it 100 yards (the length of the field) for a touchdown with the longest run in Super Bowl history. The interception changed the context of the game and shifted the momentum.
Lesson – This is not in the traditional job description of a linebacker (he needed oxygen afterwards). In our businesses, we need to do something different now; attend a meeting you've never attended; look for an opportunity in a non-traditional place.
#3 – WHEN THE WHISTLE BLOWS, THE PLAY IS OVER!
Santonio Holmes caught the winning touchdown. But he had dropped a sure touchdown pass just moments before. He begged his quarterback for one more chance – telling him, “Please let me get this game for you.” Each man respected the finality of the play before. They did not allow it to affect the next play.
Lesson – We need to shake off our past mistakes and the alarming economic forecast, and recognize that each moment is a new moment of now.
The Wage Gap Struggle for Women Lawyers
Anna T. Collins, Esq. (Portland, Maine) writes an article in The GlassHammer about the gap in compensation between men and women in the legal profession. Her issues are well-taken. See below for quotes from our author and coach, Ed Poll.
Continue Reading...New YouTube release for LawBiz
FOR IMMEDIATE RELEASE
LAW FIRM MANAGEMENT EXPERT TO RELEASE NEW YOUTUBE SERIES
Ed Poll Uses Technology to Reach Out
VENICE, CA. February 4, 2009 – Nationally recognized law firm management expert Ed Poll, JD, MBA, CMC, announced today the launch of his brand new YouTube Channel, LawBizGuide. Beginning next Tuesday, February 10, a new video about important and challenging topics surrounding the business of law will premiere each week. Next Tuesday, for example, Poll will discuss lessons we can learn from the recent collapse of law firm giant Heller Ehrman.
“These new videos are an exciting new platform for me,” says Poll, “I hope this opportunity will allow me to broaden my audience so that I can provide insightful information to a whole new group of people.”
In addition to his new YouTube Channel, Poll has also started to use Twitter as a way to reach out to the cybersphere. “I must admit – so much exposure over the Internet is a bit scary, but I really think these media are important tools that will let me provide more value to more people,” he commented. You can follow Poll at twitter.com/lawbiz.
Interview contact info
------
Ed Poll, J.D., M.B.A., CMC, is a nationally recognized expert in law practice management. He helps attorneys and law firms increase their profitability consulting with them on issues of internal operations, business development, and financial matters. Poll brings his clients a solid background in both law and business. He has 25 years experience as a practicing attorney and has also served as CEO and COO for several manufacturing businesses. In 1990, he founded LawBiz® Management Company and is now focused on coaching, speaking, and training law firms.
Poll is the author of numerous publications that have become the definitive works in the legal field, including: Law Firm Fees & Compensation: Value and Growth Dynamics (LawBiz© Management Co. 2008), Attorney & Law Firm Guide to The Business of Law: Planning and Operating for Survival and Growth, 2nd ed. (American Bar Assoc. 2003); The Profitable Law Office Handbook: Attorney’s Guide to Successful Business Planning (LawBiz® Management Co. 1996); Secrets of the Business of Law®: Successful Practices for Increasing Your Profits! (LawBiz® Management Co. 1998)
###
Printed blog
While in San Francisco, I was given "The Printed Blog." Literally, hard copy publication taken from the electronic world. If blogs can report on the hard copy world, I suppose "turn-around is fair play."
And, there must be some substance behind the group. It is published in Chicago and distributed in San Francisco. Who knows where else?
