Conference You Must Attend - Or Fall Behind
The Business of Lawâ is continuously changing— from fee structures, to marketing strategies, to client preferences. In today’s economic climate, law firms have no way to catch up once they fall behind.
- The Outlook for Mid-Sized Firms
- Trends and Practices in the Future of the Legal Profession
- Alternative Fees
- Succession Planning and Business Survival
- Marketing in the
- And much more…
There will be a buffet style lunch and a post-event reception, allowing the chance to network with other leaders in the legal profession. Also included in your registration will be 4 webcasts and membership in the LawBizÒ Forum, a community for lawyers with on-going networking and dialogue on challenges we all face in the management of law practice.
Don’t miss this opportunity! The event takes place in
Isn’t it time you took The Business of LawÒ into your own hands? Register for the 2nd Annual Midwestern Law Firm Management Conference today!
Can’t wait to see you there!
Big Firm Salary Model Broken
Is the big firm salary model broken? That's the topic addressed by Michelle Lore in the Minnesota Lawyer. Associate pay is only one of many areas of cuts in expenses that law firms are reviewing. In our Managing Partners Roundtable, just yesterday, large law firm managing partners said that they are now "lean." They have cut all the "fat" or excess expenses they can, some of which have become evident in 2009 and others which will show up first in 2010 results.
What will the law firm model of 2010 look like? Or will law firms ignore the lessons of 2007-2008 and seek to go back to "normal" as the economy turns around? "Head in the sand" approach usually doesn't work for long term success.
Why sell your law practice?
Lawyers, ready to retire, must consider the value of their law practice as an asset that can be sold ... With 401 Ks becoming 101 Ks (or less), the revenue from the sale of one's law practice may provide the revenue stream needed for retirement.
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?
Expense reduction or investment advance
One of my law firm clients has a lawyer who is what I would call a "reluctant marketer." This lawyer is a great lawyer, a "worker-bee," but not a great rainmaker. The managing partner considered engaging a coach to help the lawyer improve his skills within his comfort zone. Why is this important? Because the amount of work for this lawyer that is being internally generated is lessening. In other words, this lawyer has to begin helping himself a bit.
Parenthetically, I saw a recent survey that shows the amount of hours being worked by lawyers, generally, is coming down. But more on that later.
But, the management committee has come back and said that "costs" are frozen. No more spending. Is this a backward way to look at the situation? What about looking at expenditures from the ROI perspective? If you buy a new piece of equipment and it pays for itself in a couple of months, wouldn't you move forward? I think you should. If a coach or marketing director can help the lawyer increase his/her revenue because of improved rainmaking efforts, shouldn't you invest in the process?
And what would this mean to the other lawyers? A reduction in their take home pay? When you're already earning hundreds of thousands of dollars, a collective reduction by only a few dollars in sdthe short run for an ROI building expenditure may be worthwhile.
Bankrupt lawyers
Bankruptcy will be an important practice area for the legal profession, obviously, in 2009 and 2010, as we continue to move through the major upheaval in our economy. And our law firms will benefit.
However, one aspect I did not expect was that lawyers and law firms will likewise face economic hardships … And I'm not addressing the obvious issues coming from the collapse (for other reasons of the large firms such as Heller, et al.).
I'm addressing the more mundane, the traditional, average lawyer, the lawyers that make up the bulk of our profession. When these lawyers are in trouble, the entire profession needs to wake up and pay attention.
I was just contacted by an attorney asking me to value a law firm for purposes of the lawyer’s personal bankruptcy. His law practice is an asset of his personal estate. Times are hard when the helpers need help themselves.
Even Big Solo can fail
Failure can be experienced by small firms as well as large firms. In the case of Dreier, the real shame is not that Dreier failed - he committed fraud and there is nothing new about fraudulent conduct causing failure ... and even jail. The sad part of this tale is what happens to other lawyers working in the Dreier firm.
What is to be learned here involves the impact on other lawyers who worked in the firm. Assume for the moment that every lawyer new to Dreier did his/her due diligence to learn about Dreier's practice, his administrative polices (including malpractice coverage), and other factors of the practice in order to decide whether the lawyer wanted to join Dreier as an associate.
Now, these lawyers focus on the practice, leaving all else to Dreier. There was no follow up. For example, the associates didn't know that Dreier let his malpractice insurance coverage lapse ... which now puts all these other lawyers at risk when clients sue the "firm" and its members who worked on their matters.
Bottom line moral: What are you, the associate, doing to make sure your firm's principal is running the practice properly ... sufficiently well that your professional and personal liability will be protected? The fact that you don't "own" the practice does not mean you have the luxury of ignoring the business principles needed to protect yourself and grow your own career.
Litigation is not the answer - usually
Forty years after the Pueblo was captured by North Korea, the sailors received judgment for damages. This merely gives the sailors a piece of paper. Go collect! Not, that's the rub. And ask the Goldman family how much of their 33 million dollar judgment they've received from the assets of O.J. Simpson.
In the beginning of 2009, we need to hearken back to the words of Rodney King, "Can't we all just get along?" The obvious answer is "no." But, litigation may not be the best answer either; it's certainly not the only answer.
Law firms, even the major law firms (like Heller used to be), whose litigation work makes up more than 50% of their revenue, will need to focus on greater diversity in their offerings if they want to protect their future. More than 10% in any one area always puts a business at risk. Sometimes the risk pays well; sometimes it doesn't. Just ask the lawyers who were at Heller about the high times and then the implosion.
Are lawyers guaranteed a profit?
I like the thinking of Patrick J. Lamb who, in August 2008, said that a lawyer can negotiate a fixed fee even in litigation. In other words, he contests the old rubric that since one doesn’t know what the “other side” will do in litigation, fixing a fee is not possible. He also suggests that creating a budget for litigation doesn’t guarantee a profit, just that the lawyer will not bill more than the budget.
But, the point that Mr. Lamb raises is that no business is guaranteed a profit. Yet, ...
... lawyers tend to view themselves differently. They seem to feel that an hourly fee will guarantee their profit. Of course, they would have to know their cost structure; few do. They would have to collect the fee; more are having difficulty. And few produce a realization rate of 95% or better.
Recently, I received a phone call from a person who wanted to buy a law practice. He visited my web site and saw several law practices I represent or have represented that are for sale. His thinking was that he could buy the practices at a low price, have the seller finance the sale and thereby earn the kind of money to which he would be entitled once he passed the bar exam. I cringed when I heard the word, “entitled!” That is the underpinning economic value of far too many people in our country today ... If the current economic crisis does nothing, it may knock that value out from under us ... and that would be good.
I believe that is what Patrick Lamb was getting at ... that lawyers feel entitled to earn a profit. Yet, he fails to acknowledge the frightening statistic that more than 50% of the lawyers in a California study (and in NY and by extension most other places as well) earn less than $100,000...and more than 25% earn less than $50,000 per year. Many people, even many lawyers, would give a great deal to earn these sums, no doubt. But, after so many years of schooling and foregone opportunity revenue, it doesn’t sound like much. And certainly doesn’t allow one to live lavishly.
Running a practice using the principles of The Business of Law® will guarantee that the lawyer will have the best chance of making a profit ... but the principles must first be implemented to attain and maintain profitability!
