Granted, in Illinois, we are unlikely to suffer the rampage of a Tsunami or a Katrina, but tornadoes are common to Illinois, potential for fires is a part of life, and terrorists may strike anywhere—in fact, your own personal terrorist could be a disenchanted client seeking revenge. What disaster plans do you have?
It is a cliché to say our staff is our most-valuable asset, but it is true. What plans are in place to preserve and protect staff? Consider that hotels have evacuation plans in each room, lighted exit signs with battery backups, and smoke detectors. Do you have such evacuation plans or emergency devices?
Every office should have a disaster plan. Such a plan should include, but not be limited to:
1. A chain of command: If any member of the office becomes aware of a threat or danger, there should be, in place, a plan as to who is notified first, and who then has responsibility for designating appropriate action and notifying others.
2. In the event an emergency is determined, each staff member should have predetermined responsibilities, e.g.:
A. The receptionist should be instructed and trained in helping to evacuate clients, if necessary, and if he or she retains the office calendar, should have been instructed in how to secure it—if time and circumstances permit—or to evacuate with the documents, to the extent possible.
B. The bookkeeper should be instructed what records to file or take, including accounting disks or accounting records, and in the event of an immediate emergency, do you try to make and grab a backup or instruct staff to just “grab the computer”?
C. The secretaries and other support staff should have been instructed, if time is available, what to try to backup, what files should be put into secure file cabinets, or whether they evacuate with them.
D. Between the attorneys, associates, and paralegals, is there a clear designated chain of command, and once an emergency is declared, is there in place methods by which other office personnel is notified?
Much of the foregoing may seem trite, but the aftermath of 911, i.e., the total lack of coordination, confusion, and planning should be a wakeup call to all of us.
Specific incidents that may warrant a particular action:
1. In the event of a tornado warning:
A. Attorneys and staff should place papers and documents, to the extent possible, in filing cabinets, save all “work in progress” on computers, and turn off all computers.
B. Bookkeepers: All currency, cash, or checks be placed in a locked file or drawer, accounting records, if out, should be placed in secure filing cabinets. Any removable backups should be placed in a vault or fireproof cabinet. The computers should be backed up and turned off.
C. All drapes should be closed.
D. There should be designated areas within the office to seek shelter. (Suggested places of relative safety: Go to the basement. If none is available, move to small interior rooms or hallways on the lowest floor, and if available, get under a sturdy piece of furniture. To the extent possible, there should be as many walls as possible between you and the outside. In all events, stay away from windows).
E. After a tornado has passed, typical precautions and instruction should prevail: Watch out for downed power lines; stay away from damaged areas; don’t try to move anyone seriously injured; do not turn on any appliances or switches, if a gas smell is present.
2. Flooding: Though flooding is seemingly more of a geographic threat, i.e., nearness to levees and streams, in recent years, areas that should have seemingly been flood free have been affected. If the threat or reality of a flood is present, consider moving records, files, and furniture to a second floor, or, in the unlikely event a flood would exceed the level of the office desks, move files from lower drawers to desktops or file tops. In event of a flood, make computer backups, secure backup copies, and turn off computers, gas, and electricity.
3. Fire: Though it seems obvious that if a member of the office actually sees “fire,” they should call the fire department, it is suggested that a better practice—time permitting is to let the senior office member or office manager make the call, just to be certain someone calls. If someone other than the senior office member or office manager places the call, then whoever has made the call should immediately notify the senior member of the office or the office manager, and he or she should then notify and instruct all other personnel. Concurrently, all clients should be instructed as to evacuation. Time permitting, bookkeepers and secretarial staff should be instructed as to the disposition of work on their desks and computer files they might have. To the extent possible, and again—time permitting—a tarp or waterproof cover should be placed over the office server, and the server should be turned off.
How to recover
It goes without saying that before a disaster strikes, you should have an off-site backup of all computer and sensitive data. If you do not, you are probably watching “the Titanic,” for the third or fourth time thinking, “Maybe this time they’ll miss the iceberg.”
To recover from any disaster typically takes a real knowledge of where you were before it happened. As attorneys, many of us have instructed our clients to make an inventory of their home or business, just in case of a disaster. Have you made a video or inventory of your home, just in case of a disaster? What about the office? Carrying insurance to protect against your misfortune is not enough. You have to be able to prove or substantiate what you’ve lost.
What is the difference between an unfortunate event and a disaster?
Frankly, the difference may be much like the difference between a recession and depression. A recession is when most of the people in the world are unemployed. A depression is when I am. In the same vein, an unfortunate event is an occasion when someone else’s business suffers from a fire, flood or similar event. A disaster is when I suffer from such an event—if I am not prepared.
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For a very comprehensive discussion, contact the ISBA for a copy of the Disaster Planning: Recovery and Prevention, a program prepared by the ISBA Law Office Economic Council in 2002, primarily authored by Committee Members Paul Sullivan and Carl Draper.
I am often asked to help law firms design and implement strategic business plans. I also coach many solo and small firm attorneys in career as well as personal and professional life balance issues. In both situations—the starting point is the same—begin by taking inventory of your personal life goals. Only then can you effectively begin planning an effective career strategy or law practice. Unfortunately, may attorneys start with the law practice and take care of business first and fail to take care of their personal lives until it is too late. It is much easier to begin your life and career with balance that it is to try to bring your life back into balance later in life.
Everyone faces the issue of time management at one point or another. Attorneys work on client matters, firm projects, fight long commutes, manage households, attend school or other training, raise children, respond to increasing work and time pressures of the shrinking workplace, and often deal with aging parents. The days often seem to last long into the night and vacation and leisure time seem to be consumed with issues other than relaxation and personal fulfillment.
In fact, a recent study of more than 50,000 employees from a variety of manufacturing and service organizations found that two out of every five employees are dissatisfied with the balance between their work and their personal lives. The lack of balance “is due to long work hours, changing demographics, more time in the car, the deterioration of boundaries between work and home, and increased work pressure,” says the study’s author, Bruce Katcher, president of the Discovery Group, a management consulting firm.
Recent ABA surveys and studies demonstrate similar findings. Attorneys are becoming more and more frustrated by:
• Not enough time to enjoy family and life
• Working harder and making less
• Missing out on life and family
• No time to pursue and develop personal and professional interests
• Not spending quality time with spouse and children
Our clients are also telling us that personal and professional life balance is their greatest challenge. Time is becoming more important to people than money.
Attorneys are experiencing dependency and other problems such as alcoholism, drug addiction, depression, divorce, and suicide.
In most settings, the pace and competitiveness of legal practice have rapidly accelerated. Technological innovation has heightened demands for instant accessibility, and profit-related concerns have pushed billable hours to unprecedented levels. The result, as experts note, is a “culture clash” between personal and professional commitments. Lawyers remain perpetually on call—connected to the workplace through cell phones, e-mails, faxes, and beepers. According to ABA studies almost half of surveyed lawyers feel that they do not have enough time for themselves or their families. Almost three-quarters of lawyers with children report difficulty balancing professional and personal demands. The number of women who doubt the possibility of successfully combining work and family has almost tripled over the past two decades. Only a fifth of surveyed lawyers are very satisfied with the allocation of time between work and personal needs. A desire for more time to meet personal and family needs is one of the major reasons lawyers consider changing jobs, and it is a more important consideration for women than for men.
Ask yourself the following questions:
1. Do you find yourself spending more and more time on client and firm work-related projects?
2. Do you often feel that you don’t have any time for yourself—or your family and friends?
3. Does it seem that every minute of every day is always scheduled for something?
4. Do you sometimes feel as though you’ve lost sight of who you are and why you chose law as a career?
5. Can you remember the last time you were able to find the time to take a day off to do something fun—something just for yourself?
6. Do you feel stressed out most of the time?
7. Can you remember the last time you used all your allotted vacation and personal days?
8. Does it sometimes feel as though you never even have a chance to catch you’re breath before you have to move on to the next client project/crisis?
9. Can you remember the last time you read—and finished—a book that you were reading purely for pleasure?
10. Do you wish you had more time for some outside interests and hobbies, but simply don’t?
11. Do you often feel exhausted—even early in the week?
12. Can you remember the last time you went to the movies or visited a museum or attended some other cultural event?
13. Do you do what you do because so many people (children, partners, parents) depend on you for support?
14. Have you missed many of your family’s important events because of work-related time pressures and responsibilities?
15. Do you almost always bring work home with you?
If you answered with non-positive responses to more than five questions your life is out of balance and you need to take steps to correct the situation.
Create A Personal/Professional Life Plan
Establishing personal and professional priorities and making correct choices is crucial. You must begin by determining what’s important in life—make a list of what’s truly important in your life, establish boundaries and priorities, and formulate a plan. Typical elements that should be on your list include:
• Physical Health
• Spiritual
• Nutrition
• Stress Management
• Family
• Friends
• Financial
• Professional Relationships
• Efficiency at Work
• Professional Development
• Hobbies and Outside Interests
• Your Work Life
Once you have developed your list—you are ready to formulate your plan. Your plan should include your time investment that you plan on making in each of the above areas as well as specific activities (action items) and timelines. Once you have formulated your personal plan you are ready to develop the business plan for your practice.
A successful life and practice requires:
• Focus
• Balance
• Roadmap (Plans)
Keys To Happiness
• You must take responsibility for your personal happiness, set clear goals, develop skills, become sensitive to feedback, know how to concentrate, and get involved.
• You must have an overall context within which to live.
Tips For Staying Energized And Productive
1. Develop a Personal Life Plan and a Career/Practice Business Plan.
2. Use and work your plan.
3. Work smarter—not harder. Improve your time management skills.
4. Create your life balance expectations for you clients and your superiors in the firm. When interviewing for a new job or position let your future employer know your expectations—upfront.
5. Tend to your physical health. Insure that you address prevention and treatment of diseases, weight control, physical fitness and stress management. Schedule and keep annual physicals. Exercise daily.
6. Begin looking for ways to implement alternative billing. Look for alternatives to billable hours.
7. Take time for yourself and family. Take vacations.
8. Define what is important to you and define your personal-professional life balance boundaries.
9. Enjoy life and get involved in activities other than the practice of law. Pursue hobbies and other interests.
10. Know your personal and professional goals.
11. Learn to relax. Take time everyday for meditation, prayer, yoga or some other activity that is focused solely on relaxation.
12. Schedule time for relationship building and maintenance.
13. Never eat alone. Use mealtime to network with referral sources, potential clients, and other professionals.
14. Turn off e-mail notifications, pagers, and cell phones.
15. Develop a personal and business budget and follow it.
16. Network, Network, Network—both inside and outside of the firm.
17. Develop your conversational skills.
18. Eliminate clutter at home and at work. Develop a filing system for your personal papers and business files and documents. Open and review your mail immediately and discard anything that you do not intend to keep.
19. Use technology to streamline your work.
20. Delegate work.
Good luck on your journey.
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John W. Olmstead, Jr., MBA, Ph.D., CMC, is a Certified Management Consultant and the president of Olmstead & Associates, Legal Management Consultants, based in St. Louis, Missouri. The firm provides practice management, marketing, and technology consulting services to law and other professional service firms to help change and reinvent their practices. The firm helps law firms implement client service improvement programs consisting of client satisfaction surveys, program development, and training and coaching programs. Their coaching program provides attorneys and staff with one-on-one coaching to help them get “unstuck” and move forward, reinventing both themselves and their law practices. Founded in 1984, Olmstead & Associates serves clients across the United States ranging in size from 100 professionals to firms with solo practitioners. Dr. Olmstead is the Editor-in-Chief of “The Lawyers Competitive Edge: The Journal of Law Office Economics and Management,” published by West Group. He also serves as a member of the Legal Marketing Association (LMA) Research Committee. Dr. Olmstead may be contacted via e-mail at jolmstead@olmsteadassoc.com. Additional articles and information is available at the firm’s Web site: www.olmsteadassoc.com
© Olmstead & Associates, 2006. All rights reserved.
As a business attorney, I routinely advise clients on a variety of issues related to the start-up of their businesses. Interestingly enough, however, I have not had occasion to represent many lawyers and law firms in the process of opening their doors for business. Perhaps they don’t want to pay another attorney the same fees that they will charge their own clients, or maybe they do not comprehend the importance of proper planning for their own needs. Whatever the excuse is, to paraphrase a famous quote . . . “an attorney who represents himself (or herself) has a fool for a client.” While this article is not intended to provide legal advice, for those attorneys out there who are contemplating making the leap to open their own practice, here is a primer on three of the more important issues to consider.
Business Structure
In Illinois there are essentially four forms of business organization that a law firm may utilize: (1) Sole proprietor; (2) Partnership; (3) Professional Service Corporation; (4) Limited Liability Company. For purposes of this discussion, the various tax ramifications are not addressed, and readers should consult with their tax advisors to determine the most appropriate form of business structure for them from a tax perspective.
The simplest form of business is the sole proprietorship. No particular documentation is needed for a sole proprietor other than an assumed name filing with the County Clerk in the county in which the law practice is located if the attorney will do business under a name other than his or her own. While this form of doing business is the simplest and is very commonly used by sole practitioners, it does not provide any protection of personal assets in the event a disgruntled client brings a successful malpractice action against the attorney.
Like the sole proprietorship, a general partnership formed between two or more attorneys with profits and losses being shared equally does not necessarily require any formal documentation to create the partnership. However, in order to confirm what the various rights and responsibilities of the partners in the partnership are, it is imperative to execute a written partnership agreement that is signed by all partners. A general partnership also does not provide any protection of a partner’s personal assets in the event of a claim against the partnership. Accordingly, even if you are blame-free in connection with a malpractice claim, you may still be on the hook for your partner’s bad acts. Accordingly, simpler is not always better, at least as far as law firms are concerned.
In 2003 the Illinois Supreme Court amended its Rules to enable law firms to limit the personal exposure of members of the firms. Rules 721 and 722 are the pertinent rules applicable to limited liability legal practice. Those rules allow a lawyer or lawyers to form professional service corporations under the Professional Service Corporation Act (805 ILCS 10/1 et seq.); professional associations under the Professional Association Act (805 ILCS 305/1 et seq.); limited liability companies under the Limited Liability Company Act (805 ILCS 180/1-1 et seq.) or registered limited liability partnerships under the Uniform Partnership Act (805 ILCS 205/8.1 et seq.). Rules 721 and 722 additionally contain requirements that firms desiring to limit the personal exposure of their members must meet. Included are annual registrations with the Supreme Court and maintaining minimum levels of insurance coverage.
The methods of creation of each the foregoing entities are relatively similar in that most require some filing to be done with the Illinois Secretary of State’s office, both to form the entity and on a yearly basis to keep the entity in good standing. Additionally, each of the statutes governing the form of entity generally require some type of internal documents such as bylaws or operating agreements to govern the internal operations of the entity, including management and shareholder or member rights. Before entering into any of the foregoing arrangements, it would be wise to consult with both a tax advisor and a business attorney who is familiar with the various types of business entities so that an informed decision can be made regarding which entity to utilize for the law practice.
Employees
A law office administrator I know once opined that he wished he could hire more copy machines and fewer people as the firm made more money on copies than it did on the lawyers and support staff when the cost of having employees was compared to the cost of the copy machines. While every partner would agree that it would be lovely to have a fully automated practice and no employees to deal with, the reality is that a law firm’s employees are both the biggest asset of the firm as well as the biggest liability. How then do we enhance the value and limit the risk to the firm?
One way to protect a firm against an employment related claim is to follow all applicable employment and labor laws. Included, for example, are wage and hour laws and workers’ compensation laws. Overtime rules exist for a reason and must be observed. While lawyer employees are exempt from the rules and regulations, staff members generally are not. Accordingly, if you need to have your secretary or paralegal work through the week-end, be prepared to pay her (or him) time and one half. Comp time is not an option unless it is also offered at time and one half.
With respect to workers’ compensation, make sure you have coverage for all employees. Lawyers who are owners of the firm (i.e., partners) need not be covered, but associates must be covered. Firms who do not comply with the coverage requirements expose themselves to civil and criminal liability.
Additionally, failure to follow applicable tax laws can also result in all sorts of problems for a firm. Employers must pay federal and state taxes for their employees and must comply with state unemployment compensation rules and regulations. Consult with an accountant to ensure that you properly meet all obligations in this regard.
Finally, no matter how small the firm will be, consider having a well-drafted employee handbook (prepared by someone who knows what they are doing), which sets forth policies including benefits, timekeeping and client confidentiality. All employees should receive a copy of the handbook and should additionally sign an acknowledgment, which is kept in their personnel file, acknowledging that they received the handbook. Properly drafted policies and a firm’s adherence to those policies go a long way to help defend against any employment related claim for such things as age discrimination or sexual harassment. For those who choose to draft their own policies, a wealth of information is available through the United State’s Equal Employment Opportunity Commission’s Web site: <www.EEOC.gov>.
Please note that while it is possibl to obtain insurance coverage for employment related claims, such coverage is very expensive and usually cost-prohibitive for most firms. Accordingly, following the rules is critical to help reduce the firm’s and lawyer owners’ exposure.
Insurance
In addition to workers’ compensation for employees, a law firm should have all or most the following types of insurance coverage in place:
1. Malpractice Coverage – See Illinois Supreme Court Rules 721 and 722 regarding minimum insurance coverages required for the entities discussed above. Regardless of whether a firm will do business utilizing one of the structures discussed above or not, the amount of coverage and the deductible are important considerations. Certainly cost is a factor, but perhaps more important is to utilize a carrier that is familiar with providing coverage for attorneys. Two such companies are ISBA Mutual and CNA Insurance.
2. General Liability – This type of coverage will cover claims against the firm and lawyers for such things as a client being injured at the firm’s office.
3. Personal Property Coverage – This type of coverage will cover claims in the event of damage to property, as well as losses including theft.
4. Key Man/Woman Insurance – Life insurance policies on each of the partners/members of the firm will provide cash flow in the event a partner dies unexpectedly. In such a situation, there will most likely be a loss of income to the firm for a period of time, and this coverage will help to keep the doors open during any transition period.
5. Disability Coverage to cover overhead – This type of insurance provides coverage in the event an attorney becomes disabled. This type of disability insurance does not provide any replacement of income for the disabled lawyer, but it does cover overhead expenses of the firm, including such things as payroll and rent. Particularly for sole practitioners, this type of coverage can mean the difference between the doors staying open or the firm closing up shop in the event of the attorney is disabled for several months.
Hanging out your own shingle can be one of the most rewarding things that you will ever do as an attorney. It will also be the scariest. However, if you take the time to do it right from the beginning, your chances of success are much greater than if you wait until a problem arises. Yes, there is a cost associated with setting things up correctly, but wouldn’t you rather pay a reasonable fee to a fellow member of the bar than an exorbitant settlement or judgment to disgruntled ex-client or ex-employee?