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Best Practice tips

Best Practice Tips: Associate Attorney and Non-Equity Partner Compensation

Posted on March 20, 2019 by Rhys Saunders

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the owner of a seven-lawyer insurance defense firm in downtown Chicago. Two of the lawyers are non-equity partners and four are associates. Currently I pay the associates a set salary and a performance bonus based upon annual billable hours over 1,800. Until last year, non-equity partners were paid in the same fashion, however non-equity partners received a few additional perks such as a firm credit card and a country club membership. Last year I changed the non-equity partner compensation system to focus on collected receipts rather than billable hours. Non-equity partners receive a salary and a performance bonus based upon working-attorney-collected-received above an established threshold and a delegation bonus.

Best Practice Tips: Choosing the Best Form of Communication

Posted on March 13, 2019 by Rhys Saunders

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the owner of a four-attorney firm in Indianapolis, Indiana. The firm has three associate attorneys, three paralegals, and three other staff members. One of my attorneys recently advised me that he wanted to do more work remotely. The next day I emailed him my thoughts and advised him that I would not let him work remotely. He then emailed me that he was giving me his two weeks’ notice. What should I have done differently?

Best Practice Tips: Law Firm Financial Management—Managing the Firm's Inventory

Posted on March 7, 2019 by Rhys Saunders

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. We have an 18-attorney firm in Portland, Oregon. I was recently hired as the firm administrator. This is my first law firm. My previous employment was with a small manufacturing and distribution company. I have read some articles that discussed the importance of managing inventory in a law practice. Does a law firm even have inventory? I would appreciate your comments.

A. Inventory (or pipeline) management is a term used in the management consulting profession to refer to the process by which you continually evaluate your active opportunities (prospective clients to booked clients) for their balance of quality and quantity. The goal is to continually stay on top of the overall health, which is a full pipeline. Pipeline management allows client relationship managers to more accurately forecast fee revenues, better staff and manage client engagements, and close more client business.

Best Practice Tips: Law Firm Succession and Transition—All Three Partners Retiring at the Same Time

Posted on February 27, 2019 by Rhys Saunders

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. Our firm is a personal injury, plaintiff's litigation firm in Denver, Colorado. I am one of three partners in the firm. We have one associate who has been with us for 12 years and three recent law grad associates with less than three years’ experience. The three partners started the practice together over 30 years ago and we are all in our early 60s. Our lease expires in three years and we need to think about the future of the firm. All three of us are not ready to retire but none of us want to sign another lease. When we do retire, we would want to retire at the same time. Do you have any suggestions?

Best Practice Tips: Is Growth Always the Best Strategy?

Posted on February 20, 2019 by Rhys Saunders

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the sole owner of a five-attorney litigation firm in Mesa, Arizona. I started the firm 12 years ago after leaving a large firm. I was an income partner in that firm. For a few years I operated as a solo with a legal assistant. Then I began adding associates and staff. Now we have four associates, an office manager/bookkeeper, two paralegals, and two legal assistants. Our annual gross fee revenues are around $1.2 million, the overhead is high, and my net income is not all that much more than what I was making as a solo. My associates aren’t willing to put in the time to generate the billable hours that we need. Then there is the time and stress of managing all of this. Is growth a good thing?

Best Practice Tips: Tools to Improve Communications

Posted on February 13, 2019 by Rhys Saunders

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. Our firm is a 16-attorney personal injury insurance defense firm located in Dallas, Texas. I am a member of our three-person management committee. We have been experiencing associate attorney and staff turnover. Recently, we had all employees complete confidential surveys concerning their thoughts and feedback concerning the firm. One theme that was central to all was that the firm has poor communications with employees. I would like to hear your thoughts on what we need to do to improve.

Best Practice Tips: Law Firm Client Level vs. Matter Level Client Origination Credit

Posted on February 6, 2019 by Rhys Saunders

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the owner of an eight-attorney insurance defense law firm in the greater Chicago area. All of the other attorneys in the firm are associates. They are currently paid a salary plus a bonus for billable hours that exceed certain thresholds. I am in the process of establishing a non-equity partner tier and for this tier I want to set up a different compensation system with the focus on collected revenues rather than billable hours. I will continue to pay non-equity partners a salary with a bonus for collected working attorney fees. I will also pay responsible attorney fees for other timekeepers' work over the target threshold. I have given some thought to client origination of business, but since we have a small universe of insurance company clients, I'm not sure how this would play out. I would appreciate your thoughts.

Best Practice Tips: Law Firm Structure and Growth

Posted on January 30, 2019 by Rhys Saunders

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the administrator with a firm in Buffalo, New York. We have 14 attorneys – seven partners and seven associates. We are an eat-what-you-kill law firm. All the partners have to weigh in and agree on any and all management decisions. Our management team consists of “all partners.” While I have been hired as the administrator for management the firm, I have very little authority to do anything. The partners all have the freedom to do as they please, and there is very little accountability to each other. Recently we have been discussing the pros and cons of why we might want to change our governance and overall structure. I would be interested in your thoughts.

Best Practice Tips: Law Practice Exit Strategy—Internal or External

Posted on January 23, 2019 by Rhys Saunders

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the owner of a criminal defense practice in Bloomington, Illinois. I have been practicing for 40 years and I have just turned 65. I have one associate who has been with me for two years and two staff members. I would like to retire by the end of this year, and I would like to receive some value from my practice. Would I be better off selling my practice to my associate or another firm?

Best Practice Tips: Improving Productivity and Profitability in an Insurance Defense Law Firm

Posted on January 16, 2019 by Rhys Saunders

Asked and Answered 

By John W. Olmstead, MBA, Ph.D, CMC

Q. I am the owner of a six-attorney insurance defense firm. I started the practice 12 years ago with a paralegal and have grown the firm to where it is today – six attorneys, two paralegals, and two other staff members. While I have done well and am taking home around $350,000 a year, I am not sure if we are attaining the numbers that we should be. I have a 1,500-billable hour expectation with a per-hour bonus payable for each billable hour exceeding 1,500. I do not have any attorneys who have reached this expectation. Our billing rates average around $150 per hour. I am wanting to put in place a partnership track and am not sure where to start. Your thoughts would be appreciated.

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