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Best Practice tips

Best Practice Tips: Outsourcing Appellate Work

Posted on May 30, 2018 by Rhys Saunders

Asked and Answered 

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

Q. We have a six-attorney insurance defense firm in Kansas City. For the last few years, our associate attorney costs have gotten out of control and in some cases, revenues generated by particular attorneys are not even close to where they should be considering their costs. We have one associate attorney who we pay a base salary who only does appellate brief work. He does not like litigation and does a poor job doing our “bread-and-butter” litigation work. We simply don’t have enough appeals to keep him busy. We are paying him a base salary of $100,000 a year. Last year his working attorney fees collected were $110,000. I welcome your thoughts.

Law Firm Financial Management: Using Credit Line to Purchase Equipment

Posted on May 23, 2018 by Rhys Saunders

Asked and Answered 

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

Q. I am the financial partner with our 16-attorney firm in Indianapolis. The firm has had a rough couple of years. We had several partners leave the firm and they took several corporate clients with them. Unfortunately, this was consistent retainer and time bill work. While we still have some retainer and time bill corporate work, a much larger mix of our work is now contingency fee work. As a result, we have had some cash flow challenges and for the first three months of this year there was no money to pay partner draws. We have a credit line with the bank of $125,000 that we have not used. We only use our credit line for long-term equipment purchases. We would appreciate any suggestions that you have.

Law Firm Client Surveys: How to Collect and Report the Data

Posted on May 16, 2018 by Rhys Saunders

Asked and Answered 

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

Q. We have a 16-attorney firm in Chicago. Our marketing committee has been discussing implementing a client survey program. We are not sure where to start or how best to collect and report the data. Your thoughts would be appreciated.

Of Counsel Arrangement as a Law Firm Exit Strategy

Posted on May 9, 2018 by Rhys Saunders

Asked and Answered 

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

Q. I am the owner of a solo real estate practice in Merced, California. I have two staff members that work for me. I am the only attorney in the firm. I am sixty years old. While I am concerned about the long-term exit from the practice, I am also concerned about office coverage in case something would happen to me in the short term. I appreciate any recommendations that you may have.

Law Firm Overhead and Profit Margins

Posted on May 2, 2018 by Sara Anderson

Asked and Answered

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

Q. I am an attorney in New Orleans who has been in practice for ten years. I practiced with a small firm for eight years as an associate and then opened my own firm two years ago. I primarily work from home supplemented with a virtual pay-as-you-go office. I do not have any staff employees. I have been approached by a 14-attorney firm that would like me to join their firm as a partner. Their offer includes a salary that I feel is low and a bonus based upon a percentage after covering my salary, other direct costs, and indirect firm overhead. The overhead allocations seem extremely high to me. In my practice, I am bringing in around $100,000 in gross fees and my overhead averages $10,000-$15,000 per year. My profit margin is around 90 percent. I feel like I am better off building up my practice rather than accepting their offer. What are typical overhead and profit margins for law firms?

Law Firm Management Committee vs. Full Partnership

Posted on April 25, 2018 by Sara Anderson

Asked and Answered 

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

Q. I am a partner in a 14-attorney firm in San Antonio, Texas. We have eight partners and six associates working in the firm. The firm was founded 20 years ago, so we are a first-generation firm. Two of the partners were the founders of the firm and the other six were made partners in later years. Currently our method of governing the firm is handled by the full partnership. While each partner has one vote, we try to manage by consensus. We do not have a managing partner or any committees. We have an office manager who primarily handles the accounting and  staff oversight. The partners meet weekly to discuss issues and make decisions. We are beginning to have issues with our management structure. Partners are not showing up for the weekly meetings and complaining about the amount of time it is taking away from servicing their clients. Should we consider a different approach? We would appreciate your thoughts.

Subjective Law Firm Partner Compensation Systems

Posted on April 18, 2018 by Sara Anderson

Asked and Answered

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

Q. I am a partner in a 12-attorney commercial litigation law firm in Palm Beach, Florida. There are five partners in the firm. We are contemplating merging with another firm in the area of similar size. We have done our due diligence and have come across a possible non-starter—our compensation system. Our compensation system is an objective, formula-based system. The other firm has operated under a subjective system and they are pushing for the firm to operate similarly. We would appreciate your thoughts on this method of compensation.

Associate Attorney Motivation

Posted on April 4, 2018 by Sara Anderson

Asked and Answered

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

Q. Our firm is a 14-attorney firm in Chicago. There are nine partners and five associates in the firm. Our practice is limited to insurance defense. I am one of the founders and senior partners in the firm and have been practicing for 35 years. We are having problems getting our associates to produce at the levels that we need for the firm to be profitable. We have an annual 1,800 billable hour requirement and several of our associates are not even close. We have a bonus system that pays associates a bonus based upon billable hours exceeding 1,800 billable hours. What are we doing wrong?

Law Firm Growth Planning

Posted on March 28, 2018 by Sara Anderson

Asked and Answered

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

Q. I am a partner in a six-lawyer insurance defense litigation firm in Jackson, Mississippi. There are three partners and three associates in the firm. Our firm has been at its present size for many years, revenues have been flat, and profits have been shrinking. The partners have been discussing the pros and cons of growth and we would like to significantly grow the practice. A couple of our insurance company clients have asked us to open offices in other states and we are giving this consideration. Initially, we would open two other offices and we anticipate that this would require us to hire six additional attorneys. We appreciate any thoughts that you have.

Best Practice Tips: Law Practice Acquisition Proposal

Posted on March 21, 2018 by Sara Anderson

Asked and Answered

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

Q. I am a partner in a three-partner, six-attorney firm in Chicago. We have had discussions with another law firm in the city regarding us acquiring their practice. The owner is 70-years-old and wants to retire and exit his practice. My partners and I have looked over the numbers and believe this would be an excellent opportunity for us to expand our client base. The practice handles the same type of work that we do. We are unsure what our next step should be. Do you have any suggestions?

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