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Best Practice tips

Best Practice: Partner compensation metrics - What is important and what matters

Posted on December 1, 2010 by Chris Bonjean
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am the managing partner of a 14 attorney law firm located in Nashville, Tenn. We have 8 equity partners. The firm represents business and other institutional clients and handles transactional work as well as litigation. Each partner over the years has accumulated "partnership interest" percentages and these interests are used totally to determine annual compensation as well as ownership in the firm. The only numbers that matter in our firm are billable hours -- not dollars -- and billable hour reports are all that we have ever looked at when reviewing associate performance or partner contribution. We are now beginning to question the wisdom of this approach -- should be considering more than hours? A. Billable hours alone is a poor indicator of associate or partner performance and you should include more measures/metrics in the analysis. More and more law firms today realize that partner contribution and value goes beyond and involves much more than “billable hours” and their compensation systems incorporate other factors into the analysis. Billable hours is just one metric in the overall equation. Many law firms focus on various measures of revenue dollars - fees billed, fees collected, etc. The next question is what kind of fee dollars - working attorney, responsible (managing) attorney, or originating attorney. Fees collected by working attorney seems to be the primary focus of smaller law firms. Origination (attorney that brought in the client) attorney fees collected is often part of the mix as well. Very seldom do we see responsible attorney fees collected considered.

Best Practice: Frustrations of a law firm administrator

Posted on November 18, 2010 by Chris Bonjean
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am a law firm administrator with a 27 attorney firm in the southwest. This is my first law firm experience. I have been in my position for 8 months and am frustrated. Could you share your thoughts: A. During the past decade the roles of legal administrators have expanded dramatically. Today legal administrators can be found in firms with less than 10 attorneys. In larger firms, as well as many smaller firms, roles have shifted from day-to-day administration to firm wide leadership. A few large firm administrators are functioning as true CEOs. Large firm administrators are devoting more of their time and attention to strategic vs. administrative matters. Recent studies suggest that, in firms with more than 50 attorneys,there is an an uplifting of the role of principal administrators. Roles that have grown dramatically in recent years are strategic planning and practice management. Administrator’s roles in large law firms are no longer restricted to administrative matters.

Best Practice: Forming a law firm management committee

Posted on November 10, 2010 by Chris Bonjean
By John W. Olmstead, MBA, Ph.D, CMC Q. I am a partner in a 14 attorney firm. We have 9 partners and 5 associates. Currently, the firm is governed by all of the partners voting, usually just consensus, on all management decisions. We are thinking about going to a management committee. What suggestions do you have? A. You have reached a size where it is counterproductive for all of the partners to be involved in every management decision. In a recent posting I discussed the difference between management and administration. There should be a role for all partners in the management affairs of the firm (the partnership) but they do not need to be immersed in the day-to-day administrative concerns. Also, to what extent should a management committee be involved in administrivia. Successful firms have a good governance and management structure in place and effectively manage the firm. A major problem facing many law firms is the lack of long range focus and the amount of partner time that is being spent on administrivia issues as opposed to higher level management. A management committee may be the right direction if properly integrated with a governance/management plan for the firm. There is no "best approach" for structuring a law firm. However, keep in mind that there is still a role for the partnership at large and for your office manager or administrator as well. Here are a few ideas to get you started:

Best Practice: Getting law firm partners onboard

Posted on November 4, 2010 by Chris Bonjean
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am the managing partner of a 90 attorney firm in Chicago. We have 45 equity partners, 20 non-equity partners, and 25 associates. We have a three member executive committee as well as other committees in place in addition to the managing partner. Five years ago we formulated a strategic plan and have been attempting to successfully implement it since that time. We have had limited success. We don't seem to be able to get our partners "on board" with the actual implementation. I will tell you - I am truly herding cats here. Any ideas on how to get these guys and gals on board? A. Getting your partners on board is always a challenge. The obstacles are almost too numerous to outline. Yet if law firms want to be successful in this turbulent environment they must embrace change and get their partners not only behind new strategies but often they must also be the ones to implement these strategies as well. Managing lawyers in general is like herding cats. But trying to manage "star partners" is a real challenge. They are the "hitters" upon which a firm's future often depends. True star partners are:
  1. Building enduring client relationships
  2. Consistently performing up to their full potential
  3. Putting the firm first and implementing strategic imperatives
Star and other partners in the firm must continually balance their roles as producer, manager, and owner. Often, these roles may be in conflict. Also there are personal strategies and agendas as well. Actually, I don't think they can be managed - but they can be led. There is a difference. But in order to accomplish this the following need to be well designed, in alignment and balanced: Strategy The personalities, emotions and needs of your partners constrain a firm's ability to design and implement strategy. Keep in mind that firm leadership cannot order the troops forward; instead the troops (partners) must essentially vote with their feet to pursue a new strategic direction. Absent a crisis, partners tend to stay on track and support only modest adjustments to strategy. Organizational (Structure, Governance, HR Systems)

Best Practice: Hiring the children of firm owners or partners

Posted on October 27, 2010 by Chris Bonjean
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. I am an owner of a 5 attorney law firm in the upper midwest. There are 4 associates in the firm and I hope to eventually make them partners. I have two children that will be finishing law school in the next year or two and they have expressed an interest in joining the firm. Is this a good idea? I have heard horror stories about such arrangements? What are your thoughts? A. I have seen it go both ways. Many firms have brought children and other family members into the firm and have had excellent results. Others have not. In general I believe that law firms do a better job at this than do other business firms. Your situation is more complicated since you have associates in place that may feel threatened and uncertain as to their futures when you bring in family members. I believe that if you lay the proper foundation and go about it correctly you can successfully bring your children into the firm. Here are a few ideas:
  1. Recognize that for the family members there will be a family system, the family law firm, and an overlapping of these systems. This can be fertile ground for conflict if clear boundaries between the family role and the firm (business) role are not clear. Establish clear boundaries. Family dynamics and business dynamics seldom mix. Your objective should be to draw the clearest possible distinction between the two and make sure that everyone understands that the firm (business) is the firm and the family is the family.
  2. Children should not be brought into the firm unless they want to be involved and satisfy your standard hiring criteria for lawyers.

Best Practice: Law firm year-end planning retreat

Posted on October 20, 2010 by Chris Bonjean
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. Our firm is a 25 attorney IP law firm located in Washington D.C. Metro area. We are planning our year-end firm retreat to plan for next year. This will be our third retreat. While we believe we have achieved some positive results from the last three retreats - we believe that we need to accomplish much more. What are your ideas or thoughts on the matter? A. We find that many law firms try to use their retreats to be an extended version of their regular partnership meetings. They simply try to do too much. The agendas are loaded down with far too many topics. As a result there is a lot of debate and discussion on often day-to-day operational items and no focus on the more complex-strategic issues that often have been ignored or pushed under the rug. This year try to do less and achieve more!

Best Practice: How to deal with difficult partners

Posted on October 13, 2010 by Chris Bonjean
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC Q. Our firm has been discussing how to handle one of our partners. We are are 25-attorney firm. One of our mid-level partners who is one of our highest fee producers and best business getters simply won't follow firm policy or play by the rules. He won't turn in time-sheets in a timely manner, he is argumentative with others in the office, and not a team player. He is "me first" while the rest of the partners in the firm are mostly "firm first". We are trying to build a team-based practice and this one partner is holding up our progress. Do you have any thoughts or suggestions on how we should handle this? A. Dealing with "maverick partners" is always a challenge. Of course, they seem to always be the heavy hitters and this makes it that much more difficult as often there are major clients and large sums of money at stake - at least in the short term. This can also be major issues and large sums of money at stake in the long term if you don't deal with the maverick partner as well. In addition you won't be able to achieve the vision and goals the firm is trying to achieve.
  • For starters - if you have not already - create a well understood set of firm core values or code of conduct that governs behavior in the firm.

Best Practice: Characteristics of successful law firms: Basic building block No. 7 - Marketing

Posted on October 6, 2010 by Chris Bonjean
By John W. Olmstead, MBA, Ph.D, CMC For the past six weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:
  • Partner Relations
  • Leadership
  • Firm Management
  • Partner Compensation
  • Planning
  • Client Service
  • Marketing
Partner relations, leadership, management, partner compensation, planning, and client service blocks have been discussed. The seventh and final basic building block is marketing. Successful firms have an effective marketing infrastructure and program in place. Gone are the days when attorneys simply practiced law. Today, they face increased competition, shrinking demand for services and increasing supply of professional talent, availability of service substitutes, and marketing of professional services. Marketing can no longer be ignored if small law practices are to survive in the future. Based upon our observations working with client law firms over the past twenty six years we have concluded that marketing is poorly understood and ineffectively implemented in many small law firms. In addition, the following obstacles are at play:

Best practice: Characteristics of successful law firms: Building block No. 6 - Client service

Posted on September 29, 2010 by Chris Bonjean
By John W. Olmstead, MBA, Ph.D, CMC For the past five weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:
  • Partner Relations
  • Leadership
  • Firm Management
  • Partner Compensation
  • Planning
  • Client Service
  • Marketing
Partner relations, leadership, management, partner compensation and planning blocks have been discussed. The sixth basic building block is client service. Successful firms deliver exceptional client service. They don't just meet client expectations - they exceed them. This is the decade of the client. Clients are demanding and getting – both world-class service - and top quality products. Many law firms have spent too much energy on developing new clients and not enough retaining old ones. For many law firms, obtaining new work from existing clients is the most productive type of marketing. Delivering great client service is extremely important in today’s legal marketplace. More and more lawyers and law firms are competing for fewer clients while client loyalty continues to drop. It is no longer sufficient to simply be competent or an expert in today’s competitive legal environment – law firms must distinguish themselves by the service they provide. Lawyers and law firms must strive for 100% client satisfaction.

Best Practice: Characteristics of successful law firms: Block No. 5 - Planning

Posted on September 22, 2010 by Chris Bonjean
Asked and Answered By John W. Olmstead, MBA, Ph.D, CMC For the past four weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:
  • Partner Relations
  • Leadership
  • Firm Management
  • Partner Compensation
  • Planning
  • Client Service
  • Marketing
Partner relations, leadership, management, and partner compensation blocks have been discussed. The fifth basic building block is planning. Successful firms have a long range business or strategic plan in place. Based upon our experience from client engagements, we have concluded that lack of focus and accountability is one of the major problems facing law firms. Often the problem is too many ideas, alternatives, and options. The result often is no action at all or actions that fail to distinguish firms from their competitors and provide them with a sustained competitive advantage. Ideas, recommendations, suggestions, etc. are of no value unless implemented. Well designed business plans are essential for focusing your firm. However, don’t hide behind strategy and planning.

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