May 25, 2013

A Plan for Your Firm to Grow On

By Joel A. Rose

Over the past decade, the advantages of group practice have significantly contributed to the increase in number of lateral hires and the joining together of groups of attorneys in general practice and specialty law firms.

Without regard to the actual size of the firm, any level of growth poses inherent problems involving the management of the individual lawyers, facilities and resources. The attorney in the smaller firm may keep informed about the firm's activities by personal observation and involvement, while his or her counterpart in the larger organization may rely more on the official lines of communication. Each of these attorneys will be adequately served so long as some formalization of the management processes have been imposed to ensure adequate control over all of the firm's affairs.

Once two groups of lawyers join forces, good management practices cannot be achieved unless the privileges, obligations and responsibilities of all the firm's members are established and agreed upon.

Effective management of groups of lawyers that join together begins with organization - identifying a managing partner who may function as a chief executive officer, an executive committee that may serve as a board of directors or a representative committee system that receives direction from the managing partner or executive committee.

Rights and Responsibilities in a Partnership

The need to make distinctions between ownership, management and professional practice becomes apparent as a firm increases in size. Generally, there are two types of rights and responsibilities involved in a partnership form of organization. The first arise from the partnership agreement, those that are proprietary in nature. The second arises from the method of firm governance including responsibilities of certain partners for managing the day-to-day, long-range planning activities and substantive areas of practice. In addition, attorneys must be willing to subordinate some degree of control to designated individuals for the satisfactory operation and ultimate good of the firm.
Many lawyers are less proficient in managing their own firms than they are in serving their clients because of the partnership form of business. Law firms, organized as partnerships or structured as professional corporations that function as partnerships, may enjoy financial success and growth because of the close association between the client and one or more of the partners who bind the firm to that client.

Although the partnership type of organization may be effective for maintaining client relationships, it frequently fails to clarify the differences between the equity position of attorneys and the organizational structure and management obligations of partners. For this reason, a relatively loose organization involving a purely democratic relationship, although desirable, is oftentimes not practical for handling many of the firm's internal affairs and for assuring the desired growth and profitability. The firm's structure must be formalized, and key individuals must be willing to assume leadership and responsibility for its functioning.

When Firm Economics Are Less Than Ideal

What happens when the economics of the practice are less than ideal and there simply isn't enough to go around? The lawyers begin the feel frustrated and thwarted in achieving their personal and professional objectives because of what they perceive as the absence of sound management and administration of their firms. The firm management may at this point begin to examine more closely the "business" side of the practice.

While both are aiming in the right direction in an effort to pinpoint the source of the problem, they may want to keep one critical point in mind: Many of the administrative and financial problems experienced by law firms are of the attorneys' own creation.

Too often, attorneys are willing to relegate the business affairs of their law firms to the bottom of the pile. They pride themselves on being so busy with client matters that they simply don't have the time to look after their own administrative and financial affairs. This "benign neglect" may result in serious consequences. Generally, the symptoms of less-than-adequate planning and management are readily traced to the following areas: setting objectives, utilization of staff and budgeting for revenue and expenditures.

Every firm that strives to be profitable must make the effort to formulate, identify and express its objectives in terms of revenue, firm size, management structure, type of practice, staffing, etc. This means answering what may be some difficult questions, such as:

(1) Which areas of the practice should be retained or reduced?

(2) Which attorneys are able and willing to contribute to the firm's objectives?

(3) What should the firm be doing to attract more business and enhance its reputation?

(4) What are the sources of difficulties with clients and why?

(6) Are the department heads actively involved in managing the practice areas or is their function merely titular?

The answers to these questions are essential in formulating a plan that provides direction and must be compatible with the personal, professional and economic objectives of the partners. The point of defining and establishing objectives is to ensure that maximum effectiveness can be achieved in the day-to-day operations of the firm.

To Ensure Maximum Effectiveness

A firm's success in providing quality legal services in an effective manner is directly related to its ability to manage and control its lawyer personnel. Firm management must be willing to manage the firm and ensure that its members accept their responsibilities and satisfy their obligations for the management of administrative and practice areas. This means management must assume a proactive role for recommending policy and maintaining adequate control over such activities as recruitment, training and career development of associates; staffing of the firm's practice areas; allocation of work to attorneys; assuring adequate administrative support; developing an associate evaluation program; utilization of paralegals and law clerks; establishing criteria for admission to partnership; developing a compensation plan and benefits program; assuring adequate communications among partners and associates, etc.

A law firm's profits are fundamentally linked to its ability to successfully utilize its professional personnel. If there is a slackening in leadership and firm management is perceived as lacking direction and the necessary skills to be effective, the result will be little or no organization and the effort will ultimately fail. Most attorneys will readily subordinate their independence for the benefit of the firm, if they see tangible evidence of management's effort to meet their objectives. The benefits are obviously of mutual advantage.

Management of the firm's finances begin with careful monitoring of its past and present activities and establishing revenue and expense projections for the future. This involves reviewing the present and potential monetary aspect of each attorney and client matter. In addition, a systematic review of receipts, disbursements and productivity data will enable the firm to make decisions that will assist it in formulating and ultimately achieving practical objectives. Most firms routinely develop projections for financial goals for the year ahead. To develop the information necessary to establish the budget, the firm may be required to take a long and objective look at itself to determine whether its current volume of business will generate sufficient income to meet the partners' expectations and pay all the operating expenses. A firm must maintain a volume sufficient to full utilize the time of its attorneys. The most efficient system will not result in a satisfactory net income unless the volume and value of the work is plentiful.

Adequate financial planning includes consideration of the firm's present client base, its billing and collection procedures and specific method for managing the firm's finances. Efficient and effective management involves overseeing such matters as the day-to-day activities of the accounting staff; advising on the firm's capital requirements and annual budget and fee policies; assessing the results against the budget; developing fee policies for various practice area; determining controls over billing performance, including profitability, unbilled time and costs, receivables, delinquencies, write-offs, etc.

One other critical aspect of financial planning involves maintaining adequate controls over costs. Management must be persistent in tracking overhead costs. Generally, overhead rises more rapidly than revenue. The increase may be warranted, however, and are most often assessed by determining whether the overhead charges serve the partners I supporting their efforts to provide a satisfactory net income. Regardless of the size of the office, overhead should be controlled by means of a budget for such items as non-lawyer employment costs, occupancy costs, library, equipment and other direct and indirect costs, etc. This budget should be established as part of the annual financial plan and should represent the total expenses required to support the expected level of revenue-producing activities.

Conclusion

Systems and controls do not give you results in and of themselves. The danger to be avoided is to hamstring the life of a firm's daily practice with those kinds of financial systems and controls which create unnecessarily burdensome obstacles to the servicing of client matters in a timely manner, and make little sense to anyone other than the individual who created the system.
The true measure of leadership of the lawyer managers in today's law firm is the ability to maintain a careful balance between the need to: (1) encourage each lawyer's individual initiative; (2) provide for the much needed atmosphere of professional camaraderie so typical in the partnership type of law practice; and (3) plan and implement financial tools of modern business without which the best practice can fail.



Joel A. Rose is a certified management consultant and president of Joel A. Rose & Associates in Cherry Hill, NJ which consults to the legal profession. He may be contacted at (856) 427-0050 or jrose63827@aol.com.

January 10, 2013

Getting Credit for Originating a Matter

Who Should Serve as Billing Partner for a New Matter from an Existing Client?

By Joel Rose

This article responds to an inquiry from a partner in a law firm who felt she was treated unfairly because she deserved to be designated Billing Partner for a new client matter she originated from a firm client that was originated by another partner. This was an especially important issue for this partner because the designation "Billing Attorney" is an important criterion in her firm's compensation system.

The partner who receives the call from a new client and who will perform or supervise the performance of the work on that file may be the most appropriate person to serve as the Billing Partner. However, the decision may not be as clear-cut when a firm has a team-oriented approach to business development and client service efforts.

Existing Client

Typically, an attorney who "gets the call" on a new matter from an existing client should, as a courtesy, confer with the partner who has served as Billing Partner before opening the matter. If the partner who has primarily served as Billing Partner is continuing to fulfill the Billing Partner's responsibilities, he or she should usually be the Billing Partner for the new matter, absent any circumstances which might dictate otherwise.

"Getting the call," by itself, does not mean that the partner should be the Billing Partner on the new matter. It may be that the historical Billing Partner has done an outstanding job of cross-selling (is continuing to fulfill Billing Partner responsibilities including those for the new matter), and should continue to be the Billing Partner for the new matter.

On the other hand, because a partner is the Billing Partner on the first matter ever opened, does not necessarily mean that he or she should be the Billing Partner on all subsequent matters opened. Such would be the case if the Billing Partner has not been performing the functions expected to be performed by the Billing Partner and has had no role in developing the new matter. By way of illustration, Partner A receives a call from a mid-level manager to perform a small project for a client. Partner A performs the work, closes the file and has no further contact with the client nor with the client's decision makers. Later, after independent marketing efforts by Partner B to other decision makers in the organization, client retains the firm to perform a major project. Partner A has had no role, or even knowledge, that the marketing effort has taken place. In fact, the client does not even know that Partner A had done a project previously. Partner A should not reasonably expect to be the Billing Partner on the new matter.

Obviously, no single rule will dictate the answer to this question in every instance. Rather, billing responsibility should be considered and determined on a case-by-case basis. If more than one attorney has assisted in the origination of the new client or client matter, or is actively involved in providing services to that client, the partners should determine among themselves who will have the responsibility of serving as Billing Partner for the client and matter. If the partners are unable to make this determination, after good faith efforts to do so, the Billing Partner responsibility will be determined by the firm's Managing Partner or Management Committee. In any event, all partners who significantly assisted in the origination of the new client or client matter should be listed as "Originating Partner" on the firm's New Client/New Client Matter Intake form.

In making the determination regarding who should serve as Billing Partner, all of the partners who participated in originating the new client or matter (and if necessary, the Managing Partner/Management Committee) should consider the following factors:

1. Which partner has (or will have) primary responsibility for client management, overall supervision and administration of client services and is (or will be) the primary point of contact for the client? In short, who does (or will) the client look to for the overall care and maintenance of its interest within the firm?
2. Who was primarily responsible for the origination of the client or new client matter and what level of assistance did they provide?
3. Has the client stated a preference for receiving consolidated billing for various matters and for receiving bills from a particular partner within the firm?
4. Which partner has the primary or strongest relationship with the client?
5. Which partner is in the best position to address and resolve any issues or problems which may arise with the client?
6. Which partner has traditionally served as the Billing Partner on most or all other matters for this particular client and does that partner continue to have strong relationships and active involvement with the client and the client's legal matters?

Guidelines for Transferring Billing Responsibilities

A more difficult and sensitive situation may occur when circumstances arise when it will be appropriate and/or necessary to transfer billing responsibility from one partner to another. These circumstances include, but are not limited to the following:

1. When the Managing Partner or Management Committee determines that circumstances exist which indicate that the interests of the firm are best served by transferring Billing Partner responsibilities.

2. When the Billing Partner is engaged in a transition plan towards retirement.

3. When the appropriate roles and responsibilities expected to be performed by the Billing Partner are not being fulfilled by the current Billing Partner as to some or all matters for a client.

Conclusion

Who should serve as Billing Partner is not always a clear or "black or white" determination.

It is hoped that the partners will keep the best interests of the firm and the spirit of teamwork and support of each other at the forefront in making these decisions.


Joel A. Rose is a certified management consultant and president of Joel A. Rose & Associates in Cherry Hill, NJ which consults to the legal profession. He may be contacted at (856) 427-0050 or jrose63827@aol.com.

October 22, 2012

Firm Capitalization: How Much is Enough?

By Joel A. Rose

For partners in many law firms today, the world has never appeared to be as hostile, bewildering or financially unstable as it does right now. The complexities and uncertainties of the changing economic and professional environment have created special financial problems, especially for undercapitalized law firms. The cash flow problems experienced by many law firms, of all sizes, are frequently due to the inadequate capital to support the firm's operations.

Although there are many definitions of firm capital, it is usually viewed as being two separate yet related, elements: (1) working capital and (2) long-term capital.

In its most basic form, working capital is the money necessary for the daily operation of the firm. In most financially successful firms, working capital is the capital that the firm requires to be contributed by the partners.

Long-term capital is the money that is necessary to pay for the "hard assets," i.e., furniture, automated equipment, etc. Long-term capital is usually funded through bank borrowings or leases. This allows a firm to spread the cost of these assets over their working life and thereby spread the burden for payment of that debt among the current and future partners who will benefit from that asset.

Determining a Firm's Capital Requirements:

Most firms attempt to establish an amount of working capital that covers their immediate and long-term requirements. First, the amount of working capital should be sufficient to allow the firm to cover its cash flow requirements of the firm's billing and collection cycle, including costs advanced and "average" amount of write-offs and write-downs.

Second, the amount of capital should be sufficient to provide a cushion for usual expenses and partner draws during billing and collection cycles. For example, if one month is typically a slow collection month, the amount of the working capital fund should be sufficient to make-up for the short fall and then it will repaid during the following month. The third element of working capital is that the amount should be sufficient to pay for some of the firm's growth and expansion plans, i.e., if the firm employs one or more associates, the working capital fund should be sufficient to pay the associates' salaries and related overhead until they can generate sufficient cash flow to cover their own expenses.

A few techniques have been developed for determining the amount of working capital that a firm may require. One is to periodically calculate three months' expenses for the firm, excluding partners' draws. This three month time average will vary depending upon cash flow. Some firms having a very liquid cash flow - client pay bills promptly - may calculate two months' expenses. Those firms that have experienced slower client payments are encouraged to consider extending their cushion of firm capital to three and a half or four months. Many firms utilize their bank credit lines in lieu of partners' capital contributions as their cushion to pay firm operations and partner draws during "cash flow droughts." It has been the author's experience that firms that follow this practice too often flirt with financial difficulties, especially if the usual collection cycles from important clients are extended by 60 and 90 days or longer. A second technique is to set working capital equal to a fixed percentage of gross fee collections. Oftentimes this may range between five and eight percent. However, the timeliness of collections and plans for hiring additional associates or taking on more space of more expensive space may be a reason for increasing this percentage. We recommend that firm's should reexamine their working capital needs annually, as well as when there are significant changes in items such as payments of accounts receivable, increases in client costs advanced, firm debt or whenever the firm increases its number of lawyers.

Determining Partner Contribution:

Most first determine capital contributions based proportionately on partner earnings. The partner who earns seven percent of the firm's income usually contributes seven percent of the firm's working capital, and so on. As individual incomes go up or down, the firm periodically requests refunds some portion of capital to others. Some firms expect all partners to contribute the same amount. However, based upon the author's experience, this is rare. The variable contribution, based upon the percentage of earnings is perceived by partners in most firms to be fair. It is generally assumed that those attorneys who earn more require the use of more overhead than those partners who do not earn as much.

Furthermore, in firms in which fees are heavily dependent upon hourly rates of attorneys, it is logical to assume that the higher earners utilize more overhead to produce their higher fees and therefore should be obligated to pay more towards their overhead and overall operations.

Making Capital Contributions:

Most firms now either withhold some portion of a partner's earnings, allowing the partner to fund his or her capital contribution over some definite time period, or the partner is obligated to borrow money from a bank or other source for the full amount, with repayment of the loan guaranteed by the partner or the firm.

Partners in some smaller firms expect the value of their capital accounts to increase as the firm grows in order to fund their retirement. Typically these firms determine the value of the firm, including partners' interests as hard assets plus the value of work-in-process and accounts receivable less outstanding debts. When a lawyer is admitted as a partner utilizing this system, the firm determines its value and the incoming partner buys his or her capital interest or fractional interest from an existing partner. This system does not usually work well for a larger or mid-size firm as the cost to new partners to buy into the firm becomes exorbitant, since they are expected to purchase a portion of the growth in work-in-process and accounts receivable that they were responsible for creating. A second reason for not utilizing this method of capitalization is that, should a partner leave the firm to join with another existing or new firm, the remaining partners wind up paying money to a withdrawing partner who may join with a competitor law firm, especially if that partner takes with him or her, their clients. The third reasons for not utilizing this method is that the unfunded debt to retiring or withdrawing partners becomes so high that either the firm cannot afford to pay it or the younger partners refuse to buy capital interests of other partners.

Many senior partners prefer this system because they have filled the pipeline of work-in-process and accounts receivable with future income that everyone will receive, and believe they should be entitled to a portion of that income. They also claim that if work-in-process and accounts receivable are converted into cash when they retire, it will not cost the remaining partners anything to pay these accounts. The reality is that the growth in work-in-process and accounts receivable is not just the result of the efforts of one person, but an increase in the size of the firm, and that money is needed to pay the direct and indirect costs of the associates and staff that remain with the firm after the partner retires.



Joel A. Rose is a certified management consultant and president of Joel A. Rose & Associates in Cherry Hill, NJ which consults to the legal profession. He may be contacted at (856) 427-0050 or jrose63827@aol.com.


Building an in-house design team: Four key questions to consider

By Janet Odgis

When marketing professionals prepare their budgets, they review the options: assemble an in-house design team or contract with external consultants.

When is building a design team the right move for your business or firm?

1. Are your design needs mostly internal, or outward-facing?

In-house designers are a great boon for internal communications -- they know the organization as well as anyone. But, if you want to sell ideas and offerings to the outside world, it's often smarter to go with a fresh perspective. That person, in getting to know the business, may be closer to the marketplace and the target audience.

2. Are you prepared to manage an on-site team of designers?

Managing a team of designers -- a group that is outside your core competency -- is quite different from overseeing other practitioners. Designers often have workflows, interests and schedules that may not jive with your overall business (at least, at first). Make sure your company has the infrastructure, management and right philosophy to integrate, nurture and educate your designers.

3. Do your company's design needs require cross-discipline innovation and outside-the-box thinking?


Often, in-house designers get caught up in the internal politics and debates of the business. And their design perspectives can become narrow, after working exclusively for one brand. If your business really needs to shake things up, look to an outside agency.

4. Will you be able to get the maximum value out of an in-house employee?


Workflows can be very inconsistent, especially in design. Before you hire an in-house designer, make sure they'll be plugged in to a steady -- and, ideally, varied -- amount of work. No creatively driven designer wants to put together the same weekly newsletter ad infinitum.

Based on these quick questions, you've now clarified your expectations and estimated the activity level of the design professionals. Making this base explicit will help the creativity, development, execution and timetables of projects run more smoothly, whether in-house designers or consultants join your team.


Janet Odgis is founder and Creative Director of Odgis + Co., an award-winning graphic design studio that works with some of the world's most prestigious professional services firms, corporations and foundations.

August 30, 2012

The Science of Execution for Law Firms

By Paramjit L. Mahli

Well-implemented strategic planning provides vision, direction and goals for the firm, practice or attorney; but operational planning translates that strategy into the everyday execution tactics of the business, ultimately producing the outcomes defined by the strategy.

The day to execution or implementation planning is the conversion of strategic goals into execution. No business legal or other like to admit that most are lacking in the know-how, skills, knowledge, experience and discipline to carry off precise execution of strategic plans. This is often poorly handled, often mired in complexity, resulting in at best mediocre results and worst management making assumptions that plans don't work.

The fact of the matter is the execution component is equally as important as the strategic visioning. I have a formula with my clients: Strategy + Implementation = Results. The implementation side of the equation is where a lot of firms fail, regardless of whether they are solo or in a larger firm. There are huge road- blocks that get in the way to the business of implementation. Authors Larry Bossidy and Ram Charan, in their book "Execution" discuss this in detail.

When clients come to me this is one of the questions I am asked all too often, strategic plans suffer when managers/partners are putting out daily fires. This typically will result in big picture action plan items getting placed on the back burner to some later day. Unfortunately that later date never comes. According to Harvard Business School professor Robert Kaplan, 90% of strategies fail due to poor execution. His findings showed that businesses execute their strategies in fits and starts.

Consider also the following alarming research:
• Only 27% of employees have access to their company's strategic plan (Source: Harvard Business School Press)

• Only 5% of employees understand their company's strategy (Source: Strategy and Leadership Journal)

Proper execution is a disciplined process or logical set of activities that enable a business to make its strategy work. Not having a planned approach to execution will increase risk of failure.

To ensure success of strategic plans for your firm avoid the following mistakes:

1. The planners and 'doers' are not part of the same planning process. Often times, the planners, often senior partners see themselves as elite and above the 'doer's or worker bees. If things don't go well the 'doers' often get blamed. The fact of the matter remains pretty much everyone from senior level is a doer. The greater interaction, involvement and communication between these groups the more the plans are executed efficiently.

2. Good employers, with the right skill set are needed for the execution process. Execution requires considerably more time and effort than the planning process. It is not the result of a single decision or action but more of a series of integrated actions over a period of time.

3. Most of us, particularly lawyers don't like change and try to minimize it as much as possible, oftentimes to their own detriment. Strategy and execution demands change, which requires changes in people's behavior.

4. Clear responsibility and accountability is critical to ensure successful implementation. Management must know who is doing what, when and why and more importantly steps in the execution process.

5. Leadership, whether its practice group leaders or an owner of a small law firm must not only drive the firm to success but they must motivate ownership and commitment to the implementation process.

6. Consistent communication to ensure that everyone planners and does are on the same page. All the relevant teams must be communicated the businesses outcomes, progress and changes. In a sense, senior partners and practice group leaders have to sell the importance of importance to execution to their teams...the infamous WIFM (what's in it for me). This is a frequent conversation that keeps reoccurring with my VIP Business Intensive clients, who manage younger attorneys and support staff.

7. Organizational goals should be constructed in terms of outcomes; that will mean something tangible to customers, employees and the organization's markets served. Likewise, goals should be defined in such a way that they can be measured and managed throughout the layers of the organization. Goals should help propel action and achievement from the managers and workers who will be involved in accomplishing the goals.

8. Linking strategy to action must be a critical part of any planning process. To reduce risk and ensure success systematic steps must be clearly outlined within the execution process to all the stakeholders so that they can visualize the change.

Good business is not about overwhelm, complexity and how, rather its about common sense of what works and what doesn't. I recommend, managing partners, owners to consistently weed out complexity consistently. The more complicated things become the more difficult execution becomes.

Finally, by no means is this list complete, but its definitely some of the recurring themes I've seen when clients come to me frustrated and trying to understand what went wrong.



Paramjit L. Mahli is CEO of The Rainmakers Roundtable.

The Law Firm Retreat: Not Just Rest and Relaxation

By Joel A. Rose

A law firm retreat can serve as a practical management tool to accomplish many purposes. A crisis situation, for example, often dictates the need for a retreat. Or, if a firm's net profits are down, the objectives of the retreat might be to examine why this is happening and what to do about it.

Another approach is to utilize retreats to review trends and developments in major practice areas and discuss what should be done in order to take advantage of potential growth areas, or replace work that has been lost.

Lawyer management frequently utilizes this forum as an opportunity to consider strategic plans, but a retreat may also be used to improve communications and provide the lawyers ~ partners only or partners and associates ~ with an opportunity to develop better and more personal relationships with each other.

Whatever the goal, the successful outcome of a retreat will depend on the effort expended in planning it.

A smaller firm may assign the planning function to one or more partners. Larger ones usually designate a committee of partners, assisted by the office administrator. A firm should also determine whether the use of an outside consultant to serve as a facilitator is desirable. The consultant can also assist in gathering and analyzing firm financial data, management information, provide background on subjects and raise questions to stimulate discussion.

Determining the Agenda:

The agenda should be based upon the firm's priorities and objectives. To develop an agenda, the retreat planners should determine reasons for holding the meeting and identify various issues.

This can be a time-consuming process. However, as consultants to the legal profession, we can attest that this process is a particularly effective method of drawing all of the partners into the planning process. During discussions with the planners or through the use of survey questionnaires, attorneys are requested to identify general firm goals, suggest steps the firm might take to influence its future, discuss professional objectives, assess the firm's environment and discuss any complaints or concerns.

We have found that a survey process is an effective method of obtaining partners' views. The survey may be designed to uncover methods of designing and implementing firm policy, the present form of governance, partner/associate relationships, firm economics, practice management, marketing and development.

Surveying the partners through personal interviews or questionnaires is important in establishing firm management's commitment to include attorneys in the overall planning process. We have discovered that responses to personal interviews and questionnaires may reveal ground-in comments between partners that were unapparent before the retreat planning process.

The following points are typical as reasons for having a retreat:

 To establish open and honest communications between partners and between partners and associates.
 To build unity and improve morale.
 To reach consensus on an organizational structure for administration and management of substantive departments.
 To identify common goals and develop plans for their accomplishments.
 To consider approaches to improve profitability.

Once the issues raised by the partners are reviewed, the planners should have adequate information to use in developing an agenda for the retreat.

As noted on the accompanying illustrative agenda, conceptual issues are addressed before a discussion of specific approaches for achieving results.

Home or Away?

The number of attorneys involved and the nature of the work to be accomplished should determine the duration and location of the retreat.

The retreat should be conducted at a facility away from the office. A resort with conference and recreational facilities will provide the attendees with an opportunity to interact on both business and social levels. A downtown or suburban hotel may also serve as an appropriate retreat site.

Retreats may be attended by partners only or by partners and associates. Some firms plan retreats to include associates and may schedule separate, as well as combined, meetings to address issues of common interest. Some firms invite spouses and guests of the attorneys. The objectives and location of the retreat will determine the invitees and guests.

After the subjects are selected, a detailed agenda should be prepared that includes dates, times, location, retreat leaders and participants.

Information about the objectives and scope of the retreat should be disseminated to those who will be attending the retreat. A workbook and agenda should be published and distributed to attorneys at least one week prior to the retreat. This will give the attendees adequate time to review it and become familiar with the scheduled issues.

The content of the workbook will vary depending upon the subjects and attendees. For partners, the workbook should include the overall agenda and discussion outlines on each of the selected topics, the firm's financial data and analysis, survey results and other pertinent data.

The workbook distributed to associates should include the agenda and discussion outlines on appropriate topics only.

In Need of a Leader:

The retreat leaders should be selected on the basis of leadership, communication skills, knowledge, insight into the firm, understanding, objectivity and ability to generate and control discussions on specific topics.

In many firms, the managing partner or chair of the management committee, will serve as a retreat leader. However, other partners and/or outside consultants may be selected to serve as leaders. Choosing an outside consultant to serve as a retreat facilitator may motivate attorneys to participate and to take the retreat more seriously than if one of the firm's partners served as the leader.

The decision about the individuals to serve as retreat leaders should be based upon the objectives of the retreat and the capabilities of these individuals. The retreat leaders must be capable of stimulating and controlling the discussions.

If the retreat topics include sensitive issues, the leaders may wish to announce ground rules that set forth methods for dealing with these subjects in a manner that fosters diplomacy. In conducting retreats, the leaders must be sure that no personal agenda of attendees will be permitted to override the nature of the discussions.

The main rule of the entire session should be based upon the propositions that the retreat should be a positive experience; any comment or criticism with a negative shading must be balanced by a suggestion for improvement; and issues should be addressed rather than personalities of individuals, although it is frequently difficult to separate the two.

For larger firms, it is beneficial to organize the participants into workshops. Workshop discussion topics included in the retreat workbook address the firm's priorities. These assignments are made prior to the retreat.

In addition to pre-assigning the workshop groups, the planning committee selects a coordinator and a reporter for each workshop. The coordinator's role is to stimulate discussion, help the attorneys adhere to the topic and timetable and maintain general order.

A reporter is designated for each group and is charged with taking notes and recording the consensus reached by the attorneys on specific issues. At the conclusion of the workshops, the coordinator and reporter of each group present the findings of their respective groups. When conducting retreats for smaller firms, the partners are usually grouped together and the meeting is conducted as a round-table discussion.

Walking the Walk:

While summarizing recommendations, solutions and action plans, the leaders should establish timetables and assign partner responsibility and accountability for implementation of work to be performed.

The final phase of the retreat should emphasize implementation and follow-up.

The post-retreat activities will generally reveal the effectiveness of the retreat process. Retreat leaders, or other designated individuals, must oversee the implementation process to make certain that notes of the proceedings are prepared and to arrange for their publication and distribution. Leaders should also establish procedures for follow-up by designated individuals and committees.

The leaders should set a timetable for reporting on preparation and implementation of action plans and appraisal of results. The extent to which the partners are willing and able to implement policies and programs agreed upon at the retreat will determine their level of commitment to the firm for the future.

Below is an illustrative retreat agenda:

Saturday:

9:00 a.m. to Noon Setting Firm Objectives Over the Next Three Years:

• What are the most promising opportunities for developing further work from existing clients and new work from potential clients in your area? Other geographic locations?
• How should the firm position itself to take advantage of these opportunities? Who should be responsible for managing this process?
• Considering the current practice areas, which are most likely to fall-off in demand over the next three to five years? What should the firm do to replace this work?
• Which practice areas are most likely to flourish? What should the firm do to take advantage of these opportunities?
• Should our firm consider establishing new offices? Where? Should it risk the cost of such offices? Should these offices be self-sustaining from the start?
• What type of policy should prevail with respect to the ratio of associates to partners?
• What should be the criteria for elevating associates to partner status?
• Should associates advance to partner without regard to the ratio? Should a second-tier partner category be established?

Noon to 1:00 p.m. Working Lunch

1:00 to 3:00 p.m. Role, Authority and Accountability of Partners in Firm Governance and
Administration

• How well satisfied are we with the present form of governance?
• What specifically should be the role and authority of the management committee, managing partner and other committees?
• How would you evaluate the effectiveness of communications among and between the management committee, the managing partner and other committees, and the management committee and other partners?
• How can communications be improved?

3:00 to 5:00 p.m. Practice Management

• What should be the role and authority of each section head, originating attorney and who is the attorney responsible for performing the work?
• What should be done to improve the synergism between practice sections?

Sunday:

9:00 a.m. to Noon Partner Compensation
• How should each partner's total contribution to the firm be determined and evaluated?
• What are the objective criteria to be considered by the compensation committee?
• What are the qualitative criteria to be considered by the compensation committee?
• How should under performance be treated? Should the individual be confronted? By whom?
• How should explanations for compensation decisions be communicated to the individual partner?

Noon to 12:30 p.m. Concluding Comments

Organizing for Business Development

By Joel A. Rose

To be successful, partners in law firms must devote quality time for business development. Preparing a business development plan should involve as many lawyers as possible since the plan is complex and everyone should have a role in its implementation.

A business development plan is usually structured into two broad classifications: (1) general business development objectives; and (2) specific business development objectives and means of achieving them.

General Business Development Objectives:
It is important for a law firm to identify at the outset the overall general objectives of its partners. Unless this is done, surprising differences about a firm's "collective will" may surface later on. Also, taking the time to identify and articulate general goals makes it significantly easier to undertake the subsequent step of identifying and implementing specific means of achieving the goals. For example, does it make sense to pursue a particular type of client or area of work without determining whether doing so makes sense in terms of the partner's overall objectives.

Following is our illustrations of general business development plan objectives:
1. To serve well, efficiently, economically and fully the firm's existing clients (this objective, properly implemented, is probably the most important).
2. Growth: Does the firm wish to grow? For a variety of reasons, not all firms do wish to grow. In any event, an objective of most business development plans is to increase the number of quality clients served by the firm.
3. To identify and market whatever strengths or unique services the particular law firm may have to offer including, for example:
a. The firm's expertise in one or more substantive areas of the law;
b. The firm's ability to handle complex and multi-dimensional problems;
c. For a firm with branch offices, the ability to better serve clients through one or more offices.
4. To increase the firm's exposure in the marketplace.
5. To enhance the firm's reputation in the communities where it practices.
6. To develop and maintain relations with potential sources of referral.
7. To ensure through pro bono and other civic work that the firm is in fact perceived as being a "good citizen."

Specific Objectives:
Once the general objectives have been agreed upon, specific objectives and goals should be determined. In addition, a timetable for achieving the objectives and goals should be set. The timetable can later be used to measure the progress. It is also important to assign specific lawyers the responsibility for carrying out some of the objectives listed. If this is not done, it is all too easy for the business development plan to become another piece of paper, talked about and sometimes praised, but never really implemented.

Suggested specific objectives for the short-term could include:
1. Agreeing upon and implementing a marketing plan.
2. Analyzing the market or markets where the firm practices.
3. Identifying substantive areas of practice where the firm is weak or understaffed and quickly act to correct the situation.
4. Determining which of the firm's strengths should be brought to the attention of existing and perspective clients in the markets where the firm practices.
5. Identifying a specific number of perspective new clients and assigning responsibility to specific lawyers to deal with the prospects directly or indirectly.
6. Meeting with each major existing client and determining:
a. Whether the client is satisfied with the firm's representation;
b. How the firm might improve from the client's perspective;
c. What other services might be performed (in this regard, we have developed for some firms, client evaluation questionnaires).
7. Analyzing the mailing list for firm announcements and determining whether it should be expanded or modified.
8. Identifying a specific number of potential referral sources and informing them about the firm.
9. Identifying seminars (including CLE, trade association and client seminars) in which the firm's attorneys should participate and/or which the firm should sponsor.
10. Developing and making effective use of a firm resume (in this regard, many firms employ a general firm resume, together with resumes for its individual lawyers, its specialty groups and its branch offices, the use of which is tailored to the perceived interest or needs of a particular client or perspective client).
11. Identifying and encouraging participation in appropriate service, political, social, alumni and similar organizations, where individual lawyer participation would be beneficial.
12. Developing internal programs to keep the lawyers in the firm informed about business development activities.
13. Publishing informational memoranda and pamphlets on
new areas of the law.

The firm should identify whether there are specific goals which can be targeted for accomplishment over a longer period, for example: three, four or five years. At a minimum, periodic reviews of the effectiveness of the business development plan should be scheduled and the plan should be revised in the light of experience.

Implementing the Plan:
A business development plan can be implemented either through: (1) a business development committee; (2) the firm's existing organizational structure; or (3) a combination of the two. Many larger firms with branch offices have opted to implement the plan through their various substantive departments and their branch offices with lawyers from each department and office specifically assigned a business development responsibility. In mid-size firms, the management or executive committee may oversee the business development activities or a special business development committee supported by lawyers in the various substantive departments.

Regardless of the size of the firm, it remains essential that lawyers interested in business development monitor how the plan is being implemented and take necessary steps to ensure that assigned tasks are carried out.

Tips for Success:
There are certain elements to a business development plan which most perspective clients find especially effective. First, there should be personal contact between the lawyers in the firm and the perspective client.

Partners in many firms are invaluable in effecting personal contacts. Another interesting source of personal contact are seminars presented by law firms for potential clients. Seminars allow potential clients to meet and evaluate the lawyers presenting the program. However, seminars can only be effective if the attorneys make an effort to meet the potential client personally, determining what needs he/she has and then following up as appropriate.

One observation on seminars suggested by the general counsel of a major energy corporation which might seem self evident, but may frequently be overlooked ~ First, put on people who really know what they are talking about and who are good speakers. Don't put on an associate or partner no matter how informed he/she is, if that lawyer is going to mumble into his/her water glass during the presentation. Conversely, don't put on an associate who may be bright, but is not experienced enough to adequately field questions. Second, most sophisticated potential clients hire individual lawyers, not law firms as such and are interested in hearing about individuals with outstanding abilities or expertise in particular areas of the law. Third, attorneys must convince potential clients that as good as an individual lawyer may be, they are cost effective. A fully allocated cost comparison, prepared by the legal department of a publicly held corporation reported that inside counsel were on the average, 35 to 45 percent less costly to use than outside counsel. What this general counsel frequently finds missing in practice development efforts by many major law firms today is, a program designed to communicate with firm's sensitivity to costs and the steps they intend to take to contain them.
Once the law firm has decided who and what to market, there is one final aspect to consider - to whom in the perspective client's organization should the business development efforts be directed. In corporations which have a legal department, marketing to the chief executive officer or other operating management is of limited benefit. Usually, the legal department has responsibility for the retention and supervision of all outside counsel. This is not to say, of course, that a chief operating officer's strong recommendation would be rejected out of hand.

The general counsel is obviously a prime target, however, not always the best one. Many general counsels have enough on their plates that they don't have the time or the inclination to assess the relative merits of many outside counsel who are to be retained in narrow areas of the law. These decisions may be left to legal managers and line attorneys.
The second, major aspect of law firm business development is designed to retain the corporations as a client once the firm has succeeded in being retained. Advice offered by a general counsel in a consumer service corporation is, "Don't be complacent and think that we are married for life as the result of one encounter." Clearly, the outside counsel who is retained must continue to demonstrate his/her particular abilities and sensitivity to providing services in a timely and high quality manner and to containing costs.

Conclusion:
There are certain essential elements which outside counsel should keep in mind in their marketing approach if they want to represent and maintain business from potential clients. They must make personal contact with the appropriate person in the legal department. The individual lawyer, not the firm, must be presented as answering a specific need of the client. It is important to reach those in the potential client's organization who have the specific need for outside legal services. Additional expertise of a lawyer in the firm can be promoted once the firm has been retained. Finally, outside counsel must convince the potential client and keep the client convinced that the firm runs a cost sensitive and cost effective operation.

June 18, 2012

Warning Signs: How to Spot Partner Dissatisfaction and What to Do About It

By Joel A. Rose

By no means does economic stability or steady growth of a legal practice ensure harmony in the partner ranks or, for that matter, the contentment of any single lawyer. Managing partners who breathe too easily when reassuring revenue or profit numbers get posted may endanger their firms by ignoring tell-tale signs of disharmony. Law firms have been known to go out of business amid strong financials just as precipitously as when those numbers tumble.

The culture of a firm may be its greatest asset for identifying and pursuing both immediate and long-range objectives. Conversely, even as new clients pour in the door, the culture of a firm may be a minefield if it is bound to (1) outdated traditions ("because we've always done it this way"); (2) management styles that are dysfunctional and inconsistent with the desires and expectations of a majority of the partners, as well as the needs and priorities of the firm, or (3) anachronistic philosophies inherited from senior or departed partners that are dismissive of the marketing and compensation programs required to compete aggressively with other financially successful, proactive law firms.

Ideally, law firm management is sensitive to the changing needs of the institution and constantly attuned to the desires and expectations of the partnership about the core values guiding the firm. Those values manifest themselves in the methods for determining and implementing policies, for compensating its lawyers, and for engaging in strategic and marketing planning to compete effectively in its geographic or other markets.

Signs of Trouble:
Many managing partners are living somewhere between a fool's paradise and the edge of despair. They know their firm has problems, and they wonder how many more problems, and possibly internecine ones, may be lurking beneath the surface. We've prepared a kind of diagnostic list for such managers, a small compendium of partner complaints to watch for as symptomatic, not merely of personal discontent, but of broader institutional issues.

1. Partners complain, or politely suggest, that they are not being kept informed of firm matters that involve staffing, termination of attorneys, or other matters that may affect particular partners or their areas of practice.
2. Lawyers feel that they are being "manipulated" by management or by a group of dominating partners.
3. Partners balk at being assigned responsibility for performing certain administrative or substantive tasks without being granted adequate authority to accomplish them.
4. The more influential partners are increasingly unwilling to participate in the decision-making process for the firm.
5. At the same time, rank-and-file partners have the sense that they're just being played with - that decisions are being made by a select few, and that partner meetings are essentially eyewash as major decisions are actually made beforehand.
6. The more influential partners don't seem to be openly communicating with the rest of the attorneys, who are, more and more, often learning about decisions through the "grapevine" rather than from the decision-makers themselves.
7. Senior partners (or the major rainmakers) consider the firm to be their private domain and take others for granted.
8. The influential partners just don't seem that concerned about the feelings of other partners, or their status at the firm.
9. Too many partners feel their own personal and professional needs and priorities are being given short shrift - when, for example, they're handed off client matters at the last minute with the expectation that the work will be performed immediately, or within an unrealistic time frame, even though the matter may have rested on the originating partner's desk for days.
10. The more influential partners are just plain greedy, and are perceived to be manipulating compensation policies to suit their purposes.
11. There is a palpable lack of adequate planning for transferring client responsibility from the more senior partners to midlevel and junior partners.
12. There is a fall off in business due to a client departure that the firm did not anticipate or plan for, or a significant matter that kept several attorneys and staff fully occupied terminates and there is no plan to replace that work.
13. Senior partners reduce their active involvement in business origination, work performance, of firm management, yet are still expecting to receive a significant portion of profits.
14. A minority of partners make decisions or engage in activities that ignore or disregard the stated concerns, interest, wishes or expectations of the majority.

Action Plan:

Managing partners who can detect all or most of these telltale signs have a Herculean task ahead of them, probably beyond the scope of this article to encompass. We can, however, offer a best practices regimen for a likely majority of law firm managers who are reading enough of these warning signs to know that decisive action on their part is both necessary and possible.

1. Lawyer managers should take particular care to assess the needs, requirements and expectations of all the other lawyers.
2. Lawyers should be given the opportunity to be a part of firm governance, and to be kept informed about any of those issues that will influence the firm's future.
3. On a selective basis, assign administrative responsibilities to younger partners (and associates) that will give them a sense of what law firm management is all about.
4. Have regularly scheduled meetings. Announce the dates and times of these meetings far enough in advance to clear schedules, and hold them regardless of whether the more influential partners are present.
5. Prepare an agenda for these meetings. Ask partners to contribute to the agenda. Circulate the agenda prior to the meeting. Provide background information when and where possible in advance of the meeting.
6. Prepare minutes or summaries of the meeting so that there will be a written record of the issues discussed and decisions reached. Circulate these minutes to the partners for informational purposes.
7. Encourage all partners to speak out on policy, financial and operational issues affecting the firm and its practice components - presently and in the future - without fear of retribution by the dominant influential partners.
8. Reach a consensus of a significant majority of the partners about the kind of culture they want for the firm and develop plans to achieve these goals, with partner responsibility and designated dates for status reporting and implementation.
9. Ensure that the firm has a compensation system that is well conceived and implemented, and that rewards the positive efforts of partners and associates - providing incentive for them to perform services that will enhance the firm in a variety of ways (not just economically).
10. Provide all lawyers with the opportunity to grow - professionally and personally - by attending CLE and in-house training programs on substantive legal matters.
11. Provide opportunities for mid-level and junior partners (and associates) to participate in activities affecting client development and retention.
12. Be sensitive to the needs and concerns of the more senior partners while ensuring a compensation system that does not lessen the incentive for younger partners.
13. Be ready to "tweak" elements of the firm's culture, in accordance with the priorities and needs of the partners, as a way to avoid problems down the road.
14. Communicate, communicate, communicate!

A financially and professionally successful law firm does not simply evolve. It needs to be built in an orderly and systematic manner. The values that are important to the firm's partners have to be identified, defined and centrally implemented. Absent lawyer management sensitive to the changing needs of the firm, and the desires and expectations of its partners about the values that guide the firm, you can expect defections - individual or en masse or both - and inevitable life-or-death crises further down the road.



Joel A. Rose is a certified management consultant and president of Joel A. Rose & Associates in Cherry Hill, NJ which consults to the legal profession. He may be contacted at (856) 427-0050 or jrose63827@aol.com.

May 30, 2012

Three New Ways to Increase Firm Profitability Without Billing More Hours or Raising Rates

By Joel A. Rose

The new challenge for law firms today is how to increase profits and reduce clients' legal fees. This article describes three new approaches to enhancing profitability, other than working more hours and charging higher hourly rates.

One method is, for a firm to improve and expand its client base. The second method, is for a law firm to "take-on" more risk in the representation of a client (Alternative Fee Arrangements) and the fourth approach, is by utilizing E-Discovery.

1. Improve and expand your client base: By obtaining a higher tier of clientele and by expanding the base of existing clientele, a law firm may increase profitability. By obtaining a higher-paying tier of clients, a law firm may raise both profitability as well as its profile in the legal community.

2. Take-on risk in representation through Alternative Fee Arrangements: By accepting some of the risk that the representation will not be successful, the law firm may, in turn obtain a greater reward in the event that the representation is successful.

The law firm may provide possible alternative fee arrangements. For example, a law firm may utilize its own expertise or automation efficiencies in handling certain matters and provide a fixed fee for the guarantee of the client's future work. The law firm may also institute blended rates or discounts for the guarantee of future work from a client.

In theory, an alternative fee arrangement allows a corporate client and its outside counsel the freedom to tailor their relationship more specifically to the legal work per issue better than hourly fees can. An alternative fee may be structured to offer incentives to the law firm for superior results. Also, when their interests are aligned, outside counsel and the client are less likely to have issues.

Clients can use alternative fee arrangements to allocate two of their principal risks when retaining an outside law firm: a less than desirable result and a cost overrun. Thus, alternative fee arrangements can help the outside lawyer share risks with the client. For example, with a flat fee, the risk of a cost overrun is shifted to the outside lawyer. Finally, clients want predictability, and alternative fee arrangements may be used to ensure that a matter is performed within the client's forecasted budgetary restraints. This also forces outside counsel better to assess the representation, it's likely costs and the work that will be required.

Requiring outside counsel to take-on risk - whether it is risk associates with a successful prosecution of clients or risk associated with labor costs and operating under a fixed fee - requires outside counsel to strive to identify the needs of the client more immediately and to service the needs of the client more directly. Meeting the client's needs, constitutes a critical component of the relationship and further aligns the interests of attorneys and clients together.

If properly structured, an alternative fee arrangement should result in a win-win scenario for client and law firm. The client would achieve a desired outcome, while the law firm would be rewarded for achieving that outcome. Alternative fee arrangements should not be thought of as zero-sum games in which someone wins and another loses.

3. Profitability and E-Discovery: In effect, the advent of alternative fee arrangements and E-Discovery has provided the "perfect storm" where incentives to form alternative fee arrangements have increased as parties face the potential costs of E-Discovery and the need for E-Discovery experts and vendors to handle the discovery of electronically-stored information in litigation. As such, this is an important way in which profitability may be increased by minimizing costs and increasing the firm's marketing profile in an expanding litigation area.

It is clear now that the introduction of E-Discovery costs may require that law firms and E-Discovery vendors join together to capitalize on inherent efficiencies to offer electronically-stored information discovery services for lower costs. The law firm-third party E-Discovery expert - E-Discovery vendor nexus has led several of our law firm clients to cut deals with the team working together.

One of the biggest costs regarding electronically stored information is the screening of the stored information held by the vendor and produced by the law firm. As our client law firms and the electronically stored information vendors allocate the tasks of screening, they have provided a fixed fee or hybrid billing arrangement to the clients.

Long-term vendor or vendor team relationships, to the extent that they may be maintained for a sufficient amount of time or over a series of matters or projects, may bring with them lower transaction costs and allow outside counsel to negotiate for better work at discounted rates. Several of our law firm clients have reported that an alliance with an E-Discovery vendor may minimize the costs of repeatedly going through the Request for Vendor Information and the RFP process to find the most appropriate E-Discovery vendor for a particular matter. In addition, there is always the issue of conflicts of interest and confidentiality. If an "alliance" is formed between an outside counsel, a corporate law department and an E-Discovery vendor, the potential for conflicts of interest forming will be limited. In addition, non-disclosure agreements and similar confidentiality provisions may be kept in place and used for more than one project or matter with the same E-Discovery vendor.



Joel A. Rose is a certified management consultant and president of Joel A. Rose & Associates in Cherry Hill, NJ which consults to the legal profession. He may be contacted at (856) 427-0050 or jrose63827@aol.com.


Clients' Silent Dissatisfaction Is Bad for a Firm's Business: Conducting Client Surveys

By Joel A. Rose

No partner likes to receive a complaint from a client. However, what is far worse is when a partner does not receive a complaint when a client feels aggrieved because of a firm's actions/inactions and [the client] does not complain.

Economic and competitive changes which have occurred during the last several years have caused law firms to reassess their marketing strategies in order to continue to obtain additional work from existing clients and to attract business from new clients.

For most law firms, obtaining new work from existing clients is the most productive method for insuring that clients are satisfied with the service provided by a law firm. One of the worst things that can happen to a firm is for a dissatisfied client to leave quietly while they are dissatisfied. The damage that this client may inflict upon a firm by talking to other people about their bad experience is a lot worse than if they are willing to let the partners know about their dissatisfaction.

Many law firms have retained the author's management consulting firm to develop and conduct client surveys to obtain feedback about clients' satisfaction or dissatisfaction with the attorneys and staff who served them, the timeliness, responsiveness and value of work performed, the need for additional services, the need for greater cost or quality control, the need for greater lawyer specialization and whether they would use the firm again and refer the firm to friends and associates. To conduct client surveys, we interview senior operating and staff executives of the firm's clients to obtain their perceptions about how efficiently and effectively they (the firm's clients) are being served and the extent to which partners in law firms understand the business objectives of their clients.

Information obtained from client surveys may be the most important marketing activity a law firm can undertake. Most firms that initiate client surveys have found their clients to be impressed that the firm cares about their opinions. Also, as the result of surveys, law firms may detect certain misunderstandings which, if not clarified, could fester and result in dissatisfied clients.

Client surveys are usually conducted in one or more of the following ways: mail surveys, telephone interviews and personal meetings. The approach that law firms follow for surveying clients vary based upon the nature of the firm's practice, the number of clients to be surveyed, the relationship between the client and the firm and the firm's objectives to be obtained from the survey.

Planning the Survey

Planning the client survey is a critical part of the survey process. An individual or committee should be responsible for administering the survey. This includes determining the information to be obtained, determining whether all or a representative number of clients will be surveyed, recommending the process and the individuals responsible for surveying clients, meeting a budget for the survey process, and tabulating the results, determining whether the survey results will be made known to all or selected members of the firm, the methods of responding to survey participants (if their identity is known) and, based upon the results, recommending corrective action to be taken.


Selecting Clients to be Surveyed

All or a representative number of clients may be surveyed. Criteria for making this decision frequently include:

• The amount of revenue produced by the client and area of practice.

• The client's potential to grow significantly.

• Whether the firm or the client have particular problems or concerns which may manifest itself in a decline in business, client complaints about the work performed, the attitudes of attorneys, fees and costs charged.

• Whether the firm needs to obtain more information about the client and its current or future operations, as the result of expansion, reduction or other significant changes in the nature of the services required.

Sample Questions to be Asked

The questions to be asked should be brief and to the point. They should be easily understood by the clients. Mail surveys may include multiple choice, fill-in-the-blank and/or short narrative responses. Telephone interviews must be structured so that the questions asked will provide the desired answers. The following are representative of the kinds of questions the law firm may ask:

• The client's opinion of the firm and services provided.

• The client's level of satisfaction (or dissatisfaction) with the breadth and depth of the attorneys' understanding of the substantive nature of the work they are called upon to provide by the clients' executives.

• The client's level of satisfaction (or dissatisfaction) with the breadth and depth of the attorneys' understanding of the industry in which the client's businesses are involved.

• Which other law firms has the client employed during the last five years in (the city in which the law firm is based)? Other cities?

• What kinds of work does the client currently refer to other law firms in the city in which the firm is based? Other cities?

• If attorneys at (our firm) possessed the expertise in the substantive areas of work currently referred to other law firms that your firm has employed (in the city in which our firm is based), would you refer this work to our firm? If no, why not?

• What types of legal services does the client anticipate will be needed during the next two years? How effectively do you believe our attorneys are equipped to satisfy the client's legal needs?

• To what extent does the client believe our attorneys could "add value" to their company, i.e., conducting educational workshops attended by the client's executives? Bringing to the attention of executives recent legal developments affecting the industry and business in which the client is involved, without being asked to do this, as opposed to only performing the specific legal work that has been assigned?

• For each of the kinds of substantive work the client refers to our firm, to what extent has the client been satisfied (concerned or dissatisfied) with the following (when responding to this question, please compare the services obtained from our firm to the services provided by other firms:

 The quality of the firm's legal work?  The professional and personal compatibility of our attorneys assigned to work on the company's files?  The timeliness of the performance of our work?  How cost-effectively our firm staffs the client's work withies attorneys and paralegals?  The fees and expenses incurred for the quality of the work performed?  The extent to which the client's executives have been kept informed as to the progress of our work?  The responsiveness of our attorneys, paralegals and staff to the client's telephone, e-mail and written inquiries?

• Is there anything that our attorneys may do which would cause the client to utilize their services more than they are currently? If so, what?

• Whether the client feels that the firm has let him/her down. If so, how and when.

• Whether the client would recommend the firm, or specific attorneys, to others, if asked.

• Whether the client has a comprehensive understanding of the firm's capabilities.

Mail Surveys

The mail survey is the least expensive and frequently the fastest way of obtaining information from a large number of clients. To make the process especially meaningful, questions may vary depending upon the work performed. Firms produce color coded questionnaires for different clients and/or areas of practice. Personalized letters are sent in cases involving relatively few clients. Where there are many clients, a general letter is usually sent and is addressed "Dear Client." A postage paid return envelop is enclosed in the personal and general letters. The letter accompanying the survey is usually signed by the lawyer responsible for the client or the practice area.

To encourage responses, the return envelope should be addressed to the firm, rather than to the lawyer who signed the letter. Some firms have the response directed to its marketing director, others address the response to the firm's administrator.

The functional value of mail surveys is limited for the following reasons:
• The response rate is generally about fifty percent or lower.

• The mail survey is impersonal and may not generate the good-will which the telephone or personal surveys often do.

• The responses produce limited information because of the length of the questionnaire.

• Mail surveys allow clients to remain anonymous.

• Mail surveys have limited success in determining the clients' needs for future work or for identifying the firm's expertise and capabilities in other areas of practice.

Telephone Interview

The telephone interview allows a relatively large number of clients to be surveyed, by services provided, attorney and other selected criteria. Interviews should not be expected to exceed fifteen minutes, unless the client is willing to devote the additional time. Telephone interviews may be conducted by the responsible attorney, another attorney in the practice area or a non-lawyer who is familiar with the work performed for the client. The major problems with telephone interviews are the inaccessibility of clients and their unwillingness to discuss their opinions about the attorney or firm over the telephone. Most firms which utilize telephone interviews, instruct attorneys to inform their clients about the survey call prior to the conclusion of the matter so that the call does not come as a surprise. Also, firms which have experienced particular success with telephone interviews inform their clients about the types of questions which will be asked during the survey. This allows the client to "think about" the responses in advance of the telephone conversation.

Personal Meetings

A personal meeting is the most effective survey process since it enables the partner responsible for the client, or other partner, to visit with one or more client executives to learn how effectively the firm has been serving them. The meeting permits the partner to obtain additional information about how the law firm may better match its capabilities with the client's needs, and the suitability of the fit between the attorneys who work for the client and client's executives. During this meeting, the partner should reinforce the firm's commitment to that client and determine what the firm may do to refine or provide better or more effective legal service to that client. The partner should attempt to identify and remove perceived or actual barriers between the client and the firm in order to improve communications and services. Also, this meeting is an excellent opportunity for the partner to obtain insights about the client's needs and to recommend approaches about how the firm may assist the client's executives achieve their objectives.

Personal meetings may take 30 to 45 minutes or longer, depending upon the attorney's relationship with the client and issues to be discussed. During the meeting the partner should be sensitive to and respond to clients' non-verbal signals such as body language and facial expressions, as well as to their comments.

Personal meetings are costly. A partner has to visit the client's office to interview one or more executives. Some executives may be apprehensive to speak candidly with the attorneys, hence the value of having an objective third party conduct the survey such as a management consultant, who is experienced in preserving client/firm relationships.

Utilizing Survey Results

Conducting client surveys involves a commitment on the part of the firm to follow-up on the responses. The firm should acknowledge each client response, if its identity is known. Specific responses should be given to those clients who have expressed some concern or have offered constructive suggestions. These responses should explain what the law firm plans to do to address the issues, or why it cannot. This may be done by letter, telephone call or personal interview.

Properly structured and implemented, client surveys can be beneficial for retaining and generating new business from existing clients. During the survey process, a partner may obtain important information about the needs, perceptions and plans of major clients as well as assess the level of satisfaction of these clients. Their problems and concerns may be identified and addressed and good-will be generated as clients appreciate the firm's interest in improving its services.

The particular survey approach utilized by a firm depends upon the information to be obtained. A firm with a great number of "casual" clients, i.e., real estate closings, personal injury, etc., may decide that a written questionnaire is most appropriate. A firm that services a number of continuing business clients on a wide variety of matters may utilize personal interviews. A firm that wishes to learn about the level of satisfaction of clients in a personalized practice area, re: matrimonial, estate planning and administration, etc., may utilize telephone surveys.

The author recently spoke with partners in one firm who were apprehensive about surveying clients because they did not want to "muddy the waters." These partners believe that if a client has a problem with an attorney or the firm, the client will make his or her dissatisfaction known. The author disagrees with this logic. In today's highly competitive legal market, attorneys must utilize every opportunity to insure their clients are satisfied. The survey process may be imperfect, however, every bit of information about what a law firm may do to better serve its clients is important and worthy of consideration. Further, the survey is a positive method for lawyers to "stay close" and reinforce (and possibly improve) their relationships with their clients. Rather than taking clients' complaints as personal attacks, partners should utilize them as the methodology for getting at the root-cause of the problem, making it better for the clients. Most importantly, if something is wrong, fix it.



Joel A. Rose is a certified management consultant and president of Joel A. Rose & Associates in Cherry Hill, NJ which consults to the legal profession. He may be contacted at (856) 427-0050 or jrose63827@aol.com.