Lawyers’ Greatest Fear: Chaos

The ABA did a survey recently to identify what lawyers were most concerned about in their practices. The (not unsurprising) answer was “chaos” – in other words, a fear that their practice is out of control, and consequently, something terrible might happen to a matter – and to them.

I agree wholeheartedly with the ABA’s conclusion, and was inspired to write an article, which Attorney@Work is publishing as a three-part series. I detail what I see, from my 20+ years of experience working closely with hundreds of firms, are the reasons, and offer some practical solutions.

HERE is the first installment. And by the way, if you’re not a subscriber to Attorney@Work, you should be. A daily dose of good stuff.

Law Firms Are Ostriches, Says Georgetown Law Report

Ostrich ManThe just-released 2016 Report of the State of the Legal Profession from the Georgetown Law Center for the Study of the Legal Profession has some damning words for our supposedly best and brightest. Drawing a comparison to how Kodak went from market domination to crash after missing the market shift from film to digital, the report offers this tasty tidbit:

“The current challenge in the legal market is not that firms are unaware of the threat posed to their current business model. . .Instead, the challenge is that firms are choosing not
to act in response to the threat, even though they are fully aware of its ramifications. . . many law firm partners believe they have an economic model that has served them very well over the years. . .They are consequently reluctant to adopt any changes that could put that traditional business model at risk.

My observation: that’s only half the reason. The other half is that they don’t know what the &$@#* to change it to.

Read the full report HERE.

Fixing the Race to Make Partner

footraceMore firms are having problems finding and retaining good associates. One Atlanta firm, Fisher & Phillips, has gotten proactive about saving their considerable investment in their associates. They have created a new program that lays out the criteria for making partner early in the life of an associate – mainly originating work – then giving them the tools and training to meet those criteria.

“We’re trying to set them up to succeed,” Managing Partner Bert Brannen said In the Atlanta Daily Report story. “It’s a very intentional way to guide people through the evolution from summer clerk to fully functioning first year partner with more business than they can service on their own.”

Attorneys Master Class offers a similar program to its firms. Read about it HERE.

Here Comes the Revolution – How to Hold On to Your Team Stars

Seven people have passed the exam to be the nation’s first “legal technicians” in Washington state. A quote from the ABA Journal article by Debra Cassens Weiss:

“Washington is the first state with a program to allow limited license legal technicians (LLLT’s)  to help litigants prepare legal documents and provide advice on legal procedures without a lawyer’s supervision.”

And a second story, this time from the ABA itself: Legal technicians may partly own law firms in this state; is ban to nonlawyer ownership crumbling?

The short answer is a resounding YES. The dreaded “ABS” (alternative business structures) which allow non-attorney ownership of law firms, which is already in place in Australia, Great Britain and is coming soon in Canada, has now been breached in Washington State, sans blessing from the ABA.

And if your reaction is “it’ll never catch on,” you’re dead wrong. Oregon is close to following suit. California and New York are considering. Florida is taking a look.

A recent article in the New Jersey Law Journal titled The New World of Outside Investment in Law Firms” has an enlightening comment about the traditional resistance to change – the “law is a profession, not a business” argument:

“There is a hoary battle cry we always hear when having these discussions: “practicing law is a profession, not a business.” That started in the late 19th century when lawyers began to establish a professional identity and adopted the Victorian scheme of professionalism from England. At its core was the tension between the ascendant commercial classes and those who considered themselves better than merchants and above the fray. Many of them practiced law as a gentlemanly profession, but relied on their family money to pay the bills. Few of us today have trust funds. If we don’t bill, we don’t eat. That sounds pretty commercial to me.”

The article also discusses a seminal event – the first law firm in Britain to do an IPO. Well worth reading.

The licensed legal technician trend, like the “nurse practitioner” and “physician assistant” waves that are sweeping the medical profession, is coming to a state near you. And it will affect you in the following ways:

First – unless you’re willing to lose that outstanding paralegal, be prepared to re-think and re-structure how your practice works to keep them – and their revenues – inside the firm. Don’t worry about losing your under-performers. They’ll stay as long as you let them collect a paycheck.

Second – get ready to completely re-imagine and re-design your operations, marketing, client relationships and fees – before your competitors do – to take full advantage of this new category of legal service professionals. Because the toughest of those competitors will. You can implement a good part of this re-design right now on a practical level, before the revolution comes to your town. Frankly, much of the legal profession has been doing this for decades – we’ve just disguised it well.

Third – Get used to not supervising the person who used to be your paralegal. It will be a separate profession with its own standards and procedures. Although in Washington State it is still entwined with the Bar, the state Supreme Court actually created a separate LLLT Board to oversee it. Soon that board will operate in parallel with, and not beneath, the State Bar. Watch for the emergence of a parallel “bar.”

Fourth – expect to find yourself directly competing with one or more LLLT’s. They no longer have to work under the supervision of an attorney. They can – and will – open their own firms. But they will not be admitted to represent clients in court (yet).

Fifth – if you have one or more outstanding paralegals, be prepared to enter into new relationships with them. Many of the best will want to be partners with you – or if not with you, then with another attorney – likely your direct competitor.

Sixth – like it or not, your world is about to change. Read CNN’s commentary The Fall and Rise of Lawyers.

And finally, if you’re worried about your future direction and could use some help drawing a roadmap to your future, call or text me – 407-830-9810 – or shoot me an email – dustin@attorneysmasterclass.com.

 

Do You Have a Pending Website Disaster? Here’s How to Avoid It

Just called up a colleague’s website to find it was trashed with error messages, the result of an unsuccessful attempt to switch IT providers.

Here are some of the most important lessons that I have learned from working with many clients in website development, updates and transitions:

1) If you plan to contract with a provider, first, get the name of the program it is to be developed with. Today, the safest – and most common – program websites are developed in WordPress. If your developer is not using it, move on to one who does. This is the vehicle that makes sure your website it’s completely portable, and your developer can’t hold you hostage.

Second, get a written development agreement that specifies total costs, maintenance costs, hourly rates for changes, and certifies that the website will be 100% portable, with a dollar-specific penalty clause if it proves to be otherwise. It should also specifiy that you own full rights to everything created.

2) Make sure that you own your own domain name. You’d be surprised how many un-techy people hand the whole thing over to a web developer and later discover they are trapped because the developer both owns the domain name and has created a non-portable website.

3) Schedule someone in the office to do a monthly test of every piece of the website, including menu bars, linked documents, contact forms (actually submit a contact form each time to make sure they show up in the appropriate in-box) and out-links.

5) Make a (marketing) schedule to add and manage content on at least a quarterly basis, if not more often. Static websites fall off the search engines; frequent changes keep its ranking up.

6) Think carefully if they’re trying to sell you a blog with the site. If your plan is to post legal stuff, don’t. Nobody but your competitors cares about the legal stuff. Your prospects and clients won’t read it. If your plan is to do articles with daily relevance to your target market – say, senior issues, community issues or business issues, good for you.

But think beyond content to commitment. Blogs are only good marketing when they are constantly fed – ideally weekly, at least every couple of weeks, and you work to build subscribers, or have a regular procedure to push out notifications to a larger list. And unless you are deeply committed, you will almost inevitably stop, or at least slow down, and it will become a burden.

And if you plan to hire a ghost-writer, check with your Bar counsel first. Some Bar associations require that such materials have to be written by the lawyer personally, and labelling someone else’s work as your own is an ethical violation.

Finally, if you’re really committed to a blog, don’t use the web developer’s blog. Most are restrictive and not blogger-friendly. Use a true WordPress blog, either directly at https://wordpress.com/website/ or through one of the facilitators like GoDaddy.com.

So. If the above cautions have you nervous – or if the whole idea of creating – or taking charge of – your website or starting a blog seems daunting, just shoot me an email at dustin@attorneysmasterclass.com or give me a call at 407-830-9810. always happy to share my thought and help however I can.

What if Your Employees Owned Part of Your Firm?

What if your employees sat next to you in shareholder meetings, voting on business decisions about the firm?

big-wave

It’s coming. 

The latest iteration of “alternative business structures” – ABS’s – now permitted in the United Kingdom and Australia, and soon in Canada – is one that will frighten many attorneys: employee ownership of law firms (or the ABS that contains them).

According to the newsletter from LegalFutures.co.uk:

A groundbreaking alternative business structure that last year embraced employee ownership has seen the valuation of its shares rise 15% over the past 12 months. Staff at Triton Global each received a free initial tranche of 145 shares in the company, worth about £500, and nearly two-thirds have since invested further to the collective tune of £58,000. Triton is a multi-disciplinary insurance business combining legal advice, claims administration and loss adjusting. It has 140 staff across five offices in the UK, and a further 35 in seven offices overseas. 

And by the way, guess who’s forging ahead fastest with ABS’s there? The Chartered Accountants, who have thus far authorized 48 – in the last six months alone.

Until the mid-80’s, accountants in the U.S. were among the most conservative of all professions. By ethical rule, it was unethical to give someone a business card unless they specifically asked. Then in the late 80’s the profession went through a re-invention which re-imagined the profession as financial and management advisors to businesses, and spurred the foundation of dozens of consulting firms which collectively took billions out of the pockets of the legal profession.

Will they do it again? Will the leaders of the legal profession – the rule-makers at the national and state level – wait until the accountants skim the cream before surrendering to the inevitable? The profession’s leadership should be fighting hard to evolve the profession in the U.S. like it is evolving in Canada and the rest of the British Empire.

The Big  wave of change is coming. As they say, we can be on it – or under it.

How Do They Get Away With It? U.S. Firm Evades U.S. Non-Lawyer Ownership Rules

Non-lawyer ownership of law firms are still illegal in the U.S. even though they are now permitted in Australia, the United Kingdom and, soon, Canada. So how is a U.S. firm becoming a fully-licensed ABS (alternative business structure)? It seems they do it by putting “UK” after their London firm name.

LegalFutures, the UK-based legal blog, today reported that New York-based Cahill Gordon & Reindel just became the first U.S. firm to do so. (Last week they reported that Jenner & Block was the first but today retracted that.)

Cahill Gordon & Reindel’s ABS will have non-lawyer ownership, making it a true ABS. Their stated purpose is to expand their litigation offerings to clients in the UK and internationally. Why this requires non-lawyer participation in the firm’s ownership is still unexplained.

I have sent a query to the firm for more information. Watch this space.

Jenner & Block Jumps Ahead of the Line in the Legal Revolution

Think the Australian, British and (soon to be) Canadian legal revolution hasn’t hit the U.S. yet? Think again.

Quick recap of what’s happening, straight from the Canadian Bar Futures Report, which generally mirrors the Australian and British models.

The key elements of the revolution all flow from the first recommendation of “multidisciplinary practices” (MDP’s) – firms with business structures “that permit fee-sharing, multidisciplinary practice, and ownership, management, and investment by persons other than lawyers or other regulated legal professionals.” That means, for instance, a firm with lawyers, CPA’s, auto body repair shops and doctors, all under one roof.

From that flows the second element, “alternative business structures” (ABS’s) meaning non-lawyer ownership, or participation in ownership, of law firms. Those CPA’s and doctors and auto mechanics can be part or full owners of a firm.

And the third, “fee-sharing with and referral fees to non-lawyers.” That means the doctor or real estate agent or CPA or whatever can either get a referral fee or even a piece of the overall fee – legally.

So – the British Solicitors Regulation Authority just licensed an ABS consisting of Jenner & Block, a major national ABS based in Scotland, and a mediation service. How did they evade the (rapidly aging) U.S. legal structure strictures?  J&B asserted thar “the office will be operated by “a local independent affiliate, Jenner & Block London LLP” – even though its head of legal practice is dual-qualified Chicago-based partner Timothy J Chorvat.

And a lovely dodge of the issues. According to the article in the British blog Legal Futures, “…the firm would not explain the rationale for becoming an ABS. They would prefer at this time not to reply to your questions. The structure they have chosen for their London operations and their relationship with the SRA are not issues about [which] they wish to engage [with] the media currently.”

Smooth, J&B. And by the way, congratulations. You’re breaking ground for the rest of the profession. My spoof article “Berkshire Hathaway Purchases Omaha’s Largest Law Firm” may not be a spoof for long.

Most Law Firm Websites Suck. How to Decide if Yours Does

Had a revelation about firm websites – I was recently wandering the web looking for good examples as part of developing a client website and just about couldn’t find any. Most are, frankly, terrible. Outdated, stuffy, unattractive, “me” centered or all of the above. It’s amazing how many sophisticated firms, big and small, have websites that were first designed back in the ‘90’s – and look it.
Most firm leaders would huff at my accusation. “It works just fine,” they’d say. But then, it’s hard to measure how many people viewed their site and DIDN’T call.
I’m a marketer. I teach it. I create it. I manage it. And when I see so many of these websites I cringe at the lost potential.
Website designs have evolved dramatically from the early days, for good reason. Better thinking about what’s in the mind of the prospect, how they want information, how people perceive and absorb information, how strong design affects their perception of the strength of the firm, and so on.
A few of the biggest problems I see:

  • Websites designed by website designers, attorneys and administrators instead of marketers.
  • Websites written by website designers, attorneys and administrators instead of marketers.
  • The “all about me” approach. “Ain’t we wonderful” is the theme. Nothing about what drives clients to a firm – understanding of the clients’ industries, problems, goals and frustrations. As Steven Covey so elegantly put it in his vaunted “Seven Habits of Highly Effective People,” “first, seek to understand.” It’s called one of the most valuable business books ever written for a reason.
  • Websites designed in the frontier days of the web.
  • The classified ad approach. Packed with verbiage, these sites try to say everything on their home pages, and are often driven by the deep legal compulsion to couch everything in the most careful legal and ethical terms. The result is a flood of words that pushes readers away.

And there’s more, so much more. Good article from Bloomberg BNA on the subject, “It’s Time to Start Caring About Your Website.”

If you’re brave enough to hear a marketing expert’s unvarnished critique of your website call me. 407-830-9810.

Are You An Excitement Addict? What Is It Costing You?

The wonderful Susan Carter Liebel just posted a great article on the Solo Practice University site about entrepreneurial addiction – people who are serial entrepreneurs and love the creation process better than the implementation process, and get bored with established routine. Such entrepreneurs, inside or outside of the legal profession, are the life blood of a vibrant country.

I want to shine the spotlight on another, more troubling addiction that seems to be rampant in the legal profession. Excitement. It’s an addiction that typically takes a toll on the attorney’s practice, clients, family, and eventually themselves.

And make no mistake, it’s a true, medically-defined addiction. The more accurate term is “adrenaline addiction” because of the fight or flight hormone produced that is designed to speed us up when danger approaches.

A caveat here. A good, committed attorney will usually experience a consistent amount of stress in their daily practice. Being able to function well in stressful situations is a valuable trait. But for some, the stress either accelerates because of lack of understanding of how to manage and grow a practice, or sometimes because, in a real sense, they crave more of it.

The adrenaline-addicted attorney lives constantly on the edge. Always late for meetings and appointments, drives fast everywhere, never has enough time to do any forward planning to avoid the next crisis or to stay out of chaos, so chaos continues to reign. They are often at odds with judges and opposing counsel. They almost invariably have high staff turnover. They drink copious amounts of coffee or caffeine drinks. They cannot be separated from their mobile devices or their e-mail – 24 hours a day.

And tellingly, they also often have high receivables, because they often have poor judgment on client intake, are short on client responsiveness, and never find enough time to follow up on receivables. As a result, difficult, no-pay clients occupy significant time in their practice and their finances, creating yet more chaos. And in another sense, clients who are uncooperative are another chance for exciting conflict.

For the adrenaline addict, order, predictability, and procedural days are not exciting, but chaos and crisis are. Being late for appointments, arriving at the last minute in court, verbal jousting with frustrated clients and opposing counsel are. Even having high receivables is exciting in a negative way. After all, stress is the first cousin to excitement.

Many attorneys who profess frustration and stress about their practice are, unknowingly, excitement addicts.

Some are naturals. A common cause is growing up in an alcoholic family, where constant volatility and unpredictability created an atmosphere of fear and excitement, and a need to be hypervigilant.

And some were simply trained by the legal profession to be so. How does that occur? They may have begun their careers in firms where the workload was so overwhelming that they were always behind, and the management so overbearing that they were always under fire. In this atmosphere, young attorneys come to believe that high stress and constant crisis are normal components of a successful practice. And when they open their own firms or move to a less demanding and stressful position, they unconsciously go about creating the familiar – even though unpleasant – atmosphere.

How does the adrenaline addict feed their addiction? By –
Taking in difficult clients that, at some level they know will be a collections challenge.
Taking too many clients, so that they will always be overworked and under organized.
Not investing sufficient time with cases to strategize, schedule, get the work done, and build strong client relationships.
Not having sufficient support team, or even worse, not effectively utilizing their support team.
Viewing every encounter, from client to opposing counsel to judge, as opponents to be outsmarted and vanquished, rather than collaborators in the legal process.
Drinking 3 or more caffeinated drinks daily
Frequent offensive driving behavior, such as tailgating, speeding or road rage
Constant scheduling of appointments, meetings and events with little down time in-between, and always on-the-go
Frequently causing drama between him or herself and others, or knowingly putting him or herself into stressful situations

And the result?
For the practice –
• An attorney and staff who work long hours inefficiently and at a high level of stress
High staff turnover
High client dissatisfaction and resulting high receivables
Periodic grievances and even occasional malpractice suits
Damaged professional reputation
Financial struggles

For the attorney’s personal life –
Relationship turmoil, alienated children and family
Broken promises
Potential or actual health problems
• Lots of high-risk sports and activities
Other addictions, such as alcohol, gambling
Overspending, credit card debt, impulse buying, financial problems
Lots of toys quickly discarded

If you see a bit of yourself in any of this and want to make it different (and there’s the rub – it’s a hugely difficult addiction to give up), I’ve provided some useful reading below. And I’d be happy to chat about how I might help you change that behavior into others that promote a healthy practice and a healthier life. Give me a call at 407-830-9810.

Some useful reading:
Can You Be Addicted To Entrepreneurship? – Solo Practice University
The ACOA Laundry List of Traits, Trait 8 – Excitement
The Painful Reality of Adrenaline Addiction
How to Overcome Adrenaline Addiction: Tips From A Former Addict
Adrenaline Self Test
Are You Addicted to Your Own Stress?
ADDICTED TO ADRENALINE?

Here We Go Again – The Busy Trap is Stopping Lawyers From Riding the Wave

There is a rising economic wave – yet many lawyers’ practices are full. They’ve suddenly become too busy to grow their practices. I haven’t encountered this since before the crash. Lawyers who a year ago were out hunbig-waveting for business are now hiding out, trying to get their work done, and ignoring their marketing.

Smart lawyers who see the wave coming get out their surfboards. They start asking “how do I need to evolve this practice to take advantage of the rising market?” Dumb ones put on their life jackets and just try to stay afloat. Their mantra is “I’m too busy – I don’t have time to market!”

So, a blunt question: when is the best time to fish? When the pond is dry, or when it’s been re-stocked?

The firms that will survive and prosper are led by forward-thinking managing partners who monitor their attorneys’ workloads and proactively intervene to provide more support, more resources, and practical training on team management. They help attorneys evolve from worker-bee to a true legal CEO.

But the reaction of most firms is to hunker down. “We don’t need more help – it’s too expensive. The harder we work, the more profit we take home.” As a result they burn out their team, increase turnover of good team members, and miss the opportunity for spectacular growth.

Is your firm hunkering down in the face of a growing economy, or is it seeking to ride the wave?

If you’re in hunker down mode and want out, let’s talk. Call me at 407-830-9810.

The One-Stop Shop: Divorce Advice, Face Creams and Sex Therapy

The latest from Britain points the way to a bizarro-world for the legal profession. Britain and Australia have radically liberalised (Brit sp.) their legal systems, allowing alternative business structures (ABS), multi-disciplinary practices and non-lawyer ownership of law firms. Canada is soon to follow – read the full recommendations in “Futures: Transforming the Delivery of Legal Services in Canada”

The latest bounty from the change in Britain: “The Beauty Lawyer,” Cià Gabriella Manes, is offering a smorgasbord of services from DIY divorce advice to anti-aging face creams and, yes, sex therapy.

I made an audacious prediction when Canada released its recommendations. I predicted plaintiff firms with medical facilities and auto repair shops. Now that prediction seems a bit tame.

Read the full story HERE.

 

A Cautionary Tale for the Small-Firm Lawyer In the Fall of Dewey

An astounding relevation in the article “Judgment Day” about the fall of Dewey LeBoeuf, in the February ABA Journal.

“…Many partners asked a lot of questions about the firm’s accounting in the years leading up to the firm’s demise. They did not always receive complete responses, and the pattern was that the partners would get busy on client matters and not follow through.”

As the X-ers say, OMG. Many of the smartest lawyers on the planet were too busy doing their work that they failed to get a clear picture of how the business was working.

The message for small-firm lawyers is simple. Never get too busy working that you aren’t making sure the business itself is healthy. What does that look like?

  • Tending diligently to your marketing. Making sure you have a strong business network and that new clients show up regularly, and that no client represents more than 25% or your revenues.
  • Managing the income stream: making sure all billable team members are billing at least 3 times their base salary or draw by recording hours diligently and pushing down non-billable work.
  • Making sure billings go out promptly with client-friendly explanations, then maintaining a close eye on receivables
  • Maintaining strong client relationships – not becoming so immersed in “the work” that you ignore the client who brought it.
  • Managing overhead. Reviewing financials (or having a professional do so regularly) to ferret out unnecessary expenses.
  • Being highly selective with client intake, and letting the bad clients and bad work that sneaked in go quickly.

I was recently called into a firm of 5 partners and eight associates to do an operations analysis to discover they had nearly $3.5 million in receivables on the books. Nothing short of catastrophic management from every side: managing new intake, managing billings, managing AR, and managing the attorneys who were (still) creating this mess.

Lawyers were taught the law, not the business, and that too often means they ignore the dull, dry business side they don’t feel comfortable with in favor of the legal side they know. And in doing so, they can kill their practices.

If you’re not willing to be the financial manager, pay a CPA to guide you. If you’re not willing to be the operations and team manager, hire a firm administrator to do so. 

Most small firm attorneys will say “I can’t afford that.” but they can afford to spend sometimes as much as half their time doing the non-billable work of managing the store – and doing it badly – while losing the opportunity to do more billable work and more marketing.

The logic here is counter-intuitive. Spend more money to hire the right people – and end up making far more than the expense, creating a more stable business – and living a less stressed, crazed professional life.

If you need advice on how to turn your ship more directly into the winds of growth, call me at 407-830-9810 or email me at dustin@attorneysmasterclass.com  Always happy to offer my thoughts. 

Read the complete article “Judgment Day” in the February ABA Journal HERE.

You Won’t Need an “Emergency Plan” for Your Practice if You Have A “Growth and Success” Plan In Place

Susan Carter Liebel just posted an article on the Solo Practice University blog – a powerful and meaningful story that every sole practitioner needs to read and heed: “Emergency Planning – Thinking About the Unthinkable.”

But – in my opinion it doesn’t address the underlying issue. The best attorneys don’t need an “emergency plan” because they have built a FIRM with systems, procedures and team members who know – because they’re working on – everything that’s going on – every client, every file. Maybe it’s only one well-qualified paralegal/assistant, or maybe its a sharp associate and several team members. With this, another attorney can walk into the practice and have all the tools necessary to keep it moving and keep clients safe. In fact, even when the attorney is not there – whether for an emergency or a vacation – that good team is taking care of clients and watching over the practice. The solo-solo or the solo with only an untrained clerk don’t have anyone besides themselves who know what’s going on in the practice. They may have lists and stack of files, but most usually all the critical information is in their head.

As Michael Gerber said in “The E-Myth,” if nothing gets done when you’re not present, you don’t have a business – you have a job.” And there’s another issue. The attorney with no team has an absolute limit on his or her firm’s growth, because they have an absolute limit on their time and energy. And their family often has a limit to their tolerance of an absent spouse or parent.

So the greater truth is that the better kind of “emergency plan” is really a plan for growth and success – and the possibility of having a personal life. I just did a 10-minute video titled “The Almost Lone Ranger Syndrome”  that addresses exactly this issue. I just don’t address it as an “emergency plan” issue.

Sams Club Makes Legalzoom a Member Benefit

I predicted the further commoditization of legal services in a recent post, “The “Walmart Lawyer” Has Arrived.” Now Walmart has gone beyond its Canadian experiment with Avvo and rolled out Legalzoom nationwide. Just as I predicted.

This from today’s edition of The Florida Bar News:

“Legal Zoom did more than 1 million wills last year. It’s now a benefit for members of Sam’s Club, whose stores may eventually have lawyers on site. Avvo, which started as a lawyer rating service, now links a potential client to a lawyer every eight seconds and is setting up a service where anyone can speak to a lawyer for 15 minutes, for $39.” Read the full Florida Bar article HERE.

What is the bigger picture here? Bar associations, starting with the ABA, have so badly failed their profession that thousands of lawyers are inevitably – and in many cases, not even gradually – losing their ability to make a living at the law. Bar associations are tragically far behind the curve in serving the needs and interests of their members. The very organizations which used to protect entry to the hallowed portals of the law and keep legal services expensive, are now at the back of the pack, trying to react to the fast-moving world of business.

Futurists such as Richard Susskind in “The End of Lawyers?” and Jordan Furlong, in scores of far-seeing posts on his blog law21.ca (and occasionally myself) have been laying it all out in chapter and verse for years.  And Bar associations have done essentially nothing – at least nothing substantive – to respond. They have been re-arranging deck chairs on the Titanic.

The next big challenge for Bar associations – to which they will fail to rise – is the rising tide of transformation in the profession in Australia, Britain, and soon, Canada – multi-disciplinary practices, non-lawyer ownership of law firms, and more – as outlined the the Canadian Bar Futures Report (an absolute must-read). Bar associations will dither and quibble until the questions become irrelevant, as outside forces take over.

As I and scores of others have predicted, the bottom half of the market for legal services – the “commodity” half (where a great percentage of most attorneys live) is going away, or becoming commoditized to the $39 level now offered by AVVO.

The top half – where legal services are more complex and problems and solutions more unique – can survive, but only by taking dramatic steps to re-invent how they accomplish and deliver their services. For they too are coming under immense pressure from corporate clients who are no longer tolerating the “black hole” approach to billing. Pfizer fired one of the first shots here as early as the mid-2000’s. They announced that they were spending nearly half a billion dollars a year on legal services, and were firing half of their law firms and requiring the rest to provide services on a flat-fee basis. Thousands of companies are following suit.

The solutions? The “legal project management” approach, in whole or in part. As currently taught, it is aimed at mega-matters, and is far too complex for many practitioners (just like much case management software). But focus on internal capacity and efficiency – building strong, efficient and fast-moving teams – is essential to safe navigation of the future, even at the “bespoke” level of the law.

To survive attorneys and law firms must take heed of the principles I put forth in my “Heirarchy of Value of the Attorney In the Practice.”

First and most important – marketing – making sure we have clients to serve. Without clients, the attorney’s skills are irrelevant.
Second – client relationships – making sure the client is being well served (by the team), is happy with the work, speaks well to others about the attorney, and comes back with more work.
Third – Creating the strategy and direction – the roadmap – for the matter. I call this the “wisdom” piece.
Fourth – leading the team to get the result. Leading, not doing it all.
Fifth – the high-level legal work which no team member can do. This hearkens back to the strategy, but also means key client meetings, depositions, hearings, mediations, and trial. This is the neurosurgeon approach. He or she has a team that provides all the initial work, preps the patient for surgery, and often even does the initial opening. The neurosurgeon does only that part of the surgery that no one else can do. And when they’re done they leave the team to close and complete the surgery.

If you’re looking into the face of a rapidly changing marketplace and could use some input, call me. Always happy to offer whatever advice I can. 407-830-9810.

More rants – and more solutions – in coming posts.

Maybe Marketing Isn’t Your Problem!

In many areas of the country, the market is heating up, and when that happens, the biggest danger isn’t necessarily lack of marketing – it’s the fact that attorneys have only so much time and capacity to get the work done – and when they’re on overwhelm, they’re not marketing to capture all the additional work that’s available.  And even worse, they’re not able to deliver the best service to their current clients.

So, marketing isn’t necessarily your biggest obstacle. It might be your CAPACITY AND EFFICIENCY. And how do you increase it?

“Systems, Sorta Systems,”  part four of my video series  “Seven Ways Good Law Firms Lose Money,” discusses how poor systems – or poor use of systems – can seriously hamper a firm’s growth. It’s just 10 minutes long, and it’s worth circulating to every attorney.

The larger issue here is that the profession is moving in the wrong direction – shrinking support rather than increasing it. Steve Jobs didn’t stay in the garage building computers – he assembled a team to do almost everything he was doing, except the most important parts – the ideas and the leadership – what I refer to in the legal profession as the “wisdom” piece. When the attorney is using their time doing work that could be done by an associate, a paralegal or an assistant, they are not operating at their highest value. They have a practical ceiling on how many files and how many hours they can work – and how much time they have to make sure more business comes in.

There is a mistaken belief that technology can substitute for team. Only partly true. The lawyer without a team but with great technology has simply raised their ceiling, not removed it. And in the process they have trapped themselves inside the machine.

As Michael Gerber put it so succinctly in his book “The E-Myth,”  “if no work gets done when you are not present, you don’t have a business – you have a job.”

The path to an unlimited practice is paved not with Ipads and software, but people, systems, procedures – but most of all, great leadership and great management – of which the legal profession is in short supply. Almost every day, I help lawyers expand the

Don’t miss “Systems, Sorta Systems,” or any of the first four parts:

“A Checkbook Mentality”
“Technicians In Charge”
“The Almost Lone Ranger Syndrome”

And of course, call me if I can help Always happy to talk, no charge. 407-830-9810.

The Rising Schizophrenia In Our Profession

Much has been written recently about the increasing gap between the haves and the have-nots in this country. There’s clear evidence that, while the rich are getting richer, the middle-class is increasingly being squeezed, and a large percentage of them are heading for lower middle or even lower class financial status.

It’s the same in our profession. Some attorneys and firms are enjoying boom times, while an increasing percentage are struggling financially. (Read Susan Carter Liebel’s recent post 80% of Americans Can’t Afford Your Legal Fees”). For some the issue is how to cope with overwhelm – that is, how to increase capacity and efficiency, and take maximum advantage of boom times. For others, the issue is, literally, professional survival: how to attract sufficient business to stay afloat.

The solutions for both situations are radically different. But the root issue is the same: attorneys must break out of more traditional thinking and take dramatic and, yes, often risky, steps to change direction.

The “haves” of the profession must literally rethink who and what they are. Most are still stuck in the traditional “technician” role, simply working ever harder as more work comes in. The road out for them is reinventing their role – from “doing it, doing it” to creating, leading, and managing teams. Without this change they are actually limiting their ability to grow even more because they are working at – and usually even beyond – their capacity. These fortunate attorneys have even more work available to them – if they only had time to market and the capacity to handle more work. Where I have helped attorneys evolve from do-er to team leader, dramatic revenue increases have followed.

For much of the rest of the profession – the comfortable middle class and those who are struggling – the issue is more visceral: how to survive and thrive in a dramatically more competitive environment, and one in which the price and value of basic legal services is collapsing.

For them rethinking is about marketing. They must move from “marketing by wandering around” and living in hope to tight and aggressive focus on target markets, and evolving their services from general to more niched and specialized. In effect, they must identify and own specific “small towns” – that is, special interest communities – where they can become highly visible and preeminent. And this tight focus must also incorporate Web, social media and even advertising. But the result is dramatic: stabilized and increased income, and a strong, long-term position as the “go to” attorney in their specific “small towns.”

For both groups, there is a road up and out of their present positions. And for both, it starts with a new answer to the question “who am I as a professional?”

Call me if I can help.

The “Walmart Lawyer” Has Arrived

Back in January 2013 I wrote a post predicting “The Rise of the Walmart Lawyer.”

The rise has begun.

My prediction was that Walmart would contract with young lawyers who would then utilize an online legal document generation program like LegalZoom – and offer advice on which pre-packaged legal documents the consumer needed.

It’s begun in Canada, and not quite the way I predicted. The reality is actually more radical. Axess Law, a new-wave Toronto firm, is now offering “bespoke” legal services from a tiny rented space in the front of several Walmart stores in the Toronto area, with an eye to expansion. And they’re actually using their own proprietary documents and software akin to LegalZoom, more Canada-specific, and not quite so “canned” as LegalZoom

What makes them different?

Price, of course. Simple wills $99, notary services $25. And a carefully limited range of services. More complex work is referred out.

Business model: volume. The traditional law firm model was based on scarcity, which no longer exists – one of the reasons the profession is in trouble.

Accessibility: drop-by and drop-in service, no appointment necessary. Hours – 7 days a week, 8 a.m. to 8 p.m. They say that the hours of 5-8 are their busiest – just when other legal offices are closed.

How are you changing to deal with the future? If you provide a “commodity” level of services, you are in danger. If Walmart does it, are Target, Kohls, Kroger, Walgreens and CVS – in partnership with hundreds of other new-form law firms –  far behind? You need to read the full article. It’s one of the waves of the future – but not the only one.

If you’re worried about your future – contact me. Let’s talk.

 

A Curmudgeon’s View of Social Media Marketing

Just sent the Ohio Bar my handout for a marketing track at their upcoming Solo-Small Firm Conference in December. They liked my section on social media marketing so much they posted it as an article in their e-newsletter. Might be worth a read: http://bit.ly/1uwlpz

Also – premiering a new division of Attorneys Master Class – LegalCEOnow.com. Take a look around. Make sure you look at my short video series “Seven Ways Good Law Firms Lose Money” – http://www.legalceonow.com/adminutes.html

Partner Compensation: Start Making Sense – A Riposte

Jordan Furlong just posted another thoughtful and perceptive Law21 blog post on law firm compensation that is worth your attention: Partner Compensation: Start Making Sense. Jordan is one of the profession’s deepest thinkers and most accurate futurists, and writes what is consistently one of the top 100 legal blogs and my personal favorite. I suggest you read it first, then come back here for my counterpoint. He and I most often agree on the principles, but not always on the details.

Jordan’s observation is dead on that compensation is the “third rail” and one of the fundamental reason why law firms are failing, splintering, and going through hugely disruptive times. They are failing because of inordinate and warped compensation structures, splintering because younger partners are increasingly unwilling to finance massive payouts to retiring partners, and experiencing huge disruptions as the more progressive of them attempt to right the boat and survive.

Here are my comments on Jordan’s three points –along with a general agreement on both his approach and philosophy.

1. Stop overvaluing sales.

Yes – this “most highly valued” area of business generation is overvalued, for the reasons Jordan suggests.

His solutions, while in the right direction, contain somewhat of a fatal flaw, which is calculating “profit” on which to measure sales compensation. This introduces a wildcard factor that can destroy the original intent, because profit is a number easily manipulated and subverted.

Rather, I suggest a simpler version. First, I completely agree with his declining compensation concept. But second, a simpler structure – one which is more easily calculable – is in order here: 15% of first-year revenues, 10% of second-year, 5% of third year, and at the fourth-year the client becomes a “house” account with no origination paid. The firm should also delineate the qualified practice areas of all attorneys, and require that work outside the originating attorneys practice areas be moved to a supervising attorney with the appropriate skills, and out of the hands of the originating attorney. This serves the firm’s purposes in diversifying the firm’s contact with the client, and frankly, keeps the unqualified originating attorney from billing inappropriate hours for “supervision” of work outside their expertise.

Jordan cites frequent cases of inordinate sales focus resulting from declining client service after the sale. This, however, is not really a sales issue, but a management one. Frankly, the biggest obstacle to an attorney developing a larger book is their ability – let me restate that – their skills and willingness – to manage work effectively. Most lawyers are either good technicians or good salespeople, but rarely good managers. This problem is exacerbated by the general trend of law firms to decrease leverage, which drives work that should be done at lower levels up to the attorney, and thus decreases their capacity to handle more matters. And an attorney who is already overwhelmed is not keen to increase their marketing.

There is a larger issue here as well: how the overall firm is operated. The medieval “guild” foundations of the profession create a curious and dangerous dichotomy: my clients are my clients to manage as I wish, but I deserve a big share of the overall profits of the firm.

The fact is that, in most firms other than mega firms, the originating attorney “owns” the client, and has complete control over their management, from indifferent client service to allowing receivables to languish.

As Jordan recommends, the firm should be “taking the temperature” of clients regularly, and the very issue of continued partnership should rest on the attorney’s commitment to high level of client service and satisfaction. In this respect, firms should be actively and aggressively training attorneys to be strong team leaders and managers as well as good salespeople and technicians. And as a corollary to this, firm should be building strong support teams around their strong salespeople, which dramatically increases their capacity to oversee (and thus originate) work. This is a concept which goes against the grain of the current trend in law firm structures and is, in my opinion one of the most short-sighted issues in law firms today. But it points directly to most law firms’ inability to create good managers or good management structures.

And finally, the firm, not the attorney, should own the receivables and manage them appropriately, and the firm should be primarily responsible for making sure a high level of client service is delivered.

2. Start properly valuing everything else.

The issues Jordan enumerates for valuing other elements of the practice are certainly valid. But most of these issues are difficult to quantify other than subjectively, which often assures that no one feels treated fairly. And those that are quantifiable create a considerable overhead burden, as well as much room for argument and discussion.

Yes, firms should value client relations, as measured by client surveys, and project management, as measured by timelines and budgets. Again, these fall into my belief in us of more objective measurements.

Legal marketing, however, is compensated through results – that is, originations – and need not be additionally valued. However, firms should provide marketing budgets and better, more practical staff support. Too often, firms hire marketing people who focus on big issues of branding and image, while failing to support the practical, “boots on the ground” efforts of the individual attorneys which actually generates most of the business.

Leadership activity is already measured and compensated by stipends for service at various levels of management. In fact, firms that fail to do so are insuring that those roles will be marginally exercised, resented, and badly managed. Smart firms not only provide stipends for management responsibilities, but consequent offsets of billable hour requirements.

Recruitment efforts should generally be outside the normal purview of the working attorney, and vested in, for instance a recruitment partner, who is compensated for this management role. There could well be some space to provide some type of “finder fee” for an attorney who refers in a successful candidate. The issue of longevity of that hire as a factor for that compensation isn’t valid, since it is largely outside the control of the finder, and too dependent on political and financial decisions of firm leadership.

Community support and participation, while almost an ethical requirement of attorneys, is really of two types. The first is the contribution of services – pro bono work or work donated to charitable and community organizations – and the second is community participation and leadership. While the first is somewhat quantifiable, the second is a hybrid of personal commitments and marketing.

Permit me a tangent here. One of the biggest failings of most law firms is inadequate recognition that each attorney has certain strengths and weaknesses, and brings specific values to the firm. Most firms expect all attorneys to fall into a single pattern – good sales skills and good technical skills. And in fact, offers of partnership are most often tied directly to originations.

Often, good “sales” people are bad managers (and sometimes even not such great lawyers), and should be required to utilize a strong “client care” team to deliver services and legal work.

Conversely, every firm needs, and should appropriately value, those who are good technicians, and therefore support the good salespeople in delivering service, but who are not good salespeople themselves. The best firms have the appropriate mix of both and the right structures to make it work. Great teams behind great salespeople create a very large funnel of work, revenue, and profit.

3. Stop paying partners to bill hours.

Jordan’s observation on the baffling partnership structure is dead center. Back in the 1990s large firms were experiencing a disturbing trend: associates were leaving large firms at an alarming rate. While the theory was that partnership was a reward, associates saw partners under more pressure and stress, rather than less. A Wall Street Journal article quoted one associate as saying that the competition for partnership was “a pie eating contest, the reward for which is more pie.”

Why this still exists is a complex problem, but one that stems from the fact that most attorneys still see themselves as technicians, not managers, and insist on staying on as players, long past the point that they should have been moved to coaching.

There are virtually no successful companies where the owners and founders are still on the assembly line making widgets. In the business world, the successful entrepreneur moves from inventor to technician to manager to leader, and eventually to passive owner or shareholder.

The foundation of this problem is laid in law school, which typically teaches two principles. First, just do great work and the clients will come: and second, you’re a professional and not a business person. Consequently, lawyers have no desire to become managers, and indeed, see it as abandoning their profession, and thus their identities. In other words, their identity is tied up with the work itself, rather than the business that does that work. In many firms, the person elected managing partner is the person who was not present at the partner meeting to refuse.

Too many firms perpetuate this approach and this model by undercompensating their leaders and burdening them with onerous “technician” requirements for billable hours. Just four years ago, I encountered a managing partner of a 55-attorney office of one of the top 20 largest law firms who was paid $50,000 for the role, while still required to bill at least $600,000 – and given the support of half an assistant to support him in fulfilling both roles.

Final observation. The revolution that has already come to Britain and Australia and will shortly come to Canada (www.CBA futures.org – a must-read) will, sooner than anyone expects, come to the United States. And when venture capitalists, investors, and strong business leaders begin to transform the profession, much, if not all of this, will change. Big firms will fall and splinter and merge like never before. Smaller firms with onerous partnership and buyout terms will disintegrate, leaving those senior partners expecting big payoffs looking at empty firm checkbooks. And many attorneys will find their expected career paths vaporizing. My last tongue-in-cheek blog post, “Berkshire Hathaway Purchases Nebraska’s Largest Law Firm” isn’t fantasy, but simply a news article ahead of its time.