This is a continuation of the past three articles I published in ATL over the past month or so. My first article argued that Profits Per Partner is a great servant for a law firm but a bad master. In my second article, I set forth our Profits Per Partner Emancipation Plan as an alternative. In my third article, I set forth what I believe is the highest level in law firm profitability analysis, which is to “embrace” the volatility inherent in the practice of law. In this final article, I will give some thoughts on how a law firm could indeed Embrace Volatility.
Before getting to that, I will mention as an aside that I wrote a few weeks ago in this column an article entitled “Are Lawyers Only Happy When They’re Miserable?” That article largely dealt with how an individual might in fact Embrace Volatility. This article is directed not at individuals but at law firms.
If you have been reading my past articles, you may be open to at least considering how Embracing Volatility might be a good thing for a law firm. But is this whole concept just a fantasy, like it would be nice to not be afraid of snakes but you can’t help it and just reciting “I am not afraid of snakes” isn’t going to work? I don’t think so. I think the following simple steps would do it quite nicely:
After twenty years of operating my own law firm, I still answer my own phone – much to the pleasant surprise of many of my callers. Though you’d think that having the firm principal pick up would signal a one-person, fly-by-night operation, to the contrary, callers’ ability to get in touch with me directly conveys the impression that I’m an accessible, hands-on kind of lawyer.
Of course, answering the phone works for my practice because frankly, I don’t get all that many calls. Most of my clients and referrals who want to speak with me by phone will typically email me initially to determine a mutually agreeable time for a call. And because my work is so specialized and many cases come via referral, when clients reach my voice mail, they’re not likely to move on to the next lawyer on the list of internet search results. That means if I’m too busy to talk, I can let calls go through to voicemail without fear of losing a piece of business.
But what about lawyers who aren’t in such a position?
Soon after I started my solo practice, I realized that I needed to develop and execute a plan for getting new clients. At first, I did it the old-fashioned way: networking, joining organizations, giving elevator speeches, passing out business cards, and doing contract work for other attorneys. This method took time and cost money and it didn’t work to the extent I had hoped. So I asked a few colleagues whether I should hire someone to help me improve my business.
I received the names of consultants, SEO experts, and coaches. Someone even suggested I talk to Tony Robbins. Some people swore by them while others said that the “advice” they provided was a bunch of hooey and can be found on the internet or at the library for free.
Over the last few years, I have become very skeptical of business development professionals (sometimes known as “marketeers”) who claim that they know the “secret technique” for improving my solo practice. A number of them are lawyers or ex-lawyers who — for one reason or another — decided to go into consulting and coaching. Also, some of these “experts” have questionable backgrounds and may not understand the professional rules that we lawyers have to follow.
I should point out that the purpose of this post is not to badmouth any particular person or the legal business development industry. This guy covered that already. But click onwards to find out the reasons for my skepticism and my thoughts on when it might make sense to retain a business development professional….
Of all the regrets I have in life, one of my greatest is that I never had the chance to meet Peter Drucker before he died.
Drucker is one of my intellectual heroes. He was able to look at the same world that everyone else was looking at but see things that others couldn’t see. He literally invented a science. And like all science, it is around you from the start but you just can’t see it till someone shows you the way.
The science he invented was the science of “management.” Before Drucker, people just ran things and sometimes good things happened and sometimes bad things — no one really delved too deeply into the “why” of it all. But then along came Drucker, who made order out of chaos and realized that there were principles that, if followed, would increase the likelihood a business would be successful.
All those leadership books you sometimes read, all those “how to” books you sometimes read, all of that thinking evolved from his groundbreaking analysis into the science of “management.” Drucker’s books are utter masterpieces. Indeed, there was an epiphany for me on every single page of his amazing book Management (affiliate link). I think I learned more about how to run my law firm successfully from Drucker than from any other source.
Here are two thoughts from Drucker that hit me like a bolt of lightning when I read them. Honestly, my business — and even my whole life — was never the same again.
“A few years ago, a lawyer I know had to leave her hometown where she had lived most of her life and move cross country for family reasons. And because she loved her solo practice and the flexibility it afforded her as a mother, and since she is smart and confident, she decided to re-start her solo practice in the new city, thinking it would not be too difficult. But it proved to be much more challenging than she ever thought.”
“Back here, in her hometown where she knew everyone, clients were not hard to come by. In the new city however, she had a lot fewer contacts and even fewer potential clients. And given that back here she had not really had to work too hard to get business, she never really learned about marketing, so that too was new. Eventually, between the Not-So-Great Recession and the challenges of starting from scratch, she finally had to go to work for someone else.”
The article got me thinking: How much of an edge does a lawyer’s hometown — or college or law school town, for that matter — provide in starting a successful solo practice?
Occasionally, someone wants me to do legal work outside of my practice area. I tend to refer the potential client to an attorney who can handle it and ask for a referral fee when appropriate. But sometimes it makes sense to work the case myself with outside help — for example, if the work is for an existing client and he cannot afford the referring attorney’s fee. So as a gesture of appreciation to the client, you want to help him for a reduced fee. Or you want to get experience in the area of law that is involved.
And let’s be anonymously honest. Sometimes the case has potential for large attorney’s fees and you want a bigger cut than the firm’s standard referral percentage. It’s hard not to feel bitter when you get a paltry referral fee up front and later learn that the attorney who handled the matter got a half-million-dollar payout.
So today, I want to write about how I typically (but not always) decide whether to refer a case out completely, or co-counsel with someone else. I assume readers are familiar with and will follow the ABA Model Rules 7.2 and 1.5(e) and your state’s versions of these rules. My first priority is to refer a client to a competent attorney, even if it means a smaller referral fee or none at all. But when there are three or more equally competent and business-savvy attorneys competing for your referrals, the size and girth of the compensation package can be appealing…
Yet in spite of my love affair blogging, these days, I no longer believe as ardently as I once did that solo and small firm lawyers should take up blogging to market their practice or to show what they know to prospective clients. Sure, there are exceptions. For lawyers who’ve already taken up blogging in law school or who have a unique viewpoint about practice area that they yearn to share, starting a blog is a no-brainer. Likewise, blogging makes sense if writing about the challenges of practicing law or handling particular types of cases offers a pleasurable release from the stress. If mind and computer keyboard operate as a seamless unit, with thoughts effortlessly transforming into cogent and compelling prose, then blogging makes sense as well.
But let’s face it: most lawyers aren’t built that way….
There are plenty of good reasons why a solo lawyer should, and indeed must, refer a case to another firm. For example, if a particular case isn’t compatible with your business – either because it falls outside of your firm’s practice area or it’s not economical for your firm to handle – there’s no reason to hang on to it. And notwithstanding the advance conflict waivers that large firms foist on clients, in my view, conflicts of interest are a non-negotiable grounds for referral, because they “spawn an alarming number of ethics complaints.”
But there are other situations where a solo shouldn’t be so quick to send a case packing, notwithstanding conventional wisdom to the contrary. Here’s a list of examples where you might want to think twice before referring a case:
It’s one thing to say that you bill at $200 or $500 or $1,000 an hour; it’s another to actually collect those fees. Every time a client fails to pay a bill, you’re effectively discounting your overall rate. And while writing off $500 here or there may not seem like much, over the course of the year it can amount to several thousand dollars – which doesn’t take into account the added cost of chasing down clients to collect from them.
Of course, the best way to avoid getting stiffed is to obey Foonberg’s Rule: Get the money up front. Unfortunately, sometimes, you can’t predict the full cost upfront – and if the expected bill is mid-five figures or more, a client simply may not have that kind of money all in one place. Moreover, taking payment up front won’t guard against a client asking for a refund down the line if you haven’t vetted the client properly. So beyond upfront payment, here’s a list of tips to avoid getting stiffed:
A few months back at my home blog, MyShingle, I wrote about a small Michigan law firm that sued a legal marketing company for fraud and RICO violations, alleging that the company created a “bogus Internet marketing program, supposedly designed for small law firms and sole practitioners” and duped firms into participating in the program through a series of misrepresentations about the company’s ability to boost law firms’ Google rankings. The lawsuit is still pending in federal district court in Arizona (Docket No. 2:13-cv-01502).
Though few expressed sympathy for the firm, suggesting that it was greedy or foolish to fall for the marketing company’s “infomercial-like” sales pitch, in my view the lawsuit raised a valid question: Should law firm marketers, practice management advisers, and other vendors pitching services to improve law firm performance remain accountable, at least to some degree, for the results?
Average law school debt for graduates of private universities hovered around $122,000 last year. With only 57% of new attorneys actually obtaining real lawyer jobs, recent graduates have a lot to consider when it comes to managing their student loan payments. Thanks to our friends at SoFi, today’s infographic takes a look at student loan debt, including the possible benefits of refinancing for JDs…
Kinney Recruiting’sEvan Jowers is currently in Hong Kong for client meetings and still has a few slots available through October 22. Evan will also be in Hong Kong November 14 to December 15. Further, Robert Kinney has been in Frankfurt and Munich this week and is available for meetings with our Germany based readers.
One of our key law firm clients has referred us to one of their important clients in the US, Europe and China – a leading global technology supplier for the auto industry – in order to handle their search for a new Asia General Counsel and Asia Chief Compliance Officer.
Kinney is exclusively handling this in-house search.
This position will have a lot of responsibility and include supervision of eight attorneys underneath them in the Asia in-house team. The new hire will report directly to the global general counsel and global chief compliance officer, who is based in the US. The new hire’s ability to make judgement calls is going to be as important as their technical skill set background.
The position is based in Shanghai and will deal with the company’s operations all over Asia and also in India, including frequent acquisitions in the region.
It is expected that the new hire will come from a top US firm’s Shanghai, Beijing or Hong Kong offices, currently in a top flight corporate practice at the senior associate, counsel or partner level. Of course, the candidate can be currently in a relevant in-house role.
The JOBS Act created new tools for companies to publicly advertise securities deals online. As a result, thousands of new deals have hit the market and hundreds of millions in capital has been raised, spurring a wealth of new business development opportunities for attorneys.
Fund deals, startup capital raises, PIPE deals and loan syndicates are just a handful of the transactions benefiting from the JOBS Act. InvestorID FirmTM is a platform designed to help attorneys equip their clients with the workflow, marketing and compliance tools to publicly solicit a securities offering online. By providing clients with the tools to painlessly navigate the regulatory landscape of general solicitation, InvestorID FirmTM helps attorneys add value above just legal services.
The Jumpstart Our Business Startups Act (JOBS Act) went into effect in 2013 and permits Regulation D offerings of securities to be advertised publicly. This means that funds and companies can now use social media, emails and web sites to market transactions to new “accredited” investors.
However, with these new powers come new pain points. InvestorID FirmTM provides a secure, fully hosted, cloud-based platform with a breadth of tools for your clients, including: