Category: Management
Despite today’s economy, some law firms are growing … by merger and acquisition.
In fact, I had lunch with such a law firm just this last week. They are an 100 lawyers firm that is seeking to grow. They are interested in acquiring my client, a substantial boutique that would add a significant presence for them both in the relevant practice area as well as the geographic area.
We couldn’t seem to connect, however. I made it very clear that my client was talking about selling his firm. Their offer suggested that they were interested in "merging." The reason was simple: No capital outlay was needed for a merger. The "offer" was structured in a way that would pay my client several hundred thousand dollars more than he is currently earning. And 100% of the payment to my client would be tax deductible as an ordinary expense, not a capital expenditure. They structured the offer this way also in order to be sure that the "book of business" follows my client for several years. This, was not what we wanted … we are not looking to become partners in the acquiring firm.
During our conversation, it became clear why we were communicating at different levels…
(more…)
View page
Lawyers need to communicate. The ones who face malpractice actions typically fail to communicate with their clients to learn what clients want, how they want to hear about it, and where the client’s business or personal needs may be headed.
But I think lawyers – and most of the rest of society – have increasingly fallen into the trap of too much communication with their cell and smart phones. Cell phone use for many people seems to have become a natural extension of themselves – they inflict it on everybody around them. Just like drivers who hog the left lane while driving at half the speed limit and remaining oblivious to everyone else on the road, these cell phone users hog the physical space of those around them with the sound of their own voice, and are oblivious to how irritating it is.It’s not hard to create a list of pet peeves about these people.
Here are some of mine:
· People determined to shout their conversations as loudly as possible, presumably to show off their wit or importance or intelligence (and of course doing the opposite).
· People who board a plane and decide to place orders on their cell while sharing their private credit card information.
· People who look for the proper signal area – with a constant "Can you hear me? Can you hear me now?" – but never seem to find it.
· People who let their cell phone ring time after time, in a workshop or a concert or anywhere else where they can ignore the stares of those they annoy.
· People sharing half of their life stories in an elevator or a crowded vehicle, completely unaware that others don’t care about all the “fascinating” details.
· People who absolutely must interrupt their call with me to get another call rather than letting it go to voice mail.
My “favorites” are those who talk while in the stall of a public restroom. When I encounter one of them, I make as much bathroom noise as possible (flushing toilets or urinals multiple times, using the hand-dryers). Anything to let the individual on the other end of the phone know that the person is talking to them from a bathroom….
I’m sure you have your own special list of such people. Share it and I’ll pass along the responses in a future post. Maybe all of us together can generate enough “shaming” to change some behaviors.
View page
Even marketing folks are concerned about the return on the investment in one’s daily activities. While some folks, yes, lawyers too, ignore the money, marketing professionals are trying to convince their management that they are important to the success of their organization, that they are responsible for a lot of new business.
AdAge says: "…Return on advertising investment has always been a priority for marketers, but in the recession it flew to the top of the list. As chief marketing officers fought to justify spending within their organizations — often via spirited discussions with procurement departments about where the dollars are going… " The Days, the subject matter of this article, I’m pleased to say are friends … and outstanding marketers who focus on providing a profit on marketing dollars spent.
Do you look at this issue? Can you determine whether the money you spend is producing a profit, is enabling you to expand in your practice area, is improving your skill as a lawyer, or otherwise contributing to the improvement of your law practice? You should. If not, you’re in the gardening, playing with the dirt rather than growing gorgeous roses for sale to others who can appreciate your skills.
View page
Alan Weiss, a noted consultant (and my coach) said today: "… I’ve never seen happy customers when there are unhappy employees (either naturally unhappy or angry at the employer). I have seen happy employees and unhappy customers (no supervision, lazy, entitled). Always hire enthusiasm, you can teach the content.(emphasis added) … And make sure you demonstrate within the business the behavior you’d like to see bestowed on the customer. .."
Another way of saying this is what I’ve always preached: Hire for work ethic; hire someone who is passionate about their work, about making a contribution to the organization. and about focusing on the client, not themselves. The rest can be taught. Skills can be taught, attitude cannot.
View page
"The NLJ 250 collectively employed 9,567 fewer lawyers in 2010 than it did in 2008, a decline of nearly 8 percent in headcount, with the 10 largest firms in the U.S. alone losing more than 1,000 lawyers last year. This is just the second time in the 34-year history of the NLJ 250 survey that the nation’s largest law firms have experienced a net reduction in employed lawyers for two consecutive years."
This group of law firms, the largest of which is Baker & McKenzie at 3,700+ lawyers, makes up less than 5% of the attorney population. Their growth, like all corporate growth, has its expansion and contraction phases. There are at least two questions that come to mind:
1. Is this contraction permanent? Is this contraction a reflection of the entire industry?
2. Does this contraction reflect a major shift in the way legal services will be delivered in the future?
My crystal ball does not give me the answers. But, I believe that
i) even sole and small firm practitioners felt the change;
ii) though the numbers in the survey reflect 2008 as the base year, there does seem to be a cautiously upbeat attitude among lawyers today. More lawyers are contacting me with the serious questions of how do we make our practice better, how do we grow our practice … in other words, lawyers are starting to come out from their caves, a bit shell shocked, but ready to understand the needs of clients and focus on providing solutions to their clients;
iii) it’s not the contraction that will cause the shift in the way services are delivered, it’s the continuing evolution of technology that will impact the delivery of services. And this conclusion would have been the same with or without the contraction. It’s just that, because of the contraction, we’re more sensitive to the changes. But, these changes began before 2007-2008, and they will continue after 2011.
Lawyers have to be more sensitive to technological changes and how these changes can improve their efficiency and mode of delivery. Clients certainly are and they are looking for those lawyers who can reduce their legal costs (not necessarily hourly rate). Thus, even the decades-old billing and pricing models will be subject to pressures that mere conversation failed to impact until now.
As Oprah said yesterday while interviewing the President and First Lady, "… keep your eyes on the prize." Know what you want in your practice. Know what your clients want from you … what is the ultimate solution they are seeking by engaging your services? Stay focused and you will have happy clients … happy clients pay their bills … happy clients refer their colleagues and friends … While doing good, you will be able to do well.
View page
In most states, strict compliance with trust accounting regulations is required. Where such regulations require a paper trail that includes retaining canceled checks and other features of an older era, lawyers are inadvertently out of compliance. How? Why?
The banking industry has moved on. They are into the electronic age and we have not kept up. For example, few banking institutions, if any, still return canceled checks. They send photocopies and, after a short time, destroy the canceled checks. See the federal Check Clearing for the 21st Century Act.
In August, 2010, the American Bar Association’s House of Delegates adopted the new Model Rules for Client Trust Account Records to replace the Model Rules on Financial Recordkeeping, in effect since 1993. The ABA rules now enable lawyers to use electronic tools to comply with Model Rule 1.15 concerning holding clients funds and property.
Check your State rules — not all states have updated their regulations.
View page
McKinsey & Co. released a report stating that ‘inadequate career development has kept women from reaching the top rungs of the corporate ladder…" The same is true in law firms who correspondingly have low numbers in top management.
The report said "…companies need to spend more time coaching women …" Corporate America understands this; when lawyers learn to understand this, they will become better lawyers.
The coaching process works for athletes, works for top executives in Corporate America; and works for others who want to increase their revenue and decrease their stress. A side benefit of great importance an increase in one’s self-esteem. Lack thereof is one of the greatest impediments faced by most professionals, probably because our standard is "perfection." I know no one who is able to reach that standard. Coaching can show us how important "progress" is without worrying about reaching an impossible level of perfection. Having someone walk the plank with you who understands these issues and can enable you to progress is important. As with an athlete, having a coach can be the difference between a very successful practice and a modest practice.
View page
Yes, say some.
Only a short time ago, we believed that non-lawyers would be able to participate in the ownership of American law firms. The pressure, so we believed, would come from the British Empire. Australia already allows this and it will soon be permitted in England. But, not the U.S. … until now.
The District of Columbia permits non-lawyer ownership to the extent of 25% interest in a law firm. And, now, North Carolina has a bill before its Senate that would allow 49% non-lawyer ownership.
One argument is that law firms have expanded and are now very large organizations. In order to grow, they need additional capital … and capital is best raised in the capital markets, not from individual partners of law firms … and that means non-lawyer ownership. While large law firms are looking more and more like their corporate clients, it is still a stretch to suggest that law firms should raise outside capital.
Do law firms need to grow? Why can’t corporate clients’ interests be served well by smaller regional law firms? Why does the corporate law firm have to be as large as the client? We saw unions grow in both size and power in response to corporate and management growth and power. And we now see unions fighting to stay alive. Will that also happen to large law firms of the future? Will technology enable small groups of lawyers to be effective in large corporate representation?
Some argue that the rules of professional conduct wouldn’t bind non-lawyers in matters of confidentiality and charging reasonable fees. Further, the very independence of lawyer’s judgment might come into question. But, the rules have been bent, if not changed or discarded entirely, when large firms’ economic interests were at stake. So, it will be fascinating to see who argues on which side and how this issue develops.
Is it possible that this issue will finally cause the break up of the mandatory (integrated) bar association into State licensing agencies on the one hand and voluntary bar associations on the other hand … with the latter being the home of sole and small firm practitioners banding together to serve their own economic interests?
View page
In today’s L.A. Times, a doctor talks about her reaction to meeting a patient in an airport restroom. The patient was out of context and the doctor was taken aback, at first not recognizing the patient. She concludes by suggesting how much she learned about the patient by seeing her in her own environment, the place where she works. As a consequence, she starts to think about how her future treatment of this patient will be altered.
How often do we, as lawyers, see our clients in their habitat? What kinds of information might we gather, mostly unspoken information, that would dramatically alter the advice we provide? In many cases, quite a bit! Yet, not many lawyers take the time, unbillable time, to visit our clients to really get to know more about them, their work and family environments, and the possible impact on the clients of the advice we provide.
Like the doctor writing the article, I suspect our approach would be somewhat different. And, perhaps more important, the connection the client has with us would be dramatically different! That bond, needless to say, would result in better representation and more referrals. Interested?
View page
Someone said, "Business, by definition, is taking a risk. Law, by definition, is staying away from risk."
I look at law a bit differently. I think law looks to the past for today’s decision with a view to guide tomorrow’s action.
And accounting, is merely recording this period of time in order to tell the government what we did and, as a result, how much "protection money" we need to pay.
What do you think the functions or attributes of the three professions/businesses are?
View page
