Big Law freezes salaries for 2009 … and bonuses will be reduced for 2008! Clients are demanding that rates remain constant, no rate increase for most, though some will be able to get away with modest increases.
Clients, in general, are becoming more demanding. Lawyers need to "get over it." Lawyers are not entitled to continuous increases and must realize that we are in competition, not with other lawyers so much as with other service providers by way of comparison. And clients will leave if they are not happy with how we relate to them, serve their interests both economically as well as responsiveness.
One example happened to me just this morning. I asked my lawyer a question by email. He called me to respond rather than responding to me with an impersonal email. He asked a simple question or two and provided me with a very simple, yet effective answer that addressed my issue completely. I’ll pay at least 1/4 hour (or his minimum if higher), but my issue of the moment was addressed completely. That’s effective, efficient service.
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The economic crises has finally hit home. People I know are talking about October and November as being months when the world stopped! … and they couldn’t get off. No one seems to know what is going to happen next.
I met yesterday with managing partners of several major law firms in my Managing Partners Roundtable.
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Do you want to be a banker or lawyer? See LawBiz Tips current edition for one perspective.
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In his article, Restoring Optimism, Law Practice Today (Nov. 08), David Maister suggests that law firm managers are coaches, but that they “edge away from the coach role” during tough economic times. I would concur that the really great managers are primarily coaches to their minions even while they understand and have a firm handle on the economics of the firm. I suspect, however, that there are very few managers or firm leaders who have this attribute.
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I have warned about the dangers of law firms paying staff salaries and even partnership draws by using their bank lines of credit. In a credit line arrangement, the firm borrows and repays at will up to the amount of the credit line, which the bank regularly reviews and extends, increases or terminates as circumstances warrant.
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Complete your time sheets daily, every day.
The best practice is to keep a running log of time (software-based or otherwise) of everything you do as you do it. If you’re a scrap-of-paper person, then you need to aggregate and compile the list for your billing program before leaving the office that day. Even if your memory rivals that of the elephant, you will miss things if you don’t do this every single day.
One missed 10th of an hour each day translates to 23 lost hours a year. And failure to keep current, proper time records will usually result in more than just 1/10th of an hour lost … DAILY … and MANY thousands of dollars in lost billable revenue!
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Last week, I attended a self-esteem conference conducted by Alan Weiss. The lack thereof is one of the most debilitating psychological factors affecting so many people, even very educated and successful people.
The conference, held in Rhode Island, was well worth the travel. I don’t know exactly how to describe it, but it caused significant introspection; most people shared their experiences and concerns as well. That, alone, was worth attending. We found out that many of us share the same journey, a sharing that seldom occurs, even with loved ones.
Here are some learning points suggested by Alan:
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Not all that long ago, I learned about a "new" source of cash. I hadn’t heard of this before.
Life insurance policies on older people can be sold — the buyer pays for the policy and "cashes in" when the insured dies. The price paid to the owner of the policy usually exceeds all the insurance premiums paid to date, and then some. This lump sum payment can be significant. And a new insurance policy, premiums paid annually, is a small fraction of the lump sum payment received on the old insurance policy.
This is similar to another creative product … reverse mortgages on residential real estate.
With the financial crises upon us, this $12 billion (2007) life settlement business has been hit hard … and older folks attempt to use "life settlements" to carry them through retirement when their other capital resources are dwindling is faltering. The buyers of these policies are finding that their sources of cash (banks and other investors) are having cash flow problems as well. Thus, the funds are drying up, and the number of buyers/investors in this type of asset is shrinking.
Our creativity in creating financial instruments in the last 20 years without adequate substantive backing has caused us problems. Perhaps our creativity will also get us out of the current dilemma. Postponing retirement may not suffice to keep us in our life style; it certainly will be a damper for those who have dreamed of traveling and just relaxing once they reached a certain age. With "that age" being pushed further out, there is likely to be great resenting and disappointment … this can cause illness … and this can exacerbate the aging problems and family cash strains.
Lawyers are finally listening to me when I say that their law practice has value and can be sold … this is one way to raise cash that will assist aging lawyers (Baby Boomers and others) to smooth out the wrinkles in their financial plans caused by recent economic events.
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West LegalEdcenter will host our second teleseminar on the topic of social networking. David Nour, author of the new book, Relationship Economics, and I will talk about the new phenomenon being used to link with others and network with colleagues. Join us. Sign up now! The price is right – FREE.
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