Tag Archive: Management
Most people will agree that there are too many lawyers, an oversupply. (Parenthetically, I disagree; it seems to me that there is a dislocation between the supply and the demand for legal services, a situation that the organized bar has never been able to reconcile with successfully.) But I digress.
Assuming, for the moment, that there is an oversupply of lawyers, why should we care? Would that not mean the fees for legal services would come down? Would it not be best to let the marketplace handle supply and demand?
But, If the Bar wants to reign in the supply, how could they? Of course, get rid of some of the lawyers. (Making admission to the organized bar is another way, longer term. Economics seem to be handling this quite nicely, thank you. Law school admissions are down by 10 to 15%. Applications hit a 30 year low. Potential law students understand that spending many thousands of dollars to take the gamble that they will not be able to get a well-paying job at the end of three years is a fool’s gamble.)
Economics, once again, helps us answer the question of how to reduce the supply. There are more than 1 million lawyers in the United States. Of this group, it has been estimated that at least one half of this group are sole practitioners. Another statistic suggests that at least 400,000 lawyers will retire by the year 2020.
If we look at this latter group, and suggest that we treat it any differently than any other group in the organized bar, we would be accused of ageism, and prohibited discrimination. However, if we come up with a metric that is applicable to all lawyers, such as “competence,” then we are safe. Of course, if this metric also achieves our basic goal of reducing the number of lawyers available to serve clients, so much the better.
But, this metric is never applied uniformly. If we look at new lawyers, those who have been admitted to practice for three years or less, I am sure we will find many who are not “competent,” despite the fact that they have passed the bar exam. How many times have "mature" lawyers said, mostly to themselves, that they were happy that they were not the client "back then," that they didn’t know enough to be really competent to handle the matter they did …. that they learned "on the job."
What is the metric for “older” lawyers? Do they have to pass another bar exam? If yes why should age be the factor that determines whether they have to take a new examination? If not, what might it be? Nowhere in the time spectrum of a lawyer’s career is there a requirement for such an examination.
How many times have you, as an adversary, said to yourself my opponent is not very good? In fact, how many times have you said my opponent is not “competent?” Until the appropriate metric can be accepted and applied throughout the entire career life cycle, it seems to this writer that the real focus should be on meeting the needs of our clients who are not served or who are under-served, making sure that all lawyers, young and old alike, are “competent” and move away from even the appearance of ageism.
In a recent article, the writer describes a twist in medical fees. A specialist, in this case a cardiologist, is charging a premium retainer fee for accessibility. That’s access, not treatment! The levels of service created by the cardiologist are $7,500 per year for “concierge” service, $1,800 for “premier” status, and $500 for “select” status. The differences among the levels range from priority to get an appointment to 24/7 access by phone or email. Medicare or private insurance still pays (or doesn’t) for the actual service. But this doctor says that Medicare reduces his billing rate and this is a way to earn the money he can and wants. This is brutally frank. But, as in other areas, economics control.
I had never thought of digital assets being inherited! Wow, what an oversight. Clearly, digital property is an asset and can be passed on to the next generation. Have you thought about the goodwill represented by your Twitter account, your blog, you website and all the other digital assets you create? If not, you should because but for an affirmative act on your part, the rights to that property may be lost.
Most lawyers will pooh-pooh the idea that their electronic/digital property is worth anything … they said this about the value of their law practice also. Many lawyers are beginning to adjust their thinking, recognizing that law practice goodwill has value … and together, this property could be worth tens of thousands, if not hundreds of thousands, of dollars. Why should this value evaporate? Take care and plan not only your estate but also the estate of your law practice, including digital assets!
MyCase legal practice management software has announced an integration with the popular accounting software QuickBooks. This is an important integration, as it allows law firms to have full synchronicity between their practice management and accounting software systems. The integration comes at no additional cost to MyCase customers. For at least 15 years, I have been preaching "integration" to technology / software developers. This is a major step forward on that path. Check this out for your office.
On Thursday, August 22, the NASDAQ, one of the largest financial exchanges in the world, failed. It had no backup, and was down for more than three hours. The financial impact had to be in the billions of dollars.
Even as big as NASDAQ is, even though they have a pivotal role in the global economy, they failed to have a plan for disaster recovery. How and why they recovered is still, at this writing, a mystery. The fact that they did recover is remarkable. Even more remarkable is the fact that it has happened to them before. According to an article in The New York Times, the exchange has been shut down twice before when squirrels chewed through power lines, and as recently as 2011 hackers breached its computer system.
If it happened to NASDAQ, it can happen to your law firm. As I’ve written many times before, “disaster” for a law firm is not a question of if, but rather of when. The only unknowns are what the type of disaster, when it will occur and how bad it will be. NASDAQ was out of commission for three hours. A burst water pipe, a fire, a natural disaster, a computer meltdown could put a law firm out of commission for three weeks, or three months.
NASDAQ had no backup. How about your firm? The issue isn’t just backing up data files, although that is important. Do you have disaster recovery backups like these?
· An internal emergency communication system for lawyers, staff, clients, vendors, and the court, incorporating recorded hotline messages and out of area contact points.
· A plan for temporary office space that will accommodate furnishings, computers and phones.
· A referral arrangement with another firm that will allow you to carry on key practice matters by requesting a continuance or rescheduling a deposition.
· A solid relationship with your banker so you can get an emergency loan.
· An employee assistance fund to help tide staff over in the event there are no ready funds to pay them.
If you don’t, start planning to put them in place now. If disaster happened to NASDAQ, it can happen to you.
Some law firms are late to the starting gate. Some firms continue to hang on to the "old ways" of running their practice. There are only a few alternative paths: Hang on with the old and wait for the world to catch up, or change as the world changes, making the tough decisions on a current basis.
In recent days, there have been several articles about large law firms cutting equity partners and staff in order to bring their financial affairs into focus. The reality is that they have found that the "eat what you kill" mentality works only so long before dissension and dissatisfaction sets in amongst the rank and file. Becoming more collaborative, cross selling the expertise of the firm and its individual members can create greater firm revenue. And paraphrasing former Pres. Kennedy, as the ocean rises, so do all the ships in the ocean.
In addition, the firms must identify their strengths and play to them. There are very few organizations that can be "all things to all people." With limited resources available, it is important to husband those resources and expend them in a focused manner for greatest benefit to the firm and its clients. Knowing who you are and what you want to be is essential to one’s success.
The catalyst to change is often money. With a cushion from past successes, there is little motive to change. When a cushion narrows or evaporates entirely, and when collections become an issue because clients with their own financial problems fail to pay your legal billings, motivation to review your operations and make appropriate changes rises to the surface.
Visiting ALM LegalTech conference today was eye popping in both its simplicity and complexity.
First, the simple: D. Casey Flaherty, corporate counsel at Kia Motors America, suggests that law firms don’t need more software. They need to use their existing software more efficiently and effectively. What a concept. Reminds me of the scientists’ suggesting that humans use only 10% or less of our mental capacity.
The difference between the two concepts is that inefficient use of existing technology increases the legal spend for clients. And only Corporate America can do what Mr. Flaherty did: subject his outside counsel to economic consequences when they are guilty. He recently reduced a law firm’s billing to Kia Motors by 40 hours because he detected they didn’t know how to use Word to print to a .pdf file and eliminate the scanning process which would have reduced associates time on his matters by the 40 hours. Multiply this scenario many times and you are talking about hundreds of thousands of dollars in lawyer billing. More on that in a later post.
Next, the complex: Owen Byrd of Lex Machina discussed the concept of Moneyball for Lawyers. He says that “Moneyball” applies data (any collection of facts) to analytics in order to understand trends and patterns that emerge from that data. This supplements legal research and reasoning with predictive analytics. This approach can help predict a party’s behavior, likely outcome of a lawsuit and the results from a specific legal strategy or argument. The concept, emanating from Stanford studies, can be viewed merely as a new research tool. If so, it’s rather expensive. It can also be viewed as a marketing tool by helping you refine your pitches for new legal work to prospective clients. In this case, the cost is insignificant when you attain one or more new clients. This is the future of the legal profession. Currently, Lex Machina and its approach can be utilized only by the larger organizations with big money at stake. But, the handwriting is on the wall.
Most important, these two divergent approaches to technology demonstrate the need to be proficient with current technology in order to satisfy rule 1.1 (definition of competence) and to run scared about the future if you fail to pay attention to the changes coming in the future. The bottom line is to serve clients well. Your awareness and proficiency with technology addresses that goal…and may provide a competitive advantage to some.
The following note is prompted by the comments of Susan Cartier Liebel of Solo Practice University® and her post about Kimberly, a young mother who just gave birth to her third child and was a 3L law student at Stetson. She became ill but failed to go to a doctor to address her own health. She was busy with her family and "stuff."
This is for all of you out there whether lawyer or law student, mother or father, who puts
themselves last. You put off going to the doctor for that chronic cough while you rush your child to the pediatrician for a hang nail. You eat your cold dinner out of a jar standing up and talking on the phone while you make sure your child’s meal is hot and she’s seated lest she choke on her food. You do so because ‘you can handle it’. Well, here’s the truth. You can’t.
You can’t care for your kids or your spouse if you break down physically. You can’t care for your clients if you don’t take time to reinvigorate and refresh. Remember the airline admonition: Put your air mask on first and then help your child and others around you. None of us are superhuman or immortal. There is nothing more important than your health, no final, no brief, no exam, no trial, no event. Remember this the next time you get no sleep or ignore that persistent cough or inexplicable pain in your side because ‘you don’t have time’ to slow down. Remember you can break down, too. No machine and certainly no human can work without stop and without repair from time to time.
MyCase features my guest blog post suggesting that there is plenty of work for those lawyers willing to be realistic both in the nature of the clients they serve and the fees they charge.
While you’re at their web site, check out their software. It has been reviewed by many and is well – regarded.
There are at least two components of legal costs: Fees and expenses. When one is clearly out of line, the other is perceived to be out of line. Perception is reality.
Much has been written about the $1,000 per hour legal fee. It’s out of line, too high, much too expensive, etc. But the writers fail to assess the competitive market for those services and whether those services have some very special expertise connected with the fee that justifies the fee. If, for example, you’re in a "bet the company" situation, you want the best lawyer you can get. If you’re in a criminal trial as was OJ Simpson, you want a particular lawyer and team of lawyers. You will pay the asking price.
If you’re facing a normal contract dispute, one might consider this a commodity type of legal battle, one not requiring the best lawyer in the state; a good lawyer will suffice and the cost of his/her services will be adjusted downward accordingly. Some call this commodity pricing.
If you’re a very large bankrupt company, you need specialized professional expertise. According to Bankruptcy Court filings (attorney fees need to be approved by the judge), many lawyers in this arena are receiving $1,000 per hour. Nothing out of the ordinary here…. this is reality.
However, when these same filings show application for expense reimbursements that are out of the ordinary, then questions arise. For example, why should the bankrupt estate pay for first class airfare, for normal photocopying charges, for faxes, for overnight hotel stays at the Waldorf-Astoria, etc.? Many such expenses are considered part of a firm’s normal overhead; many such expenses can be lowered by conducting oneself in the "normal course of business," such as charging for coach airfare (not first class or business fare), hotel charges (at a Marriott, etc. rather than the Waldorf).
Any "over" charges should be at the lawyer’s expense not the expense of the estate. After all, isn’t that why the lawyer is receiving the larger per hour fees? It’s when the lawyer begins to "nickel and dime" the client or take advantage by charging more than "ordinary" expenses, the perception of over-billing extends over to the fee itself. When asked, I usually advise my clients to reduce the expense charges and their fee charges will not be questioned. It’s usually the $5.05 charge that brings the whole bill into question, not the other way around.