When some talk of strategic planning, they are talking about retreats and consultants, about mission statements and long term goal setting.  Strategic planning can be all of this - however, it doesn't necessarily have to be a complex document that takes weeks or months to develop.

In a more simpler form, strategic planning consists of reviewing the current environment, setting goals to improve it, and implementing them, measuring performance along the way.  How you get from "review" to "do" is the focus of several posts this week.

 There are several different "models" of strategic plans.  Some listed on The Free Management Library include:

• "Basic" Strategic Plan - this is the plan typically implemented in firms that invest in developing a strategic plan;
• Goal-Based Model - this model is more focused on goal setting and performance metrics relating to meeting the goals;
• Alignment Model - this model is targeted to driving the organization to align itself with the firm's mission;
• Scenario Model - this model uses scenarios to help identify strategic issues and goals;
• "Organic" Model - this model focuses on embracing the shared values and evolving the plan through the continual dialogue that will hopefully eventually increase the values that are shared. 

74% of the respondents to the 2007 Law Firm Economic Survey from LexisNexis stated they did not have a written strategic plan.  However, 89% of those who did plan said that there was a correlation between their plan and income.  What is your firm's plan?

For a look at reasons why strategic planning has been a problem for law firms to implement, look at an earlier post on the subject:  Law Firms With Strategic Plans More Profitable.

Related posts

• Developing a "Basic" Strategic Plan For Law Firms
• Survey Targets Business Development In Law Firms
• Law Firm Challenge Number 1: Get a Plan!
• For Long Term Increases To Income, Partners Must Delegate Work
• The End of Generally Accepted Accounting Principles?

On the plane coming back from Philadelphia  I was asked by a colleague of mine, Tiffany Poulton, what I thought was an obstacle to change.  After a brief pause, I mentioned that perceived difficulty would be an obstacle to change.  She responded, "what about fear?"

It brought to mind a book and a play I read in college.  The book, Henry James' Beast In The Jungle, is about a man who spends his entire life waiting for an awful event that is to happen to him.  The play, Eugene O'Neill's The Iceman Cometh, is about a group of drunks who waste their lives living in the tunnel of a pipe dream, refusing to change and face their own realities.

In both of these works of fiction, fear is the main driver inhibiting change.  John Marcher, James' protagonist, is so self absorbed in fear that he can't see that he has many opportunities to free himself from the chains he has attached to his life.  Only when realizing his lost opportunities does he see that the "beast" is his own lack of action that has cost him the only thing that brought him comfort in life.

In O'Neill's play, his protagonist, Hickey, has already overcome his obstacle to change, self realization (never mind that it was done by murder), and though he attempts to share that knowledge to his peers, their own fear to accept who they are prevent them from waking from the intoxicated blur of their lives.  As the antagonist Harry exclaims, "Stay passed out, that's the right dope. There aren't any cool willow trees–except you grow your own in a bottle."

What is the obstacle that prevents change in your office?  Is it comfort?   Perceived difficulty?  Or is it fear? 

Why do some attorneys refuse to enter their time as work is performed?  Is it that they are too busy?  Or afraid of the expectation of adding another chore to their workload?

Why do some firms not establish and maintain a strategic plan?  Is it that planning is too time consuming and difficult?  Or are attorneys afraid of being held accountable to the results?

Why do some partners refuse to share work with associates?  Is it a lack of trust?  Lack of motivated associates? Client demands? Or fear that they won't be able to replace the work and thus their compensation may be adversely affected?

It's been said that the only constant in life is change.  However, embracing change for the sake of it alone won't improve income.  Any movement to change processes or habits should be looked at through the effects it can have to your bottom line.  How would it affect productivity to require attorneys enter time as work is performed?  What would happen to the relative tranquility of the firm if you implemented a strategic plan and held everyone accountable for the results?  How would requiring partners to shift work to associates affect the quality of services provided your clients?  How would it affect compensation?

When addressing concerns, be mindful of fear.  Fear may be underlying every reason why the change is fought.  The pipe dream of the status quo may have your attorneys in a self-absorbed state of fear of change.  At all costs this must be defeated to enact meaningful processes that will increase value to the firm, its clients, and its members.

Otherwise, as is written to end O'Neill's play, "The days grow hot, O Babylon. Tis cool beneath the willow trees."

 Tom Collins has written many times on the subject of change in the law firm.  All of them are highly recommended.  Some are linked below:

• Law Firm Plan Is To Change The Plan
  
• The Right Way To Manage Change In the Law Firm
  
• Getting Agreement To Change From Law Firm Partners
  
• A Law Firm's Future Depends On How Well It Can Change
  

 We have begun taking submissions for the 2008 Law Firm Economic Survey.  If your firm is interested in participating, please contact Brian by clicking here.

Related posts

• Size Does Not Have to Determine Law Firm Partner Income
• Minimizing Sub-Optimization Within the Law Firm
• Managing Partner Forum Attendees: Business Development Most Effective Way To Improve Profitability
• Law Firm Challenge Number 1: Get a Plan!
• Law Firm Business Model - Leverage

A guest blogger for JDBliss writes on March 20th about a 3L law student at Standford Law School who has built a new organization trying to influence how Big Law firms treat their associates.  The law student

"was disturbed by the stories he heard from lawyer friends about 60-hour weeks poring over mind-numbing documents, young associates getting little feedback on their performance, and the small percentage of associates who made partner after years of toil."

Instead of accepting the "status quo", he started an organization focused on reforming law firms.  According to the post, the group has already made an impact on firms as many have started to:

• provide more flexibility for lawyers who are parents,
• offer mentorship programs for newer attorneys,
• change or eliminate the billable hour in favor of fee and compensation arrangements that reduce pressures on associates,
• evaluate newer lawyers based on the skills they have developed rather than their longevity at the firm, and
• give employees credit for pro bono service and other firm-related work such as recruiting.

Wait a second.  Something is missing from the above.  Where is the "reduction of obnoxiously high starting salaries for graduating law school students"?  Must have been an oversight.  I have little worry, though.  Through the commitment of this brave group, I am certain law firms will respond by lowering associate salaries from their current ridiculous levels through the group's "influenc[ing] the employment practices of law firms by highlighting firms' commitment to their lawyers' work-life balance, to diversity, and to professional development during the lawyers' careers."

If this too is not a goal of the group, the membership of "more than 1,000 students" may have unwittingly given firms a reason to do so.   

One of the above bullet points does appear, in principle at least, to validate findings in a recent Harvard Business Review article about which I wrote on March 14th.  The desire to move away from billable hour requirements in exchange for other arrangments that are more task oriented fits into the HBR argument of "Gen Y"'s focus on results rather than method.

I also can't argue with the need for mentorship programs and merit-based promotion.  Both of these needs help the firm increase revenue and value not only to clients but firm professionals as well. 

If the group wants others to take it seriously, though, it may want to consider a few things:

• If you want a work-life balance, you have to understand that your salary will not be as high.  There are costs to balancing your life.  Make the same argument for reducing pay for associates.
• Clean up the site.  I can't take seriously a movement to drive down work standards written with such a lazy approach.  No capital letters starting sentences?  The grammar is so bad that it reads like a rambling manifesto rather than a reasoned argument.
• Highlight your pro bono initiatives and how it has affected the life of the members who participate. 

I can't help but think of what those in other industries would think reading that site (besides the poor drafting).   Imagine a coal miner or construction worker or any other type of industry where long hours are required reading it.  Attorneys who get paid upwards to hundreds of thousands of dollars a year starting pay complaining about their plight.  

As they say in the south, "bless your heart".

Related posts

• Law Firm Culture and the Work/life Issue
• The Missing Alternative Fee Arrangement for Law Firms
• The End of Generally Accepted Accounting Principles?
• Partner Income Related to Law Firms Fees
• Measuring Your Law Firm's Billing Cycle

The Harvard Business Review is rapidly becoming my other magazine I read cover-to-cover (the other being The Economist).  In the March, 2008 issue there is a short article related to Web Retailing that I believe is a good example of why attorneys need to be spending more time blogging.  Andreas B. Eisingerich and Tobias Kretschmer surveyed online customers on what drives them to purchase from a retailer.  What they found is that online customers do more research and are more likely to purchase from a retailer that engages them than one who simply tries to sell product.  They found that "exploiting consumers' desire for engagement is the single dominant driver of superior shareholder value for e-commerce companies."

". . .[Providing informational content] helps customers search for solutions, invites them to think of all the ways the core products might add value to their lives, wins their loyalty, and entices them to buy."

How does this translate into an endorsement of blogging?  It is no different than creating a brochure or newsletter - it helps clients understand the law of their particular interest or need.  It drives them to seek you when they need someone to represent them regarding related subject matter.  Blogging is a continual dialogue, with very little in the way of up front cost (other than the pain involved in updating content regularly).  Not only does blogging display the expertise of your firms and lawyers, it is a mechanism to drive business development. 

To determine how blogging increases revenue (ie, to measure performance), you must track how clients come to you.  Make sure your business software can track source of business.  With a blog, you can provide downloadable content and require registration to download.  This also helps in determining source of business.  You can determine a lot from who visits your site as well.  You can capture location, frequency of visits, what pages they visit, what they download, etc.  All of this is valuable information for business development purposes.  For example, if your area of expertise is Estate Planning and you write a post related to a new law that fundamentally changes how investment vehicles are treated that increases hits in a specific geographic location by 30%, then you can surmise that the public in that location is interested in this topic; thus, you can focus advertising or public speaking opportunities to get your firm's name out as an expert in the area - not only for those reading the blog, but also those who aren't online. 

As clients become more web-savvy, it will be the law firms with a strong web presence that will dictate the standards by which other firms compare.  Providing information for your clients is good - providing updated analytical content written by attorneys in their specialty places your firm in a position to engage current and potential clients and drive superior shareholder value.

Related posts

• The Myth that Companies Hire Attorneys, Not Law Firms
• Rule-Based Docketing
• Managing Partner Forum Attendees: Business Development Most Effective Way To Improve Profitability
• Law Firms Pass On Arbitration In Employment Disputes
• Law Firms Need More Face Time

The Spring 2008 Managing Partner Advocate is in the mail.  Highlights include an interview with a managing partner from a Louisiana firm and an article from a tax attorney on the tax implications of a withdrawing member of the firm.  Like our past issues, the Spring '08 Advocate is full of articles focused on increasing income as well.

The Managing Partner Advocate is a complimentary publication for Juris (and soon PCLaw) clients, but is available for free to anyone requesting a subscription.  To be placed on our mailing list, please click here to send an email request.

Registered users to this blog may also download the Advocate from this site.  To download, please visit the downloads page by clicking here.  If you haven't already registered, it is free and gives you access to downloadable files and now the Managing Partner Advocate. 

We have begun taking submissions for the 2008 Law Firm Economic Survey.  If your firm is interested in participating, please contact Brian by clicking here. 

Related posts

• Want To Have A Record Year For Your Law Firm?
• New Contributors For More Partner Income
• Managing Partner Advocate Summer Issue In The Mail
• Cash Flow An Important Metric For Law Firms
• Top 25% of Law Firms Earn Margins Above 40%

The Estrin Report is a great resource for paralegals and other legal support professionals.  The March 22nd post quotes a Maryland Daily Record article where an attorney has been suspended twice - TWICE - for mismanagement of client trust funds.  He never took one penny, however.  Instead, he was the victim of two consecutive bad hires.

The Maryland solo practitioner hired a paralegal, among other things, to manage a client trust account.  The paralegal, without oversight, embezzled nearly $150,000 before being caught.  After being disciplined, the attorney hired another paralegal to "clean up the financial mess left by " the predecessor.  This one took over $170,000 from his clients.

The attorney complained that he had several hundreds of cases he managed and was in court a lot.  "You’ve got to delegate things. You can’t be there to sign every check.”   

Whether these were paralegals or not isn't the point.  What is noteworthy is the exposure attorneys have, especially in small firms, when trusting unmanaged staff to control firm finances.  Embezzlement is more common than we'd like to believe.  (Admin charged with embezzling over $200,000 from firm; Bookkeeper embezzles over $400,000 from firm;  New Orleans firm dissolves after Chief Financial Officer embezzles $2 million;  Office Manager embezzles $700,000 from firm;  Bookkeeper accused of taking over $4.3 million from escrow accounts)  

Ignorance is no defense.  You can't spend all day watching your staff either.  “You’ve got to have some trust in your employees,” the aggrieved attorney said. “You pay them good money.”  In his case, you'd think a little skepticism would have been prudent.

What are some things that can be done to avert a would-be-embezzler?  Tom Collins wrote the following in his September 6, 2006 post:

First, select business software with built-in audit trails and controls. Remain alert to the reality that it can happen in your firm. Keep your eyes and ears open. Obtain professional assistance to implement appropriate internal controls including segregation of duties. Insist that employees take vacations on consecutive days under an arrangement where others assume their duties. Do not let a crisis take over and circumvent normal controls and procedures. Budgeting, comparative financial results, and detailed review and questioning of monthly financial statements are an essential function of law firm management and play a vital role in protecting and preserving the assets of the firm.

Scott Barrett wrote an article in 2004 that addresses ways to avoid being a victim of embezzlement.  Read it by clicking here.

 We have begun taking submissions for the 2008 Law Firm Economic Survey.  If your firm is interested in participating, please contact Brian by clicking here.

Related posts

• Speeding Up Law Firm Billing and Collection
• Opportunity Focused Law Firm Management
• Increase Realization on Law Firm Fees from Insurance Companies
• Generation X
• Fewer Attorneys Would Open Their Own Practice

Law is famously known to those who practice as the "jealous mistress" (I'm not sure how well this analogy works with the growing number of women attorneys).  The phrase adds a new dimension when used in association with virtual reality.   Davis, LLP, a Canadian firm made the focus of the cover story in the March 2008 Canadian Lawyer (New Frontiers), has set up real estate in a virtual world called Second Life.  Second Life, an online place where, according to the article, over nine million people live.  Second Life's own website claims the number is closer to thirteen million.  Thirteen million!  From there, two resident Davis, LLP attorneys can talk to prospective clients and recruit new lawyers. 

Says Pablo Guzman (PabloGuzman Little, for those reading this in a virtual coffee shop), an attorney with Davis:  "Lawyers go where their clients are or where they think they can get clients.  For us, Second Life is a great marketing tool and a recruitment tool." 

Thirteen million people.  I wonder if there are internet cafes in this place?  Would logging into the internet there peek back into reality, or look into infinity?

The world within the web doesn't end with Second Life.  Besides this blog, myriads of other lawyers are following Kevin O'Keefe's lead in starting blogs (www.lexblog.com). Vendors such as LexisNexis (Martindale Hubbell's blog) and Thomson West (westblog.net) have taken advantage of the running online dialogue.  And now a consortium of marketing consultants and lawyers have created the webspace known as JDSupra.com, where attorneys can share work product (documents) and market their services.  And, of course, there is Facebook.

But what is this "Web 2.0" anyway?  According to Tim O'Reilly, the term was coined at a conference brainstorming session after the dot.com crash.  Contemplating the future of the internet, the name was given as a way to mark the next generation of tools on the web.  For example, Web 1.0 used Brittanica Online for encyclopedic information; Web 2.0 uses Wikipedia.  Web 1.0 used personal websites for running online dialogue; Web 2.0 uses blogs.  Web 1.0 used creepy AOL Chatrooms; Web 2.0 uses creepy virtual worlds ("creepy" in a mystifying sense).

Thirteen million people.  In one large online world.  Can you afford to avoid real estate in this vast empty space?  I have not visited this world of Second Life, but I can only expect that there is no housing market crash or credit tightening going on - but then, I am probably wrong.  Surely virtual life imitates "real" life?

According to Mr. Guzman, Second Life "is not necessarily somewhere were we can practise law, because we do not practise law in cyberspace".   Perhaps not now.  But with thirteen million people walking like virtual zombies in a world conceived by code sentries, it surely is only a matter of time when independence is claimed, wars are fought, and lawyers are brought in to restore justice. 

The IRS isn't waiting for attorneys to set up shop.  Accoring to a May, 2007 CNN story, the IRS wants to tax profits made while inside Second Life.  The currency , the Linden, has an exchange rate and can be converted to US Dollars.  Where there is money, there is potential for disagreement.  And need for contracts.  And perhaps a lawsuit ensues.  

The pieces are there for the ability (dare I say need?) to practice law.  Maybe that comes with Web 3.0.

Related posts

• Martindale-Hubbell Connected Launches Networking for Lawyers
• Women Rainmakers
• Who Your Clients Are Can Sell Others on Your Law Firm
• Trust but Verify
• The Long Tail and Legal Services

In the coming weeks, there will be some new contributors added to the blog.  I met with several members of the Redwood Analytics team in Virginia today and am happy to announce that their expertise will be added to More Partner Income.

Redwood Analytics is a new acquisition to LexisNexis.  They focus on benchmarking and business intelligence tools for law firms.  They also have a staff of consultants who work with law firms to measure performance as well as provide granular analysis on both matter and attorney metrics.

The addition of Redwood's expertise to the blog will provide unique insight gained from experience in working with law firms in the large law segment that demand high levels of analysis related to the business aspects of their practice. 

Redwood also hosts a Think Tank, made up of law firm leaders.  From Redwood's website: 

[Redwood's Think Tank] is comprised of forward thinking industry leaders assembled to study and formulate cogent solutions to significant law firm management issues. Individuals are invited to join the Think Tank based on their demonstrated ability both to think strategically and to take action to promote change.

For more information on Redwood Analytics and the products and services they provide, please visit www.redwoodanalytics.com.

We have begun taking submissions for the 2008 Law Firm Economic Survey.  If your firm is interested in participating, please contact Brian by clicking here.

Related posts

• Cash Flow An Important Metric For Law Firms
• What Does a Paperclip Have to Do With Law Firm Management?
• Top 25% of Law Firms Earn Margins Above 40%
• Spring 2008 Managing Partner Advocate Is In The Mail - And Online
• Business Development Opportunities For Law Firms In 2008

I have suggested utilizing a non-equity partnership tier as a way to reward attorneys who are not yet ready for firm ownership.  Jim Cotterman has made an argument against it.  In my assessment, non-equity partnership can be a tier to place attorneys who excel in some things, such as working files, but don't have the skills to bring in new clients or matters or don't have the requisite discipline to be a firm owner.  Cotterman, however argues that non-equity partner tiers can end up being dumping grounds for the mediocre.

Cotterman cites a May 2006 study, An Empirical Study of Single-tier Vs. Two-tier Partnerships in the AmLaw 200, by Professor William Henderson at the Indiana School of Law.  The study documents that average per equity partner income in single tiered partnerships are significantly higher than two-tiered partnership firms.  The study noted:

The higher profitability of single-tier firms appears to be a function of higher levels of prestige, which enable single-tier firms to (a) attract and retain a more lucrative client base, and (b) run a more rigorous promotion-to-partnership tournament in which associates work longer hours and are less secure in their futures with the firm. 

Cotterman does believe there are certain situations where establishing income partners could be a good idea, including the reasons I mention above.  How do you feel about this?  In the 2008 Law Firm Economic Survey, we are asking respondents if they have a non-equity partnership system in place.  With this information, we will be able to determine whether equity partners in two-tiered partnership firms make more or less than those in one-tier firms.  It will be interesting to see if our results, which focus on small and mid-size law firms, mimic or contrast the findings in the Amlaw 200.

We have begun taking submissions for the 2008 Law Firm Economic Survey.  If your firm is interested in participating, please contact Brian by clicking here.

Related posts

• Survey Targets Business Development In Law Firms
• For Long Term Increases To Income, Partners Must Delegate Work
• The End of Generally Accepted Accounting Principles?
• Reflections on the 2007 ALM Billing Rates & Practices Survey
• Billable Hours vs. Head Count Leverage in Law Firms

A method of increasing performance is based on the Hawthorne Effect.  Although several of the experiments have been downplayed by social psychologists, the effect that attention has to performance is as true today as it was when recorded at the Hawthorne Plant in the 1920's.

Basically, when attention is given to the performance of an employee, the employee's performance increases.  Simply put, measurement improves performance.  If you set goals for your timekeepers and don't measure them against the goals, the incentive to succeed is left to trusting individuals to meet their goals. 

How well suited is your firm for a loss of a client such as Bear Stearns (or, perhaps, Lehman Brothers)?  Gerry Riskin wrote in January to make your firm recession-proof.  Some of the factors listed in recession-proofing the firm:

• Ramp up frequency of financial reporting (monitor the firm's key finanacial metrics);
• Make hard decisions humanely and fast (monitor under-performing timekeepers);
• Manage internal expectations (monitor expectations to keep staff motivated and avoid "business as usual");

 Each of the above requires attention.   Trust alone that the individual timekeepers will respond to economic crises is a recipe for disaster.  A better management model is the Hawthorne Effect.   Everyone needs to be accountable for results.  Let the effect of attention to performance help the firm during difficult times. 

The effect of measuring performance brings other benefits.  Beyond improving results, keeping attention on profit drivers has the added benefit of opening opportunities - even in bad economic times.   As Riskin notes, [w]hile strategy may be more challenging during recessions, if you grasp the nettle, opportunities will arise to enhance your client mix and your talent base.

We have begun taking submissions towards the 2008 Law Firm Economic Survey.  If your firm is interested in participating or if you would like more information, please contact Brian by clicking here.

Related posts

• Survey Targets Business Development In Law Firms
• Size Does Not Have to Determine Law Firm Partner Income
• Managing Partner Forum Attendees: Business Development Most Effective Way To Improve Profitability
• Law Firm Strategic Planning - An Overview Of Models
• Cash Flow An Important Metric For Law Firms