No matter how much you work, until you convert it to cash it is worthless.  The average days in the law firm cash flow cycle (from worked to collected) is 169 (source:  2007 Law Firm Economic Survey from LexisNexis).  Shortening your cash flow cycle has a positive impact to liquidity and thus your cash flow cycle should be measured.

There are two metrics that need to be measured:  days to bill and days to collect.  Determining these numbers on a timekeeper level identifies those timekeepers who are efficient and those who aren't.  The opportunity then is to set a standard and work towards compliance by all timekeepers.

What is this standard?  It depends on the area of practice.  Many insurance companies just won't pay under 60 days of accepted electronic invoice and will only accept these invoices quarterly.  In this case, 150 days isn't so bad.  Some areas of law (many domestic relations situations come to mind)  should, by default, be prepaid.  Any work in process should be billed immediately and applied against the prepayments.  In these cases a cash flow cycle of 60 days should be cause for concern.

Tools such as Juris from LexisNexis' Active Information can help you track this key performance indicator so that you can improve your liquidity. 

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.

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In the February, 2008 Managing Partner Magazine, a case study was published regarding the international firm Herbert Smith, who recently implemented a financial management system that focused on measuring performance.  The case study mimics everything we promote on More Partner Income and thus deserves highlight.

The study begins with a quote from William Thomson (Lord Kelvin), who said "if you cannot measure it, you cannot improve it".  They may have done well to also quote "don't reinvent the wheel", since most of the sweat put forward in devising their system is already developed by software vendors such as LexisNexis.  It is the process, though, that bears note.

The firm adopted a "phased approach" to implementation that focused on basic needs first, then expanded to add functionality as the basic needs were met and a comfort level established by the users.  The firm initially only gave access to the system to the partners and used three phases:

1. Easy access to key financial reports
2. Financial planning and reporting
3. Time recording and "universe" design

The first phase entailed providing easy access to the important financial reports that had previously been distributed on paper.  This not only provided the partners with the information they needed, it helped them become accustomed to viewing this information electronically.

Phase two was focused on budgeting and management accounts.  They also placed some forward-looking indicators of performance and trend analysis.  This helped the firm make future projections through modeling.

Phase three provided real-time information for fee earners, including alerts when time entries were late or incomplete.

In my opinion, phase three should have been phase 1, phase 1 should have been phase 2, and phase 2 should have been phase 3.  However, whatever works is the right solution.  The important thing is that the firm set up their implementation with the highest probability of success by not cramming an entire new method of consuming information to all fee earners at once.  Instead, they focused on getting partners on board first, then eased them into the solution by first getting the most important information (read:  what they had already been getting) to them first.  Then incrementally adding new value to the system until it became an indispensable tool for managing the firm.

When your firm is looking to invest in a software solution: 

• If considering to develop it internally, which will require specialized staff to maintain, make sure you research to see if software vendors have already developed the solution you need;
• When you implement the solution, make sure you do it in phases to ensure adoption by all those who will benefit from it.

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.

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Dennis Kennedy, in an article published February 27, 2008 on llrx.com, writes of eight trends in technology that will impact  the legal industry this year.  Although he predicts a "sleepy year for legal technology", Kennedy believes "[f]irms that are good at technology will take advantage of opportunities to widen their technology advantage over their competitors and position themselves well for the time when economic recovery comes."

The trends for 2008:

Making Better Use of What You Already Own.
Expect budgets to tighten and firms to look at what is on the shelf and spend more effort in making what they already have work better for them.

Lawyers Win Round 1 in the E-discovery Battle . . . by a Wide Margin.
E-discovery isn’t going to be nearly as big a hit inside law firms as it is inside of tech shows in 2008.  "Electronic discovery remains a trickle rather than a flood in today's litigation world."

Security Begins to Matter . . . Really.
Kennedy expects clients, particularly in healthcare and finance, to press firms on security. He notes the lax policies at law firms related to sensitive data (something I too have observed).  Hot topics include drive and folder encryption, remote access, and more stringent password policies.  Email encryption is notably absent from this list.  Speaking of email . . .

The Death Throes for Email?
Email has proven an unreliable mechanism for communication, says Kennedy. Because of the problems inherent with email (spam for example), communication tools like instant messaging and file transfer protocols will increase and use of email for quick communication and file transfer will decrease.  In my opinion, the same security concerns are present in other online communication protocols, not just email.  I am not betting on widespread adoption of more secure standards in the legal community in 2008, however.

Going Mobile.
For those who haven’t already moved to blackberry devices and other mobile devices, Kennedy predicts the productivity gains by those who already use the technology will lead others to adopt them.  He also notes the widespread use of tools such as remote access that many attorneys now take for granted.  I will add that I believe more and more firms will demand web-based applications to expand their mobile workplace.

Opening Audio and Video Channels.
In addition to the increased use of blogs and RSS feeds, Kennedy predicts a higher use of podcasts and streaming video by law firms in 2008.  Several companies that cater to the legal market, including Martindale Hubbell, are implementing use of social networking tools such as this into their offerings.  I think it is still a few years away before more widespread adoption by law firms, but it will certainly be something to watch.

Dancing with a Recession.
Sometimes you can talk yourself into a recession.  Enough has been said about it (though the media has been curiously silent lately) and the indicators are still pointing downward.  Kennedy predicts that firms will want to delay large investments and will look into ways to meet their needs without costly hardware upgrades.  Kennedy expects Software as a Service (SaaS) and Open Source software use to increase in 2008 as cost effective ways to upgrade their technology.

Smart Ways to Work Together – Collaboration Tools.
When it comes to productivity tools, Kennedy writes, “2008 will see the growth of ways for lawyers to use technology to work together with clients, colleagues, courts, opposing counsel and others.”  Kennedy, along with Tom Mighell, co-authored a soon-to-be published book called The Lawyer's Guide to Collaboration Tools and Technologies: Smart Ways to Work Together.  The book can be pre-ordered by clicking here.

Read the entire article by clicking here.

 Morepartnerincome.com is sponsored by Juris®.  For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com. 

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There has been some discussion in legal blogs regarding the use of social networking tools such as Facebook as a marketing tool.  Kevin O'Keefe notes the potential of Facebook as a growing force for lawyers and businesspeople.  Larry Bodine writes [w]hy lawyers can't ignore Facebook for networking.

The Birmingham Post (UK) writes of a reason why there should be caution in using Facebook.  In an article titled Facebook May Blow Up In Your Face, several potential "minefields" are noted:

• Facebook is for personal use only:  In its terms and conditions, it states in the first sentence under User Conduct:

"You understand that except for advertising programs offered by us on the Site (e.g., Facebook Flyers, Facebook Marketplace), the Service and the Site are available for your personal, non-commercial use only."

• In the terms and conditions, every user agrees not to register for more than one user account, not to register a user account on behalf of another, or register a user account on behalf of any group or entity.  
• You can be banned from Facebook for a violation of terms, subject to "final and binding arbitration" under Delaware law, likely in California.
• Facebook has a license to do whatever it wants with content you provide.  In theory, you could upload a photograph and Facebook could sell it without you receiving a penny. If you write lengthy notes about business related issues, these could be turned into a book by Facebook for its gain, not yours. Relevant wording from terms and conditions:

"By posting User Content to any part of the Site, you automatically grant, and you represent and warrant that you have the right to grant, to the Company an irrevocable, perpetual, non-exclusive, transferable, fully paid, worldwide license (with the right to sublicense) to use, copy, publicly perform, publicly display, reformat, translate, excerpt (in whole or in part) and distribute such User Content for any purpose, commercial, advertising, or otherwise, on or in connection with the Site or the promotion thereof, to prepare derivative works of, or incorporate into other works, such User Content, and to grant and authorize sublicenses of the foregoing."

Bodine cites Joshua Fruchter, in a more recent post, citing methods of using Facebook as a marketing tool.   Particularly in regard to posting copyrighted content, this should be re-assessed.

Bodine and O'Keefe promote Facebook as a networking tool.  Facebook does have a section for businesses called Facebook Pages that serves this purpose.  However, there is no pre-screening process to ensure that the entity is in fact who it states it is (read:  Wikipedia-ish).  There is  an additional terms and conditions (which incorporates the original terms)  that doesn't negate any of the above concerns (apart from allowing commercial use).   If you plan to utilize this tool, make sure you follow the guidelines of Facebook's terms and conditions. [poll=7]

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 Last Friday I wrote about the dangers of sending sensitive emails to clients unencrypted.  Please read the comments Tom Mighell wrote - he made some very good points.

Today I read that sensitive settlement negotiations were discovered after a lawyer mistakenly emailed sensitive documents to a New York Times reporter rather than co-counsel. 

What would have happened had the lawyer sent this email encrypted?  It wouldn't have sent at all, since the encryption software wouldn't have recognized the recipient as having an encrypted key and would have thrown a warning to the sender.  The sender would then know to place the correct recipient in the email.

Of course, there is a concern that you could send an encrypted email to the wrong party who is also set up to decrypt emails from you.  This is a good reason to not set up encryption with everyone but rather just with those you expect to share privileged sensitive information.

The way around sending email to the wrong person, assuming you use Microsoft Outlook, is to turn off the feature "suggest names while completing to, cc,  and bcc fields" in the advanced options of email options (under tools>>options). 

Morepartnerincome.com is sponsored by Juris®.  For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

 877/377-3740, e-mail info@juris.com or go to www.Juris.com.

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The days of unencrypted email communications being protected under the attorney/client privilege may be numbered.  The latest evidence of this comes from New York, where Judge Charles W. Ramos ruled last fall that emails from a doctor to his lawyer sent via a hospital's business email server weren't privileged after they were discovered by the hospital (source:  Wall Street Journal Law Blog).

Judge Ramos rejected the privilege largely because, he found, the plaintiff didn’t have any real expectation that the messages were private. The hospital had a policy of prohibiting email for personal purposes, and that policy was disclosed to employees.

This is another shot across the bow to law firms.  When courts have waived the privilege in situations like the above, it has been due to a lack of expectation of privacy.  There have been similar cases in the past (Kaufman v. SunGard Invest. Sys., 2006 U.S. Dist. LEXIS 28149 (D.N.J. 2006)),  In the bankruptcy proceeding In re Asia Global Crossing, Ltd., 324 B.R. 503 (Bankr. D.N.Y. 2005), the Southern District of New York held that email between an attorney and client left on the corporate email system waived the privilege.  The court held found that the following four factors should be taken into consideration in that analysis:

(1) does the corporation maintain a policy banning personal or other objectionable use,

(2) does the company monitor the use of the employee's computer or e-mail,

(3) do third parties have a right of access to the computer or emails, and

(4) did the corporation notify the employee, or was the employee aware, of the use and monitoring policies?

What if the client was communicating to the attorney with encrypted email?  Does that offer the client an “expectation of privacy?” 

In order for a client to invoke the protections of the attorney client privilege, four elements are required:

1. the client is seeking legal advice;
2. from a professional in his capacity as an attorney;
3. the communication relates to the legal advice; and 
4. the confidential communication is between the client and the attorney.

 In Nat'l Econ. Research Assocs. v. Evans, 21 Mass. L. Rep. 337 (Mass. Super. Ct. 2006), the Massachusetts Superior Court held that when the employer did not specify in its manual that it could monitor email and the employee took “reasonable” steps to protect the emails (the court considered deleting the emails and running a disk de-fragmentation program sufficient), then the privilege isn’t waived.    Ernest Sasso, on his firm site, wrote a comprehensive article regarding email and client confidentiality which supports the argument that encrypted email would make arguments for waiver of privilege moot.  To my knowledge, the issue of encrypted mail being challenged to waive privilege has still not been litigated (please correct me if I am wrong).
 

If you are communicating via email to clients regarding your case, stop it now.  Or, take evasive action.  Use encryption in all communications with clients expected to contain privileged information.  In my opinion, you have a stronger argument for an expectation of privacy even with minimal encryption (read: ease of use and implementation) than with none at all.  Plus, the cost of software (for the client end) can be billed to the client as an up-front expense if the client desires to communicate via email.

The above is just a cursory look at the law to alert you to the potential danger of communicating with clients via unencrypted email.  Logon to Lexis.com to research the above in more detail.  And to avoid being the next victim, encrypt now. 

Some encryption providers:

• http://www.pgp.com/
• http://www.entrust.com/email-encryption/
• http://www.shyfile.net/
• http://www.centurionsoft.com/
• http://www.tumbleweed.com/solutions/outbound_email.html

The above isn’t even close to comprehensive.  Have your IT staff research solutions that will work with your firm.

Morepartnerincome.com is sponsored by Juris®.  For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

 877/377-3740, e-mail info@juris.com or go to www.Juris.com.

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I spent a good bit of time with 230 law firm management and administrative folks at the annual Juris International Users conference. The Juris user group is unique in that the organization is completely independent. It is financed and run entirely by licensees of Juris software.

I find these annual meetings insightful on two levels. Meeting topics reflect management trends in midrange law firms. Informal group discussions about daily life in the law firm shine the light on the things that motivate and the things that frustrate. Those conversations are often about the relationship between the professional side of the law firm and the non-lawyer people who make it possible for lawyers to concentrate on law.

Reviewing the conference topics for this year, it is pretty clear that those involved in running the business side of the firm are interested in more sophisticated management and operational tools—more user-driven reporting tools, dashboard technology, workflow optimization, pre-billing compliance testing, electronic billing and advanced financial accounting. Business intelligence is a hot topic and Juris has rolled out some extraordinary products and reserves in response to this increasing sophistication in law firm management. One of the interesting new services is Juris Insight, a continuous benchmarking service that not only tracks key performance metrics for the participating law firms but provides comparisons with peer law firms.

As for the informal conversations, I was pleased that more of those were focused on the firm’s objectives—what the law firm was trying to accomplish. There appeared to be fewer dealing with “difficulties of working with attorneys.” There was still some talk about the second-class treatment afforded to non-lawyer members of the law firm team. I ran into one administrator who is trying to do her job and survive under an abusive boss. Abusive bosses don’t get the best out of people, but jerks do get law firms sued. That reason alone warrants a “no jerks allowed” policy. For the most part, however, conversations were upbeat with the interest of the law firm at the center. That is a good sign.

One thing that has become clear over the years is that the administrative and accounting people in a law firm are the gatekeepers when it comes to putting powerful capabilities and features of software to work on behalf of the law firm. That is especially true of capabilities added to software subsequent to the firm’s original purchase. Take automated compliance testing, for example. An increasing number of corporate law firm clients have mandated billing guidelines. Bills that deviate from those guidelines get rejected or adjusted. Juris includes tools for automatically testing billing transactions against those client-mandated requirements and suggesting the corrective action needed to bring the transactions into compliance. At firms where the automatic compliance testing capability is being used, revenue losses due to client adjustments or rejected bills have been eliminated or significantly reduced. Unfortunately, there are other law firms where the accounting people have not taken advantage of the Juris capability. This powerful benefit remains locked away, unused, with firm leaders in the dark, unaware of the available system feature that would improve law firm performance and client service.

Software is unique in that through enhancements and optional additions, the software becomes more valuable and beneficial over time. Newer users of a software product often get more value out of the same software. That is because older users often have not updated their skills for features and capabilities added since the original purchase. So many beneficial capabilities go untapped that I suggest law firms require their administrator or principal accounting person to repeat the training regimen for their business software at least once every two or three years. It is also well worthwhile to engage the consulting arm of your business software vendor to perform a two- or three-day performance review and recommend changes in your procedures or system use for improved financial performance and for increased client satisfaction. Such a review always pays for itself.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

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Andy Adkins, director of Legal Technology at the University of Florida’s College of Law, and Natalie Kelly, director of Law Practice Management for the State Bar of Georgia, teamed up and gave the 2007 ABA Tech Show attendees a how-to check list for conducting a technology assessment and developing a workable technology plan.

You can view their presentation in the Best of ABA Technology article, Reliable Law Office Technology: Priceless, which appears in the September 2007 online issue of Law Technology Today.

For more information, contact Andy Adkins (adkins@law.ufl.edu) or Natalie Kelly (natalie@gabar.org).

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

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Process improvement (work flow systems) are the in thing. It is the technology investment that seems to get a quick approval from partners.

While it is difficult to argue with the idea of streamlining work flow, not all work flow is equal. I was reminded of that by a short couple of paragraphs on the last page of the September issue of the Harvard Business Review. It includes a quote from Peter Drucker “surely nothing is quite so useless as doing with great efficiency what should not be done at all”. It is a reminder that effectiveness (doing the right things) is far more important in the success of an enterprise than efficiency. It is even better when you can do the right things efficiently, but the emphasis should be on doing the right things and that means pursuing opportunities. Don Moyer, dmoyer@thoughtformdesign.com, who authored the two paragraphs on that last page of the HBR, provided the following advice:

To distinguish worthwhile initiatives from those that waste time and money, look for projects that are visible to customers, affect core capabilities, or differentiate you from competitors.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

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E-mail has just about become the standard for communication. It saves time and facilitates collaborations. But there are times when you need to be able to prove receipt and contents of an e-mail, and in that regard, it presents its own set of problems.

Carole Levitt and Mark Rosch addressed that subject in some detail in an article appearing in the August 2007 The Bottom Line, the official publication of the State Bar of California Law Practice Management and Technology Section. After laying out the problems of proving receipt and contents, the authors point to a solution endorsed by various bar associations—registered e-mail. Registered e-mail is a service offered by RPost.

If you are not already using this service, you need to consider it. On a pay-as-you-go model, it is $0.59 per e-mail, but there are various package prices that will bring that cost down for law firms making regular use of the services.

We have come to use e-mail automatically. It has been moving from an informal and casual communications device to our primary means of communication, stipulation and agreement. As noted by the authors, RPost is “a process by which sent e-mails can be ‘registered’ to show legal proof of receipt of a specific e-mail and attachments.”

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center: 877/377-3740, e-mail info@juris.com or go to www.Juris.com.
 

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