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Last week on April 6, 2007 Juris, Inc. announced release of Juris Active Information—a suite of management reporting, business intelligence and decision support tools for the law firm. Active Information will help law firms move from a rearview mirror management reporting process using only printed static reports to a real-time information distribution and analysis model. With Active Information, law firm leaders will have the information and tools to make decisions that can change the outcome and increase partner income.”

The Active Information Suite consists of three components—Reporting, Business Intelligence, and Budgeting and Forecasting. The first module, Reporting, is currently available. Business Intelligence and Budgeting & Forecasting are scheduled for release in July 2007 and October 2007, respectively.

Active Information’s Reporting component revolutionizes how law firms develop, distribute, and use information for decision making. Each individual in the firm can decide exactly what information they want, how they want to see it, and when they want to receive it. With Juris Active Information, management reporting will no longer be limited to traditional reports of simply columns and rows. Firms will now be able to incorporate dashboards, images, charts, and graphs into their reporting models. Moreover, management information will have utility beyond simply reading a report. Active Information content can be used to navigate or drill down to detailed information underlying the management report. Content can be manipulated and extracted into other applications such as Microsoft® Excel to allow for quick and easy analysis.

According to Stephen Collins, Juris CEO, “Backward looking traditional reports leave an information gap. You know where you have been, but it’s too late to do anything about it. Juris Active Information will close that gap. It moves the Event Horizon for law firm leaders—providing actionable targeted information in time to change the outcome.” Collins continued, “A key element of making information useful for decision making is ensuring the right people get the right information in a format that facilitates their decision making process. With Active Information, each decision maker can receive important information in a format unique to their needs and it’s all distributed automatically.”

The Business Intelligence module includes a custom dashboard designer, business metrics library and metrics designer plus a link to Juris® Insight(SM) for incorporating continuous peer group benchmarks into the firm’s reporting systems. It also includes a separate data warehouse for enhanced reporting performance and customization. The Budgeting and Forecasting application adds the capability for complex budgets with multiple forecasts that are incorporated into the tracking and reporting stream of the law firm.

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

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The “plan” must be to change the “plan”! Strategic plans are based on assumptions, and assumptions are inaccurate temporary estimates about the future. 

The inaccurate character of assumptions is why planning must be a continuous process. Through that continuous process of changing the plan as the future gets nearer, successful organizations are distinguished by doing the “right things”. 

I often wondered why so many consultants to the legal community tend to discredit the value of strategic planning.  Rob Millard’s post titled Why Committing to Success Leads to Failure sheds light on the reason.  It is because too many law firm leaders they deal with see the “plan” as the end product.  It isn’t.  It is the planning process, not the plan, that leads to success. Strategic planning is a way of thinking—strategic thinking. The plan must be to change the plan!  

The need to continually change the plan is the reason that I emphasize that the tangible product of strategic planning, “the plan”, should consist of words, phrases, and sentences, not paragraphs, pages, and chapters.  It is a living document that coordinates and shapes an organization’s actions and decisions and that is changed by those actions and decisions in reaction to an unfolding future.  Taking a line from the Pirates of the Caribbean, “It is more of a guide than an actual code”. 

Periodically, the organization must come together and revise the guiding product. They must come together to agree on revised assumptions about the future, to identify the changes in the opportunities available to the firm, and to adjust or reaffirm the law firm’s goals.  They must agree on the key strategies the law firm will rely on to achieve those goals. Then they must set out the programs and responsibilities for implementing the tactics in support of the agreed upon strategies

Rob Millard wrote: “All too often, I find myself facing blank stares from clients [law firms] who want me to help them to only craft a plan that will lead them to greatness. This is only possible where the future is certain. Which, of course, it is not.”  His point is clear. If you unwaveringly pursue a plan based on inaccurate assumptions, you will eventually implement the wrong strategy—you will successfully fail.

Rob Millard’s blog is The Adventure of Strategy. He is part of the Edge International consulting group.  For more on this subject, you should also read my previous post, Strategic Planning Will Not Predict the Future, But It will Prepare the Law Firm for It, which referred to an earlier and also insightful post by Millard.

Morepartnerincome.com is sponsored by Juris, Inc.  For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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Consistent measured growth wins the day for most midsized firms.  All you have to do is look around to see the destruction that follows merger announcements.  Even merger talks can prove disastrous for a law firm.  The time-honored lateral hire, while a notch down on the risk meter, can still pack a jarring negative wallop.  And unless it is done to advance a law firm’s strategy, lateral hires do little to benefit the existing partners in the firm.  They create a bigger pie, but when the pie is divided, no one goes home with a bigger piece of that pie.

Unless a firm reaches a point of equilibrium in its size (something that isn’t easily achieved and doesn’t last), growth is necessary for sustainability.  Room has to be created for upward moving of legal talent into the partner ranks—that takes a combination of growth and outgoing partners.

Mergers and (to a lesser extent) lateral hires at the partner level are “bet the farm” decisions, regardless of which end of the transaction you are on.

There is plenty of good evidence that size doesn’t mean higher per-partner income for midsized law firms.  It’s not size, but doing the right things right that drives income. Likewise, achieving a large size through more diversification can cost a firm its brand image and its competitive edge.  It does increase business risk, and increased diversification is likely to lower rather than increase a firm’s pricing power. 

When it come to mergers and partner level lateral hires, don’t do them, or at least don’t do them without a darn good strategic reason.  Even then, don’t do them without seeking the advice and help of experts like those in the major consulting firms working with law firms.

Morepartnerincome.com is sponsored by Juris, Inc.  For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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David Maister was prompted to write Guns for Hire when he started to think about the actions of a leading PR firm that transgressed many people’s sense of ethics – creating a blog consistently favorable to Wal-Mart® without disclosing Wal-Mart’s (or the PR firm’s) involvement. This led him to question why people in an organization take on work (or make decisions) that they would have rejected if they had been on their own. He hit the nail on the head when he wrote the following:

“If I knew that all my colleagues, bosses, partners, owners, etc., shared a common set of standards, then I would have the courage to make selective decisions based on those standards.”

I have written quite a bit on the importance of law firms having a core set of beliefs. Partners need to know what they agree about and they need to communicate those beliefs firm-wide. By doing so, the “If I knew” portion of Maister’s remarks would be satisfied and individual partners and others on the law firm team would be in a position to deal with many issues as if the organization was their business (law firm). Without a core set of beliefs, enterprises are left without a moral and sound business compass.

It isn’t difficult—the partners need to talk, agree, and communicate to the organization the common set of beliefs that guide the firm. It is empowering for the partners to do it. It is inspirational to the entire team to know that their organization believes in a guiding set of principles and sound business beliefs. An organization’s culture develops around those common beliefs. They become the glue that tends to hold a firm together through bad times as well as the good times. Without that culture, firms take on a strict “eat-what-you-kill” mentality where everyone is out for No. 1. When what you can eat takes a downward turn due to temporary economic or competitive reasons, loyalty goes out the window.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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George O’May, the founder of what is now PricewaterhouseCoopers, once wrote something to the effect that it would be impossible to measure income (of a business) in so short a period as one year if it were not absolutely essential to do so.

Rough and inaccurate navigation has a better chance of getting you where you want to go than no navigation at all. Yet, 80 percent of midsized law firms do little in the way of navigation. Success, for whatever period it exists, appears to be accidental. Partners in those firms that do plan and budget earn two to seven times more than those that do not.

Planning is a continuous process, one that shapes a firm’s decisions and, at the same time, is shaped by decisions. Budgeting lays out expectations and goals for the coming operational period. To be effective, planning and budgeting have to be accompanied by programs that measure progress and that hold people accountable.

Prior posts have dealt with the Strategic Planning process. For example, see The Structure to Structured Planning. Budgeting is more down to earth. It is closer to home in terms of time. We are not planning based on assumptions about the future as much as we are dealing with the here and now.

The Juris development team recently invited existing Juris law firm clients to provide input for expanding the budgeting functionality of the Juris suite of software. The Juris software suite already includes features for budgeting at the timekeeper, client/matter, and firm level; the development team is looking for improvement ideas. They are particularly interested in budgeting requests related to decision-support features in Juris.

What we continue to find is that the majority of midsized firms do little in the way of budgeting. Budgeting firm expenses is more common than budgeting for the enterprise as a whole, including, for example, complete financial performance and cash flow. Budgeting at the matter level is largely nonexistent except where required by the law firm’s client.

The law firm's revenue producing resources are its legal professionals. The most elementary (and important) budgeting step would be to develop individual “budgets” or plans for each individual timekeeper. Why an individual plan? Every member of the team is an individual—each with a different balancing act in their daily life. Billable hours are just one part of that balancing act. Firms that have successfully adjusted to new work/life balance environments will vary compensation and timekeeper plans based on the individual’s plan. The plan should include:

• Business Development
• Professional Development
• Management or Administrative Activities
• Work on Non-Billable Matters
• Work on Billable Matters

Budgeting fee revenue for a law firm for so short a period as one year (let alone one month) would be impossible if it were not absolutely essential to do so! You can’t do it just by adding up available hours of the professional staff. You can’t do it just based on past experience. You can’t do it just by reviewing the work already in-house. You have to do it using all of those pieces of information plus a large dose of judgment. The fact that it is difficult makes it all the more imperative that it be done.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
 

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Recently I participated with a number of managing partners in a roundtable discussion of issues they are dealing with. An issue shared by most attendees dealt with write downs of billable time by the billing attorney before the bill even gets out the door of the law firm. The national consulting firm Altman Weil, Inc. referred to such write downs as “Invisible Expenses” because, in many firms, they go unaccounted for.

One attendee indicated that last year his firm initiated a policy that the managing partner had to approve any write down above a certain amount. As the attending partner explained, “There is always an explanation—since I’m not the responsible attorney, how can I second guess that billing attorney?”

Approval mechanisms seldom work. But there is something that will. Require any write down to have a Reason Code and then track and report those reasons and the amount of the write down. Don’t create many codes—just a few. For example:

We blew it

Associate took too long

Planned associate development activity

Exceeded client expectation

Relationship building

Measurement always improves performance. By tracking and reporting write offs, reason patterns are disclosed. Why does one billing attorney write down bills for “exceeding client expectations” at a significantly higher rate than other attorneys? Why do we make adjustments repeatedly for the same clients? Why are multiple billing attorneys writing down the hours of the same associate because that associate took too long?

You can’t second-guess individual decisions by responsible attorneys, but you can identify patterns, and that will lead to an improvement in billing realization.

PS: You can always add a code or two to center in on problem areas. For example, if you have a high volume of “associate took too long” write offs, you might temporarily expand that code into several that better explain why they took too long. Once the area is in control, remove the excess codes. Too many codes can hide the trees in the forest.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
 

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The following was extracted with permission from a paper by Howard L. Mudrick, president of HM Solutions.

The firm must be well-organized internally to allow the partners to focus their efforts externally—dealing with the firm's competitive position in the marketplace rather than bickering about internal issues. You have to be well-managed, which means a number of things:

• Having a well-understood decision-making process that defines specifically who is responsible for, and has authority to make, which decisions. Where major decisions are delegated to a managing partner or an executive committee, a means to building consensus and communicating direction is critical. A formal decision-making structure is not enough. To be in a position to make quick decisions, the firm's culture must be one where partners support decisions with which they may not agree. Decision by veto or stonewalling can take a firm out of competition faster than anything else.
• Developing a culture in which partners are willing to be held accountable and are willing to hold their colleagues accountable for their actions. This is one of the most difficult things to achieve in most small firms. Whether it is an unproductive partner, one whose quality of work is not on par with others in the firm, one who is a malpractice risk or one who is a disruptive force, most small firms hesitate to take action. This can be a major obstacle in moving the firm to a position of strategic strength.
• Having partners adhere to practice management guidelines dealing with specialization, quality control, quality service to clients, work intake, billing and collection guidelines, work assignment, and delegation.
• Having a financial management system to help ensure financial stability. You want to make sure that you're getting the most from your resources.
• Involving all partners in marketing, client service and the growth of the practice. Being well-managed means instituting a partner compensation system that rewards activities crucial to the firm's success.

More about Howard L. Mudrick: Mr. Mudrick, a CPA and a former partner at Hildebrandt, has more than 20 years experience consulting with law firms, plus on-ground experience in financial management positions with midsized law firms. For a complete copy of Howard Mudrick’s paper Will Fate Plan Your Future or Will You? , email HLMudrick@aol.com.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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Howard Mudrick lists the following obstacles that can stop the planning process in its tracks.

Partners may be spending too much time and energy focusing on internal matters. This tends to happen when partners have not reached consensus on basic philosophic issues. If the partners can't get beyond this problem, the firm usually falls behind its competitors.

Some partners may not fully understand the economics of their practices. They may have a tendency to set economic goals without regard to whether the firm's client base/capacity for growth can support those goals. They may focus on cutting overhead rather than on increasing gross revenues.

They may not understand how their practice management habits impact the firm's financial success. Even if they do, they may not be willing to change those habits, including:

• Work selection.
• Pricing, billing and collections, including write-downs of time and write-offs of accounts receivable.
• Delegating to other partners and associates and properly supervising work that has been delegated.
• Specialization.
• Keeping time and turning it in.
• Using systems.
• Doing work on time.
• Communicating with clients regularly.

Some partners may not understand the necessity of having a strong, well-managed organization to implement strategic goals. They assume that, regardless of internal issues that are not resolved, there should be no reason that the firm would not be successful in implementing a plan.

Some partners may not understand the importance of decisions that must be made regarding the practice itself. Even if they do, they may be unwilling to make decisions that cut or curtail a given practice, especially if they are involved in it.

If any of the above situations are present in your law firm, the first step toward taking control away from fate as the future determinate for a law firm is to eliminate the obstacle.

The above insightful points were extracted from a paper by Howard L. Mudrick, president HM Solutions. Mudrick is president of HM Solutions, Inc., a Dallas based management consultancy to the legal profession. Howard Mudrick, a CPA and a former partner at Hildebrandt, has more than 20 years experience consulting with law firms plus on-ground experience in financial management positions with midsized law firms. For a copy of Howard Mudrick’s paper, Will Fate Plan Your Future or Will You?, email HLMudrick@aol.com.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
 

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The Authority Triangle is a useful tool for managing the assimilation of new additions to the firm or when delegating authority to others.

David Maister posted “What Do You Want From Me?” that included a check list for the delegatee when given an assignment. He noted that “people will assign work to you badly, and that will cause you problems…The key is to take responsibility and ask permission to ask questions.”

But there is also another level of delegation that needs to be considered. Neither associates nor administrative staff members operate in an environment where they are simply carrying out a series of assignments. They hold their position in the firm for the purpose of exercising their own judgment and authority within the scope of their assigned responsibilities. The question is how much judgment and authority are they expected to exercise without touching base with a higher authority.

To answer that question, you need to understand the Authority Triangle. For an individual fully competent in his or her position with the firm, around eighty percent of their job activities including decisions that affect others can be carried on without notification or consultation up the chain of command. Consultation or communications after the fact is appropriate for approximately 15%. Perhaps 5% falls in a category requiring advance permission—where the individual recommends to their superior or others an action for which they would like approval.

For a new addition to the firm, the Authority Triangle is upside down.

Over a reasonable period time the new individual must right the triangle to become a fully competent member of the firm. The individual who fails to respect this process, or who turns the triangle too rapidly, places the law firm at risk by exceeding his or her level of competency. The individual who turns the triangle too slowly is a drain on resources disproportionaly consuming the time and effort of others in the communication, consultation and permission processes.

Obviously the percentages vary depending on job scope and the individual involved but the concept is an important one. It is a concept understood vaguely by most professionals but it is beneficial to reinforce that vague notion by confirming that it is in fact a key management concept related to delegation.

I encourage you to incorporate the Authority Triangle concept into your firm’s core belief system. Once the notion is adopted within a firm, it will facilitate the process through which new associates or employees become fully competent incumbents. It will give supervising partners a standardized and useful tool for communicating about situations that involve a “too fast” or “too slow” problem. Finally this sound management concept is an effective tool anytime you are delegating authority. You can use it to communicate those kinds of actions or decisions that fall into the incumbent's 80% zone and those that are in the 20% zone requiring communication, consultation or permission.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

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