A Survival Guide for Legal Practice Managers

A Survival Guide for Legal Practice Managers

Partner succession and career transition in law firms

Monday, May 28, 2018

By Jordan Furlong; Consultant, Author and Legal Market Analyst

A few years ago, I was contacted by some senior staff members at a high-profile boutique firm who were coming to grips with a deeply alarming prospect. The name founders, widely known and respected within the local bar, were all coming up on retirement, but seemed to be showing little interest in devolving authority, transitioning clients, or planning for the future.

It was becoming increasingly clear that the partners weren’t thinking beyond the next couple of years, and that was because that period of time was as far as their interest extended. They were going to retire from practice soon, and so they were driving hard on all cylinders, hoarding hours and maximizing client time, until that happy day arrived.

The deeply alarming prospect for the senior staff was that the firm really only existed to be the commercial vehicle for the name partners’ legal careers, and when those careers ended, the vehicle would have served its purpose.

The end is near

I once wrote that many law firms seem to be run these days as if they intended to close their doors in five years’ time. I was half-joking at the time, but I now think there was more truth in it than I realised. Five years is probably the anticipated remaining career length of a typical law firm’s most powerful partners. So if it seems to you that your law firm’s engine has been pushed into overdrive lately, such that it’s going to be immensely profitable in the short term but is imperiling itself in the long term, well, maybe there’s a reason for that.

I can think of two reasons why the leaders of a law firm — and here, I’m referring to the firm’s founders, senior partners, and/or most important rainmakers and client development lawyers — are not taking steps to arrange an orderly pre-retirement transition of legal knowledge and client relationships to their younger colleagues (a process frequently described as succession planning).

1. The charitable explanation is that these lawyers can’t really help themselves. All they’ve ever known how to do is practise law. They were raised in a profession that prized highly competitive individual profit-maximising behaviour, and there was never any “Off” button installed on their internal lawyering machines. Plus, they’re experiencing the natural human reluctance to confront the passage of time and the inevitable winding-down of individual activity and influence — especially difficult, in my experience, for older men to cope with.

It’s entirely normal for lawyers in this position to keep diving back into their work — the one thing they know how to do and that they’re indisputably great at — than to face up to both their professional denouement and the impending mortality that lies behind it.

2.  The less charitable explanation is that whoever dies with the most toys wins, and these guys intend to win. They’re perfectly happy to drain the contents of the firm and recycle the empty afterwards — and if most of the other people in the firm have put their backs and their hearts into the enterprise for many years in the belief that their turn would come someday, well, that’s their problem.

Both kinds of situations occur in law firms, and there’s no point being overly sympathetic with the first group or overly angry with the second. The key to getting through this crisis — and make no mistake, a succession crisis is exactly what many law firms are either entering today or are already deep in the throes of — is to take a clear-eyed strategic approach to its resolution.

One and done?

The first step to managing a succession crisis is to ask whether there ought to be any succession at all. That might sound strange, but it’s actually important.

Earlier this year, Adam Smith Esq., a law firm consultancy in New York, explored this concept in an excellent blog post about “One-Generational Firms.” Their idea is that some number of law firms out there were never meant to be, and are not equipped to become, multi-generational. Like the boutique firm I encountered, the founders didn’t necessarily believe they were setting up a firm that would last beyond their retirements. They were setting up a firm that was going to take them to their retirements, and not one day past that. 

I should emphasise that there’s nothing wrong with this. There’s no law that says every enterprise should survive its founders; in fact, the vast majority of small businesses don’t, and that’s perfectly fine.

But I do think your firm’s leaders need to sit down and have a private and very honest discussion about one-generational firms and multi-generational firms and decide which one you have there. It doesn’t matter much, from my perspective, which answer you come up with. What matters is that you agree about what the firm’s owners and leaders genuinely want and expect from their firm.

Beware of being too aspirational here, of saying, “Yes, we’re building for the future, we want to leave a legacy, etc,” if you don’t really mean it. If what the firm’s powerhouse people really want is to mainline cash from the law firm for the next few years and then close up shop, then it’s wasteful and counterproductive to spend time, money, and effort on succession plans and generational handovers that will never take place. You’ve got to be honest with yourselves about what sort of firm you really have.  

Start by establishing beyond any doubt whether this is a firm that wishes to have succession at all. Challenge the default assumption that your law firm will continue on in perpetuity. But if you decide, during these conversations, that yes, you truly do want the firm to last beyond the current generation of rainmakers, then everyone also needs to be clear about the hard choices and time-consuming mechanics that choice requires.

How to carry on

If your firm’s intention really is to be multi-generational, and the political will has been expressed to make it happen, then you need to start moving on this, and fast. I’m not a succession planning consultant by any means, and you should seek out someone who is to receive their expert guidance; but among the things they might tell you are the following.

You might have heard the old proverb, “The best time to plant a tree was 50 years ago. The second-best time is today.”

The same applies to succession planning in law firms. You need to start down two paths in parallel: the first, to resolve the crisis that’s now imminent or underway, and the second, to reduce the likelihood of similar crises in future. Here are three suggestions under each category.

Imminent Steps

  1. If you haven’t already done so through the “one and done” discussions above, take a deep breath and schedule conversations with those senior lawyers who are implicated in succession issues. These conversations, which you’ve probably been dreading, will in all likelihood be less traumatic than you fear; in a number of cases, these lawyers themselves recognise their looming succession challenge, but they don’t have the emotional or professional tools to start dealing with it. They might very well be relieved and grateful for your intervention.
  2. You’re going to have to incentivise this process financially. Put less delicately, you’re going to have to pay these partners to get them to move along. They’ve earned the right, over their years of service, to receive a gilt-edged handshake; and anyway, they’ll fight you harder if they don’t get one. Create a two-, three-  or five-year off-ramp that combines reduced billable targets with annual remuneration averaging their five highest-earning years out of the last 10. Pay them for a couple of years after retirement, too. They won’t be bringing as much money in the door during this time; but they can earn it through this next step.
  3. Give them something else to do. In exchange for less work for more pay, offer them a choice of “legacy responsibilities” to last up to and perhaps beyond their retirement. Actively mentor at least two junior partners and one young associate a year; work with the law librarian to “download” their expertise and know-how into a knowledge bank for future generations; award them the title of "firm ambassador" and have them make the rounds of clients, law schools, community organisations, etc. Involve them in reinforcing the firm’s reputation by dint of their own talents and accomplishments.

Long-Term Steps

  1. Start with nomenclature. “Succession” is probably not a helpful word for us to be using; it suggests being replaced, superseded, even usurped. From the perspective of the person being “succeeded,” it feels like being thrown aside for an upgraded model. Try “transition” instead: it’s a more neutral term, and one that lawyers are already familiar with: they transition throughout their careers, from students to associates to partners to specialists to leaders, etc. “Transition” can be introduced at the first-year associate level and continued thereafter.
  2. Create an infrastructure within the firm that can more easily accommodate transitional processes. One of the biggest obstacles to transition is a single-lawyer client relationship that the lawyer feels like hoarding; make it a rule that every client deals with at least two lawyers within the firm on an equal basis. Get lawyers thinking about transitions earlier in their careers; for example, start talking about long-term or disability insurance when lawyers turn 50. Place transition issues on the agenda of every partnership meeting. Bring back successfully retired partners to rhapsodize about how great it is on the other side. Normalise transition.
  3. Involve the clients. A commonly overlooked fact, one that often comes as a surprise to older lawyers, is that their clients are just as aware of their aging curve as they are. Clients want the firm to deal with this issue before the client has to make a difficult choice down the line. I go so far as to suggest that law firms should use the occasion of a key partner’s transition to open a dialogue with the client about rethinking the client’s legal needs, and even “rebooting” the relationship with the firm to direct some work elsewhere and focus its retainers with your firm on higher-value matters. The client will appreciate it.

I once heard a law firm succession consultant compare older lawyers with soldiers returning from war: “They struggle to reintegrate into society.” I think that’s an apt comparison, and it highlights that one of your duties to your transitioning older lawyers, both professionally and personally, is to help them with that reintegration process. Be humane and considerate in dealing with lawyers facing a career transition endpoint; imagine how you’ll want to be treated when your turn comes.

That boutique law firm I mentioned at the outset is still carrying on, by the way. I don’t know if they ever managed to resolve their succession issues, or if the firm is simply coasting quietly into oblivion; from the outside, both processes look much the same.

Which of these two paths is your own firm travelling down today? Is it the path you want to be on? And if not, are you ready to begin switching tracks? On this issue, more than any other facing law firms right now, time is of the absolute essence.

About our Guest Blogger

Jordan Furlong is a consultant, author, and legal market analyst who forecasts the impact of changing market conditions on lawyers and law firms. He has given dozens of presentations to law firms and legal organisations in the US, Canada, Europe, and Australia over the past several years.

Jordan is a Fellow of the College of Law Practice Management and a member of the Advisory Board of the American Bar Association's Center for Innovation. He is the author of Law Is A Buyer's Market: Building a Client-First Law Firm, and he writes about the changing legal landscape at law21.ca.

7 questions to help improve your law firm's website

Monday, May 21, 2018

By Libby Hakim; Specialist SEO Website Copywriter

Is that little voice growing louder? You know, the one that says, “Your website really needs an update.”

Despite the little voice growing louder and louder, there are always so many other things to draw you away from the job of initiating a website refresh.

Like most jobs, though, the hardest part is often simply getting started.

Here, we help you kickstart your website refresh project by replacing that pesky little voice with 7 questions. By answering these questions, you’ll get clear on the scope of the required changes, get prepared to brief any external consultants, and be able to organise some quick fixes today.

1.   What’s bugging you about your current website?

That little voice is in your head for a reason, so it’s important to uncover the reasons you want to change or update your website.

Does the design seem outdated? Was the content written in a hurry a few years ago? Are the images no longer consistent with your firm’s image? Have people told you the website is difficult to read on a mobile device?

Getting clear on the changes required means you can prioritise the work, bring in any external help and make better decisions throughout the entire website refresh project.

2.   What is the ultimate goal for your website?

It’s okay if you have a website because, well, everyone else has one. But your website is an investment, and having website goals can help you get a better return on that investment.

Your website is the place many people are first introduced to your firm and the place your potential clients may go to make a final decision about using your services. It’s an extremely powerful marketing tool.

However, to use it as a marketing tool you need to understand how your website fits into your marketing plans and specify marketing goals for your website.

Do you want people to call after visiting your site? Do you want visitors to book a free 15-minute phone consultation? Do you want your website to lure in locals who are searching for a lawyer like you on Google?

By having a goal, you can start refining the website to help you achieve those goals. For example, if your goal is to bring in more local clients via search engines, then you need to start investigating options for optimising your website for search engines (know as search engine optimisation or SEO). If you want people to call, make sure your phone number is prominent in the top menu bar and the footer and easily found on the contact page.

3.   Is your menu navigation driving people away?

User experience guru Steve Krug explains the importance of web navigation conventions with an analogy involving our physical navigation of the real world. In his book, Don’t make me think: A common sense approach to web and mobile usability, he asks readers to imagine the frustration if someone moved street signs from corners, put them halfway down the pole and aligned the signs vertically.

Make sure you’re not causing frustration for your visitors by following these menu navigation conventions:

  • Your logo should appear on every page in the same place, usually the upper left corner, and link back to the home page
  • The first item in the primary menu bar should be “Home” and should take you back there (no matter where you are on the website)
  • The primary menu and footer navigation should include “Contact”.

5.   Do you know who you’re talking to?

Have you ever read an article, book or website and thought, “Wow, that just hit the nail on the head. It’s like they know what I’m thinking.”

There are no mind-reading powers at work here. It’s just a case of the writer doing their homework about their target audience and writing with that target audience in mind.

Who is your target audience? Small business owners? Okay, that’s a good start. But you need to dig deeper and think like a marketer.

Marketers create target audience personas to help them better understand who they’re talking to. This involves creating a detailed profile of your ideal client. Cover things like location, age, gender, type of business, pain points, interests outside of work, and favourite products and holiday locations. It’s not an easy task, but it’s worthwhile to build up a clear picture – in writing – of the client you want to welcome through your doors more often.

5.   Are you letting others do your boasting?

If you’re not letting happy past clients sing your praises, you should be.

When a potential client is in those final stages of deciding whether to use your services, a raving testimonial will often seal the deal. Your past clients will speak many times louder than anything else on your website.

How do you get these testimonials? Simple – just ask. Send a polite email to your satisfied clients asking if they’d be happy to email you back with a testimonial. Perhaps they’ve already told you how happy they are? In that case, just ask them to elaborate on what they’ve already told you. Otherwise, explain that testimonials are important for your business and ask for a few sentences about why they chose you, how you helped them and what they think sets you apart from others.

The best thing about this strategy is that it not only adds to your website, it also boosts your confidence!

6.   Are you boring visitors with blocks of text?

Unless they’re to be found in the latest blockbuster novel, chunks and chunks of text will turn readers away. Indeed, online readers are known to be scanners, skimmers and a rather impatient lot.

So, you need to help people move through your content quickly. How? Here are a few tips:

  • Break up text with headings and subheadings
  • Use bullets and lists
  • Use plenty of images
  • Prune unnecessary words and repetitive sentences
  • Have a main point for each paragraph and remove any content not related to that point.

7.   Is your website healthy under the bonnet?

The mention of website development, back ends, plugins and coding can send some people into meltdown. But it’s helpful to have some idea about the more technical side of your website.

The good news is there are a lot of free tools out there to help you identify whether there’s a technical problem on your site that you may need to raise with your website developer. Here are a few of the best ones:

  • Woorank – an SEO audit tool that will give you recommendations on issues impacting your site’s Google rankings
  • Pingdom – grades the speed of your website and makes suggestions for improving speed
  • Google’s mobile-friendly test – tests how well someone can use your page when on a mobile device.

Where to now?

Once you’ve answered these questions, jot down what action you need to take, prioritise the bigger tasks and organise those quick fixes. And tell that little voice to quiet down – you’re on your way to a cleaner, slicker website.

About our Guest Blogger

Libby Hakim is a specialist SEO website copywriter and a former lawyer. As a lawyer, she worked in private practice before holding a government role as legislative drafter for 12 years.

Libby now writes for law firms, legal tech companies, and other finance, insurance, tech and business organisations. She also works as a freelance communications consultant with law firms and government departments, and loves being able to bridge the gap between legal and marketing minds.

You can read more about Libby on her “Libby Hakim” site.

Super changes to remember as end of financial year approaches

Monday, May 14, 2018

By Andrew Proebstl, Chief Executive, legalsuper

2017 was a year of significant changes to superannuation. With this in mind, it is well worth taking the time to ensure you, your colleagues and your staff are up-to-date with the changes and their implications, especially as the end of the 2017-18 financial year approaches.

Annual cap on the amount of concessional contributions you can pay

The annual cap on concessional (before tax) contributions is now $25,000 per annum for all employed people, down from its previous rate of $30,000 for those aged less than 50 years and $35,000 for those aged 50 and over.

Concessional contributions include Superannuation Guarantee paid by your employer, amounts you choose to salary sacrifice and contributions for which you intend to claim a tax deduction.

If your concessional contributions exceed the new cap, contributions in excess of the cap will be taxed at a higher rate. You should periodically check with your super fund whether or not your concessional contributions are nearing the cap.

Tax deductions for contributions

One other recent change by the government was to broaden access for more Australians to the concessional contributions cap to include both employees and self-employed persons. All people under 75 years of age may now be able to claim an income tax deduction for personal superannuation contributions to an eligible fund with people aged between 65 and 74 needing to first satisfy a work test.

Personal contributions for which a tax deduction is claimed count towards the concessional contributions cap of $25,000.

Non-concessional contributions

The annual cap on non-concessional (after tax) contributions has been reduced to $100,000 per annum down from $180,000 per annum.

However, if you are under 65 years of age, you may be able to make non-concessional contributions of up to three times the annual cap (i.e. $100,000) in a single year to a maximum ‘bring-forward’ amount of $300,000. Please note that the $300,000 non-concessional contribution limit means that in the particular financial year you make the contribution, and in the next two financial years, you cannot make any further non-concessional contributions.

Super fund members with a total super balance of $1.6 million at 30 June of the previous financial year are reminded that non-concessional contributions are no longer permitted.

For those earning over $250,000

‘Division 293 tax’ was introduced at the start of the 2012–13 financial year to reduce the tax concession on superannuation contributions for individuals with income greater than $300,000.

From 1 July 2017, this income amount was reduced to $250,000 with affected individuals paying 30 per cent tax on their concessional superannuation contributions rather than the standard 15 per cent tax.

However, this effective tax rate of 30 per cent continues to be less than the marginal tax rate for those earning greater than $250,000.

Super balances of lower income spouses

To help lower income earning spouses increase the superannuation they accumulate, a person can make a contribution on behalf of their spouse and claim a tax offset.

To access the offset, the income threshold for the receiving spouse has been increased from $10,800 to $37,000, thereby helping more families to support each other in accumulating superannuation.

A contributing spouse is eligible for an 18 per cent tax offset worth up to a maximum of $540 for contributions made to an eligible spouse’s superannuation account.

The tax offset is reduced for income above $37,000, phasing out at an income above $40,000.

First home super saver scheme

From 1 July 2018, eligible super fund members will be able to apply to withdraw contributions made to super after 1 July 2017 to use as a first home deposit.

The Government’s intention in introducing the First Home Super Saver (FHSS) Scheme was to reduce pressure on housing affordability.

Eligibility for the scheme includes the following:

  • be 18 years or over,
  • have not previously owned property in Australia,
  • have not previously released FHSS Scheme funds,
  • either live or intend to live in the premises you are buying as soon as practicable, and
  • intend to live in the property for at least six months of the first 12 months you own it, after it is practical to move in.

Up to $15,000 of contributions made in any one financial year can count towards the amount that can be released. The maximum amount of contributions that can be released is $30,000 plus associated earnings.

Concessional contributions and earnings that are withdrawn will be taxed at marginal rates less a 30 per cent offset.

Government super co-contributions

Government super co-contributions have been available since 2003, and remain a helpful way for eligible people to boost their retirement savings.

Lower or middle-income earners who meet the criteria and make concessional contributions to their super fund are eligible for a government co-contribution up to a maximum amount of $500.

The amount that the government co-contributes depends on your income and how much you contribute.

About our Guest Blogger

Andrew Proebstl is chief executive of legalsuper; Australia’s super fund for the legal community.  Qualifying as a Chartered Accountant while working with Arthur Andersen, Andrew has broad experience across the superannuation industry with fund administrators, investment managers, custodians and other superannuation funds.

Andrew is a member of the Policy Committee and former Director of the Australian Institute of Superannuation Trustees. He is also a former member of the Victorian Executive of the Associations of Superannuation Funds of Australia.  He regularly presents at superannuation industry conferences and writes regular superannuation columns for law societies across Australia.  He can be contacted on ph 03 9602 0101 or via aproebstl@legalsuper.com.au

Performance Reviews – how to make them functional not feared

Monday, May 07, 2018

By Emily Mortimer, HR Manager, Piper Alderman

Annual performance reviews are either currently underway or just around the corner for most law firms. Have you got a performance review process that’s engaging and rewarding for both the employer and employee?

For many legal industry staff, performance reviews are a time of anxiety. Mental health is an increasingly important topic in all industries and sadly, the legal profession holds an unenviable reputation with many reports indicating 1 in 3 employees in the industry are impacted with mental health issues.

It is widely accepted that these high statistics are due to the design of the job. Whether you work as a practitioner or in a support function, the performance expectations are high from your internal and external clients, competition is rife and dynamics are changing daily.

Despite the growing evidence, practical solutions to bridge the gap are seriously lacking. With performance review season around the corner we bring to you a guide to improving your framework and hopefully influencing productive outcomes for your firms.

Communication is key

Let’s start with those that are either new to the legal industry or new to the workforce and have not had a performance review before.

How would you feel if you received a calendar invite with a subject line ‘Performance Review’ and a ‘let’s catch up message’? The recipient immediately launches into ‘Ummm okay? About what? Have I done something wrong? Am I going to loose my job?’ and the anxiety builds.

How can this type of reaction be avoided?

You could avoid this with something as simple as an ‘all firm email’ alerting staff that the performance review process will be undertaken between X and Y dates and briefly outline the process. For larger firms, you could liaise with team leaders and supervisors first and have them liaise with members of their teams.

If there’s a form for your employees to fill out, give them time to consider it and welcome them to ask questions before completing it if they need to.

If your firm has junior team members that have not experienced professional performance reviews before, assign them a buddy to talk to about any concerns that they have or reach out to them individually or liaise with them in separate communications to educate them on how the process works and what they can expect.

What should my performance review process look like?

The size of your firm size will determine your performance review framework. As a larger firm you are likely to have a team of HR professionals using best practice tools and techniques and as a smaller firm you might go for a coffee and a chat. There is no right or wrong process – the value is in the conversation not the framework.

If you’re a small law firm with limited resources, you could reach out to someone in the ALPMA network (or contact an ALPMA Committee member in your Branch) and ask them for suggestions on a few key questions. You could ask your colleagues, do some research on Google or heaven forbid, just ask your team members what they want to get out of the discussion with you.

Remember, communication is two way

This is NOT an opportunity for:

  • a leader to download to the team member every frustration they have experienced;
  • an opportunity for a team member to complain about the profession. The profession is the profession.

This IS an opportunity:

  • to talk about what works, what doesn’t and what is in your control to change.
  • for you to share your own experiences and strategies when you have faced challenges in your career;
  • for you to listen and learn about what motivates your team and how you can get the best out of them;
  • for you to learn about what your staff need and where you can improve as a leader;
  • for you to listen.

Make it about the future

You can’t change the past. We are human and we make mistakes.

What we should be focusing on in all performance discussions is what lessons were learnt from those mistakes and what skills and tools we need in the future to improve performance based on those lessons. Questions like ‘what skills do you want to improve in the next six months’, ‘where do you need more help from me?’, ‘what tasks cause you the most frustration/stress?’ are practical open ended questions that provide an opportunity to address performance issues in a positive framework.

This style is designed to put performance improvement measures in place rather than to demoralise, demotivate and frustrate.

Talk about mental health

Including mental health in your performance framework is not as daunting as it sounds.

Asking people questions such as ‘what do you do to unwind’ or ‘how are you turning off’ are great questions for a leader to ask their team members. They are open ended questions which will educate on what works for that person when they are under pressure. It indicates an understanding that personal interests and stress management are important tools in your career tool kit and it provides the leader with additional intelligence on how their team builds resilience to deal with the day to day stressors of life.

The leader must of course be prepared to accept that a team member may indicate they are not coping well professionally or personally but it must be viewed as an opportunity to put a support structure in place.

The legal industry has the ability to be in a unique position to implement positive strategies at the individual, team and organisational level. Taking steps shared in this article may seem insignificant but small and practical steps create environments that provide psychologically safe climates in your firm. Research and evidence indicates great performance review processes lead to improved performance, greater retention and higher productivity.

Win win really.

About our Guest Blogger

Emily Mortimer has over 17 years’ experience in the human resources industry with the most recent of those ten years being in Professional Services. An advocate to the professional benefits of ALPMA membership, Emily has been an ALPMA member for 9 years, a State Executive volunteer for seven, chair of the South Australian Executive for three and National Board member for two years.

As well as her ALPMA appointments Emily is an appointed member to the Law Society of South Australia’s Wellbeing and Resilience committee and school Governance committee.

On a daily basis Emily works to identify and improve systems that help individuals and organisations achieve their objectives, proactively address unique people and organisational challenges that require commercial assessment and practical judgement, and creates value for others in their employee experience.

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