A Survival Guide for Legal Practice Managers

A Survival Guide for Legal Practice Managers

3 Ways To Improve Your Firm’s Profitability & Efficiency

Tuesday, June 04, 2013

By James Parker, Executive Manager, Practice Management, LexisNexis

 

Where does the time go?

When a law firm’s most precious commodity, billable time, is not promptly and accurately recorded, the costs from lost revenue can be staggering.

According to a recent study by Altman Weil, one tenth of a fee earner’s time is lost if not recorded until the end of the day; four hours are lost if time is not recorded until the end of the week, and 15 hours are lost if time is not recorded until the end of the month. At a minimum, these omissions can result in an additional 170 to 200 hours per year, per lawyer, lost forever if not recorded promptly.

1. Automate, automate, automate!

Automated billable time recording tools can help to create historical case information, matter by matter, for easily-accessible client reviews. This functionality helps lawyers adhere to ABA Model Rules—“to keep the client reasonably informed and to keep accurate client activity records.”

So, where does the time go? Automated time capture answers the big question, enabling law firms to better manage revenue for optimum efficiency. By detecting and closing all revenue leaks, primarily the leakage of hours worked but not billed, law firms can be sure all billable dollars are recorded and entered into their billing system.

Accurate and detailed timekeeping is critical for both law firms and buyers of legal services to meet clients’ cost mandates, which in turn leads to greater client satisfaction, increased retention rates and improved firm profitability. 

2. Invest in your practice

Practice management software is one of the most sensible investments a firm can make. It can be hugely beneficial in improving the productivity of the firm as well as the efficiency of core practice management functions such as billing and office management by putting a powerhouse of legal knowledge and expertise to work for you. Most solutions are built around the way legal professionals work and empower sole practitioners, small law firms, mid law firms, large law firms, government and corporate counsel to excel at the practice of law.

Bottom line. Better software will help you make more money by increasing the percentage of fees that actually get paid and reducing the frequency of unreasonably aged debts. Only instant access to your financial position, which goes hand in hand with easy year-end reporting, can help you achieve this. 

3. Ask for help

Most law firms have embraced the practice management model in some form, each model is different in composition and specific goals, while the responsibilities of the group leaders as managers, strategists and business developers are primarily the same. Their success relies heavily upon their skills and abilities in each of these areas.

In for the long haul. Find a local consultant who can examine your practice, identify your strengths and weaknesses, and offer suggestions for continuous improvement. Ensure the consultants are highly ranked for customer service and available to offer support from implementation through to completion and beyond.

How have you improved productivity and efficiency in your firm?

About our Guest Blogger

James ParkerJames Parker leads the Practice Management team at LexisNexis Pacific which is responsible for delivering solutions that enable our clients to more effectively manage their business, increase their productivity and profitability, and stimulate growth. James’ responsibilities include managing the Development, Post-Sales and Professional Services teams.

James has a wealth of experience in the technology field and prior to joining LexisNexis Pacific, held senior management roles developing and managing UK and international Customer Services. James’ employment history includes Head of Operations and Customer Services with LexisNexis UK, Director of IT and Support at JacobsRimell and Senior Manager of Customer Services EMEA for Vitria Technology.

You can follow LexisNexis on Twitter @LexisNexis.

Online Legal Services Business Models and The Implications for Traditional Law Firms.

Tuesday, May 28, 2013

By Lachlan McKnight, CEO and Co-Founder of LegalVision


The internet has dramatically changed the way in which consumers purchase everything from clothes to insurance. There is no point in hiding from the fact that sooner or later, consumers will move en masse to the internet to purchase legal services. Online legal services, including the provision of legal documents, advice and information, have taken off in both the US and the UK over the past 5 years. The Australian market has not developed as quickly, but based on the growth of business such as RocketLawyer, LegalZoom and Riverview Law overseas, we can expect significant changes here as well. 

In this post, I will briefly go through the US experience, share with you some of the challenges we’ve faced in the Australian market, and discuss the implications of the move to online law for traditional firms.

The US Experience


The key for any business in the online legal services space is to pick an appropriate business model which allows it to leverage the three key strengths of e-commerce: low overheads, scalability and search. LegalZoom and RocketLawyer, the two biggest players in the US online legal services market, have chosen models which achieve just this.

The approach of RocketLawyer and LegalZoom has been to focus on the personal and small business markets and generate revenue by (i) selling customised legal documents on either a pay-per-document or subscription basis and (ii) providing their customers with access to lawyers offering discounted hourly rates (in many ways a “group buying” model). 

Because of their size, VC backing and Silicon Valley mentality, these businesses have grown very quickly, despite attempts by various state law societies in the US to shut them down. Because the marginal cost of providing their product to consumers is very low, and the costs of running a business online are also very low, they are able to reinvest significant sums in marketing. Raising over $100m in venture capital between them has also helped!

The big US players have been able to grow by focusing mainly on the legal documents market. In many ways this is a reflection of the US legal market- consumers are savvy and willing to do some work themselves on documents before seeing a lawyer. 

The Challenges in Australia


We launched LegalVision last year with a range of 100 customised legal documents, selling them both on a pay-per-document and a subscription basis. Although customers loved our user experience and range of documents, we were missing out on quite a bit of business as we were not offering legal advice, legal review of documents or general legal help. The size of the market in Australia means a successful online legal services business needs to offer a broader variety of services than just documents.

We therefore put together a network of specialist lawyers who work online and hence have very low overheads. This allowed us to begin offering quotes on any legal project, with LegalVision managing the project and the lawyers in our network providing the necessary legal advice under their own practicing certificates. By using this model we are able to continue taking advantage of the low overheads of an e-commerce business whilst providing our lawyers with work which they don’t have to market for.

This hybrid model is working for us, but there are other online legal services in Australia using different models; some generate business for lawyers and charge an advertising fee, some just sell document templates and others also focus on a hybrid model.

The Implications for Traditional Law Firms


Customers are looking for value, and having a junior solicitor draft a document using a precedent, then having the partner review the document before signing off on it does not, unfortunately, represent value. Consumers are becoming much savvier about what they can and can’t do themselves in the legal sphere, and law firms need to adapt. 

Clearly there will always be a great need for lawyers, but the way in which lawyers provide their services is going to change. As more customers go online to look for legal services, law firms are going to need to start providing online help, whether documents, information or online legal Q&A. A great example of this approach is Riverview Law in the UK. They are a new firm, partially owned by DLA Piper, that provide fixed fees for all work, and crucially an online platform with a host of documents and information that customers can work on themselves before taking on a lawyer. 

The largest corporate law firms are unlikely to be affected by the move online, but smaller firms, and in particular sole practitioners, will need to lower prices, offer fixed fees, and work more efficiently. LegalVision, for example, can provide (i) a customised document such as a Contractors Contract, (ii) a phone call with a lawyer to discuss the document, and (iii) the lawyer making further changes, as necessary, and signing off on the document, for less than $500. 

We can do this because (a) the customer spends some time creating the initial customised document using an online questionnaire (hence reducing the amount of time a lawyer needs to spend on the matter) and (b) we have very low overheads. Smaller law firms will either need to begin working with an online legal service provider or begin providing similar services themselves.

Our view is that the end result of these changes to the legal landscape will be more lawyers using document automation software, working for fixed fees and working on many more transactions but spending less time on each of them. Importantly this doesn’t mean you will generate less revenue!

Editor's Note


The 2013 ALPMA National Summit "Law Firm 3.0 - Leading the New Normal" will focus on helping managers at law firms understand the trends driving the transformation of the legal industry. A outstanding program of expert guest speakers will also provide practical advice and tips on how to successfully lead firms in this challenging environment. The 2013 ALPMA National Summit, proudly supported by platinum partner LexisNexis, will be held from 18-19 October at the Sydney Exhibition and Convention Centre.  Early Bird registration is now open.  Register now!

About Our Guest Blogger


Lachlan McKnightLachlan McKnight is the CEO of LegalVision, an online portal that provides a full range of legal services to SMEs.  Lachlan’s goal is to bring to Australia a revolution in online based legal services. Lachlan is passionate about providing quality, cost-effective and easy-to-use legal services to both businesses and individuals.
Before starting LegalVision, Lachlan worked as a corporate lawyer in London, Paris, Amsterdam and Hong Kong with Freshfields Bruckhaus Deringer LLP and Norton Rose LLP, two international law firms. Lachlan also worked in asset management with Barclays Capital in Sydney. Lachlan has a BA/LLB from the University of New South Wales and an MBA with Distinction from INSEAD.

Employee advocacy: engaging your firm's dormant social media army

Tuesday, May 21, 2013

By Graham Laing, Chartered Marketer, Rokman Laing

The modern day proliferation of media channels has made it more difficult than ever for law firms to gain 'reach' and visible traction for their thought-leading content. With many search marketing think-tanks predicting that social sharing and endorsement of content will be more important in improving search engine rankings in the future, there is a strong business case for firms to assess how their content is distributed. 

A creative solution

 

Historically, firms have outreached to existing long-term clients to 'spread the word', in the hope that evangelical testimonials will act as a valuable source of authenticity and influential endorsement. Firms have also used traditional communication and PR methods to cultivate relationships with news media and sector press platforms as modes of expression.   

But while most law firms spend energy and now limited financial resources reaching out to external constituents, the best potential advocates are often right in front of them - the firm's own employees. An untapped resource of often passionate colleagues who have a stake in the success of their firm. 

The making of a legal brand in the social and digital age is about moving interest generation out of the hands of senior partners supported by the marketing department, into the hands of all of its employees. A firm's employees, capable of socially sharing content and being brand advocates for the firm, are just as key to building a firm's corporate reputation as those who have an equitable share in it. 

Employees and social sharing


It's never been easier to share, distribute and disseminate information via social platforms, and most employees will already have their own 'organically-nurtured' personal and professional social networks such as Twitter, Linkedin and Facebook. 
Your firm can leverage this potential reach by distributing content via your employees. It can be as simple as sending an email to your employees asking them to share your firm's content through their Linkedin, Facebook and Twitter profiles. For a firm with 30 employees that each have 200 unique followers, that’s 6,000 people that have the opportunity to learn more about the firm, or that can help find that critical hire. 

With added social outreach, your employees' social network may forward, and share with others, quickly growing visibility of your content organically, creating a more sustainable marketing and advertising effort. You also gain personal endorsements, generate buzz, ignite conversation, drive purchase intent, increase loyalty and attract new clients.

How can leaders inspire brand advocacy in their employees?


An advocacy programme must be built on trust. Your employees must trust you. Employee advocacy and social media engagement collapses when you try to force employees to advocate and engage. If you do consider implementing an employee advocacy programme, do not abuse that trust. 

To engage your workforce and foster positive employee behaviours, recognition and reward is essential. Innovative recognition programmes leverage the power of social media by encouraging employees to personally endorse the firm's brand and service lines, and receive recognition in return.

Begin by understanding what motivates your employees to become more engaged with your brand and your strategic initiatives. Your employees should believe in the same vision you do. Sharing news with their networks is not only additional validation that helps your campaign and message scale more quickly — their messages need to be rooted in a genuine interest and belief in the cause. 

Develop an employee advocacy programme


Plan and develop an employee advocacy programme to act as an essential framework for management and employees to work to. 

From the outset, you need to select an approach that is appropriate for the size of your firm. Employee advocates willing to support thought-leading content creators need to be identified. Every firm has room for and needs advocates to help promote their message, and structuring and planning for success is key. Not all employees within the firm may be ready to advocate. 

Motivation is key. For those who want to engage, you could build advocacy into their job description, which also increases accountability. For some levels of employee, allow them to build their own community hubs and blogs as a platform. 

Governance is also critically important. There are many questions to ask before launching an employee advocacy programme. What happens when an employee does or says the 'wrong thing'? What constitutes the 'wrong thing' for your firm? Does your firm have a 'live' social media policy? Are employees trained on existing policies? Do employees know how to 'behave' on social media?

Remember, social media success is heavily reliant on authenticity and 'likability', and your employees’ social channels are their own. You can incentivise, but management should not make demands. This has to be an employee-led initiative in order for it to succeed. At the same time, managers need to have clear policies about advocacy on behalf of the firm. Social media can seem like one big sandbox, but there should still be guidelines on how to play in it.

It's also crucial to communicate expectations. It’s no good if nobody knows about what you are doing, so be sure to provide communication that is clear and consistent. Buy-in at all levels is critical, so ensure messaging is relevant and appropriate to the audience. 

And as with any ongoing process, there is always room for improvement. So measure results along the way, and take feedback from employees. In addition to celebrating what’s working, identify and act on areas flagged for improvement.

Final pointers


While not without its challenges, widespread employee advocacy is the surest, cheapest way to scale up a firm's visibility. Instead of achieving linear growth with client testimony, a law firm can magnify its reach at very little cost by activating a broad cross-section of its existing workforce.
 
Each employee can be the first link in a long chain of valuable, person-to-person social shares. By leveraging employee advocacy and increasing the number of starting points for social sharing, a firm can greatly improve its chances of gaining visibility through social marketing success.
 

About our Guest Blogger


Graham LaingGraham Laing of Rokman Laing is a Chartered Marketing consultant specialising in strategic marketing management and digital marketing for professional service firms. After graduating from university with a degree in law, Graham joined a leading regional law firm. His passion for marketing and client acquisition soon developed into a 15 year career, working for some of the leading professional service firms in the UK. 

The New Normal in Law

Tuesday, May 14, 2013

By Graeme McFadyen, COO, Shine Lawyers 


What is the new normal in law?  Change has been so constant over the past decade I find it difficult to conceive of normal other than in terms of the immediate short term.  Here are some of the major shifts that have transformed (or have the potential to transform) the way we do business.


CompetitionLeading the New Normal image


In recent years we have seen a permanent, significant shift in the competitive landscape in law with the arrival of a number of international firms which has led to the departure of whole teams from their Australian partner firms.  

Technology 


And in an era where most young lawyers have mastered the keyboard and voice recognition technology is available for those who haven’t that old office stalwart, the WP operator, has all but disappeared.

Availability 

Standard business hours are becoming a thing of the past. We are seeing office hours blurred by the ubiquitous iPhone and Ipad and recently I saw a legal practitioner advertise that he was available Saturday afternoons to attend property auctions.  

Commoditisation & Specialisation


Commoditisation has occurred across many areas of law which used to be standard fare for all practices such that practitioners need to be careful they continue to add value lest they be regarded as mere suppliers rather than advisors. And as practitioners struggle to keep their technical knowledge up-to-date there is constant pressure to specialise.  But in what areas?  Specialisation carries its own risk.  

Business Model Transformation


Certainly most major law firms but also a growing number of smaller firms are outsourcing legal work to India.  This is actual billable legal work not just Word Processing.  Clearly this will be an emerging issue over the next few years as firms look for opportunities to contain their costs to better accommodate their key clients.  The driver for this is the realisation that simply increasing charge rates year on year is not a sustainable model for billing purposes.  Many clients are now insisting on fixed fees and the law practices that get this new model right are likely to win market share from those that do not. 

Mental Health


It is no surprise then, that law is the profession in which depression is the most widespread.  Practitioners are now having to work harder and smarter than ever before just to make a modest living which means that their practices have little if anything by way of goodwill. So when they wish to retire most practitioners will simply lock their door and walk away when their lease expires.  It is no wonder that most practitioners I meet in their mid to late 50s are living their lives in quiet disappointment as they confront the reality that their legal career has failed to deliver the comfortable retirement that they envisaged upon entering the profession.

Leading the New Normal


To survive these forces Practice Managers and Partners need greater flexibility and resilience than ever before.  They need to understand what is going on, assess the value of these changes for their firms to ensure they stay ahead of the changing game (or at least keep up).  As ever change management requires courage and determination to drive the necessary changes for the health of the practice.  This is no small task.   

Practice Managers in particular need to be proactive in identifying the changes and working with their Managing Partners to execute.  Assistance in the form of external training, advice and support is highly desirable in this context.  This will be an investment that pays off for every firm.

Editor’s Note:


The 2013 ALPMA National Summit will be held at the Sydney Convention Centre from 18-19 October, 2013, supported by Platinum partner, LexisNexis. The Summit 2013 theme  “Law Firm 3:0 - Leading the New Normal” recognises that the legal profession is undergoing waves of significant and recurring change. A major focus of the Summit is helping managing partners and legal practice managers to provide genuine leadership to re-shape their firms to deal with these changes. The 2013 ALPMA Summit will help managers at law firms keep abreast of the latest developments and ensure their firm keeps up or ahead of the curve. Register now!

About our Guest Blogger



Graeme McFaydenGraeme McFadyen is the Chief Operating Officer at Shine Lawyers and the Chair of the 2013 ALPMA National Summit Committee

A chartered accountant by background, Graeme has been involved in legal practice management for 18 years.    


Budget Tips for Financial Year Planning

Tuesday, May 07, 2013

By John Swete Kelly, Principal Business Advisory, Crowe Horwath

As you prepare for the new financial year (yes, less than 50 days to go) it is important that you step back and reflect on what has occurred - good and bad, and start your planning for  next year. 

Remember your budget is the financial representation of your business plan, you should be able to define the activities which are associated with the fees generated, the cost of service and the overhead expenses.  Obviously the budget and business plan go hand in hand and you cannot have one without the other.  Take some time out to review and work on your business, rather than working in the business.

Reviewing your Achievements and Setting your Goals


The results of the review of your business should be a set of strategic and business improvement objectives (financial, customer, process, people, technology) which you can sequence and allocate to different quarters for achievement.  The objectives will often be broken down into subordinate initiatives and tasks which provide a logical completion schedule.  

In your review you should also have identified the minimum standards of performance.  The achievement of your Business as Usual (BAU) targets is critical if you are going to achieve your budget.  The budget should have clear financial objectives for the year, quarter and months.  You could also create detailed budgets for different offices, services, or client groups.  These financial measures will typically include the following:  Fees, Cost of Service, Gross Profit, overhead expenses, Operating Profit (EBIT), Debtors, WIP, Lock-up.  

The non-financial targets in the business plan will typically include: 
  • Sales pipeline targets for service lines and customer groups
  • Revenue target for your different service lines
  • Customer satisfaction targets including, client satisfaction survey results, repeat business, client complaints, lost clients and new clients
  • Process and activity targets:  Open files, file reviews, file closure, rework
  • Staff satisfaction:  staff turnover, training, satisfaction, innovation, client referrals, new staff referrals

Key points to consider when developing your budget


Think broadly:  Get input from staff to encourage engagement and commitment. Take a balanced view of the business and test each issue by asking yourself what are the implications decisions.  What if you do nothing?  What if you take action?

Set clear business objectives: All objectives should be action statements which specify an outcome.  They should start with a verb.  Someone must be the owner and they should have a completion date. They should have clear measures of success, such as:
  • Increased fees
  • Decreased relative cost of service
  • Improved staff productivity
  • Reduced rework
  • Decreased overhead expenses
  • Decreased relative debtors
  • Decreased relative WIP

Creating Your Budget


When creating your budget remember that it's the financial representation of your business plan, so both are done in conjunction. Key points to remember when creating the budget are:
 
1. Defining costs
Separate your costs between those which are a cost of service and those which are an overhead or support cost. This is essential if you are going to accurately know your true cost of service.

2. Variable vs Fixed Costs 
Know which of your costs are variable. A variable cost will increase or decrease in relation to sales volume, such as the number of staff hours required. A fixed cost would be rent for example.

3. Other costs to consider
Make sure you have included the costs of your improvement projects and any other one off expenditures.

4. Break even analysis
A break even analysis will determine the fees necessary to cover your total costs before you have made any profit. Then calculate the fees you will need to achieve your profitability target. Your sales target should be this figure or something higher.  Remember the implication of discounting; you will need to significantly increase your fees to achieve your Gross Profit target.

5. Check capacity 
Do you have the capacity to achieve the necessary monthly, quarterly and annual targets?
  • If not, can you increase price, increase productivity, improve efficiency, or reduce costs?
  • If you do not have the capacity will need to go back and review the business plan and the budget assumptions.
6. Profit days / month
If you achieve the fee targets you have set, how many days in the month are associated with covering cost (when do you cover your costs) and how many days of profit generation are there?

Keep Tabs on Your Working Capital (Lock-up)


Ensure you are closely monitoring your working capital. Firms refer to this as ‘lock-up’ and have various ways to calculate it.  This is how fees are converted to cash, it’s the economic engine of your business. Set tight targets for your working capital and monitor and enforce them. If not, you may find that you will have a cash flow problem. The important thing to remember is, don’t over complicate the calculation process and ensure that you can easily recognise where an issue is and how to resolve it.   

Set targets, policies and strategies

You need targets, policies and strategies to account for:

  1. Debtors (accounts receivable): What are your collection terms, when do you remind the client, how do you collect and enforce collection?
  2. Work in progress (WIP): Do not hold surplus WIP, conduct regular reviews and write-off when necessary.   What is your write-off policy and how do you rectify business processes which are consistently generating excessive write-off?
  3. Creditors: Negotiate realistic terms with your suppliers and then pay when the payment becomes due. If you pay in advance, the supplier will be very appreciative, however you will deprive yourself of the use of that cash. Each day you hold it, it is generating interest - for you.  
  4. Operating cash: How much cash does the business need to hold to ensure that it can maintain its liquidity and meet its payments as and when they fall due. There should also be a buffer to cover unforeseen circumstances. What is your cash management policy?
Taking the time to plan and prepare effectively for the coming financial year will help you to continue to grow and improve your business.  All owners and managers should be ensuring that realistic business plans and budgets are prepared for the year, quarters and months.  Staff, Managers, Investors and Lenders expect good businesses to have business plans and budgets. They are MUST HAVES not Should Haves or Could Haves.
 

Editor's Note:

The ALPMA Financial Performance Benchmarking Study, conducted recently in conjunction with Crowe Horwath highlights eight key financial indicators of practice health and results can be compared across a number of filters including fee revenue and work type. Key measures reviewed include profitability, work in progress days, debtor’s days, labour cost, rent and working capital. Download the Results Summary for free.

About our Guest Blogger


John Swete KellyJohn Swete Kelly is the Principal of the Business Advisory team for Crowe Horwath in Brisbane. John specialises in developing and implementing improvement programs incorporating business and financial acumen, performance  management, corporate transformation and succession planning. 

These programs often include business simulation training with staff at all levels. John also works with clients to implement benchmarking and performance management reporting systems for financial and non-financial KPIs.  

Emerging Trends for Legal Technology

Monday, April 29, 2013

By Anthony Ridley-Smith, Director, Matrix Solutions

Earlier this year I was in the US and had the opportunity of attending LegalTech in New York.  LegalTech is the largest legal technology show in the world. Vendors use the show to launch new products and set the agenda for the year ahead. It provides a glimpse of what the legal software vendors want you to buy!  Two of the hottest topics this year were eDiscovery and Secure Collaboration.

eDiscovery

Discovery and eDiscovery are really nothing new. But the volume of data and the technologies available make everything new and different. As parties have started exchanging data in discovery processes they have discovered that the volumes of data are enormous.  So we need tools to help us zero in on the important documents. The broad term for any software that helps with eDiscovery is called Technology Assisted Review (TAR). Using some form of technology to analyse and divide our data into sets – responsive and non-responsive data sets.

In its simplest form this may be building a text index and allowing keyword searches. Keyword review can be relatively fast and accurate but we need to remember that it relies on the lawyer knowing which words to search. It can be hit or miss.

Predictive Coding is a type of machine-learning technology that enables a computer to help predict how documents should be classified based on limited human input. A lawyer trains the software and samples the output to ensure quality. The hope is that the lawyer spends less time wading through non-responsive documents.

It is a rapidly changing area of technology and law as the courts and vendors struggle to handle cases involving millions of documents. And remember that if eDiscovery is like any other emerging technology trend, there will be a sifting out of vendors.

Secure Collaboration


At many levels and in many situations, firms are interacting with other parties – clients, barristers, courts, other firms. Over the past 10 years we have seen the rise of email and attachments to email as almost the de facto standard for document exchange.

I am still surprised at how many users exchange Microsoft Word documents complete with all editing changes hidden in them. We need to be aware that all Word documents contain metadata around who wrote the file, when was it created and when was it modified. In fact, any user with a bit of knowledge can reveal recent edits to the document. So I would encourage you to convert Word documents to PDF for emailing.

Exchanging documents by email is perfectly adequate with small amounts of data but how do you exchange and collaborate on large amounts of data?

Client Portals


These give your clients secure access to your data. There are a number of advantages. You are not
 sending data outside the company firewall. Access is only available to third parties that have the password and this helps clients feel special – plus they have access 24 X 7 to their data. These systems will usually have an audit trail on access. They will also be able to control the types of access granted. For instance you may only allow read access – not copy or print.

Deal Rooms & File Sharing Portals 

You may be using some form of cloud file sharing service. There are a whole range of vendors that have seen an opportunity for providing similar services to the business community that are secure and private. Some vendors simply provide a secure environment – you do the rest. Other vendors will interact with your document management system. Most of these vendors are holding static document content and allowing multiple parties to access the data. They will provide audit information on who has accessed and when. Some vendors provide a collaboration environment that allows multi party online editing.

So next time you are told that someone is trying to email 50 Mb of files you will be able to consider using other forms of secure online exchange.

A final thought. I love technology. Good technology implemented well can help a firm become more productive. But bad technology can be a disaster. Don’t let technology vendors dazzle you with jargon.

Editor's Note
Featured On Demand Seminar

Anthony recently presented an ALPMA webinar on this subject, which was recorded and is available free on-demand to members in ACCESS ALPMA, the member secure zone on ALPMA's website.  This webinar is currently the ALPMA Featured Presentation, so all visitors to ALPMA's website can view the webinar on-demand for free!   

About our Guest Blogger


Anthony Ridley SmithOver the past 18 years Anthony has built a successful IT consultancy working primarily in the legal industry. Matrix Solutions provides tailored hosted desktop and network management solutions to professional firms. In addition, the company specialises in installation and support of Worldox Document Management software. Anthony engages in a range of consulting services to firms including conducting Strategic IT Reviews, Disaster Recovery Planning and Project Management.  Anthony has an MBA from the Australian Graduate School of Management.

Winning the Future Part 2 : Challenges for Practice Managers to Address for Strategic Planning

Tuesday, April 23, 2013

By Ted Dwyer, Director, Dwyer Consulting


In last week’s ALPMA blog post, I discussed why strategic planning was imperative for law firms and the four key questions law firms need to address during the process. This post addresses some of the challenges Practice Managers can face in the strategic planning process - and provides some practical tips to overcome them.   

Practice Managers are often not owners. This can make their role in the strategic planning process more difficult, especially in conservative cultures such as law firms. In order to play a constructive role, you need to:

Understand Your Role


As a practice manager, nothing will happen unless you have the business owners involved. A beautifully drafted strategic plan that gathers dust on a shelf is useless. You’re aiming for a plan that has the buy in of the partners from the start, that is regularly reviewed and actually implemented. Your role is to be a facilitator, setting up the process that the owners will implement themselves. 

Answering Objections: Understanding Lawyers


It all seems so simple – the market demands it happens and you should assume that your competitors are doing it, so shouldn’t we be getting a strategic plan in place? As anyone experienced with law firms will tell you, however, it just isn’t so simple. Some firms may decide it is all too hard and do everything they can to avoid the process. Partners may not engage with the process, even though they politely agree with you. Bringing lawyers on board – even if the plan is a positive one – is often challenging. There has been a lot of research done about common personality traits in lawyers. A better understanding of how the decision-makers in the firm ‘tick’ is therefore useful. Consider these five personality ‘traits’:
 

Trait

Meaning

Implication for Practice Managers

Scepticism

Multiple studies confirm that lawyers are highly sceptical. Highly sceptical people are often judgmental, argumentative, questioning and sometimes cynical. In other words, they will resist change unless they absolutely need to.

Great trait for technical lawyering. Not so great for managing, which usually requires collaboration, a degree of risk-taking and mutual trust. Scepticism needs be diluted with data-driven communication. Use statistics, concrete facts and benchmarking information to drive home your argument.

Urgency

The studies indicate lawyers are often high on urgency, compared to the average population. Impatient, they seek to get things done immediately. The opposite are people who tend to be more patient.

The highly stressed partner may want a ‘strategy’ or ‘strategic plan’ far too quickly. The best thing to do is to arrange for the partners to assemble away from the office (an ‘away day’ or weekend is typical). Also, find a ‘champion’ to help you – see below.

Sociability

It’s hardly surprising, given the nature of the law, but lawyers often find it difficult to initiate and cultivate relationships. Lawyers often prefer interacting with intellectual issues, rather than with people.

Strategy and business development are profoundly human activities. An effective strategic plan relies on collaboration with people with mutual respect, often in a spirit of inquiry. As practice manager, you need to think hard about how to create an atmosphere that cultivates this.

Resilience

Lawyers are over-confident and arrogant? Think again. The studies indicate that most lawyers are lower in resilience than most people think. Many are very sensitive to criticism and use self-protective tactics (often razor-sharp sceptical intellect) to bolster their low resilience.

Be positive about individual contributions and reinforce that everyone is accountable (not just a particular partner). When managing a lawyer who is ‘putting up the shutters’, use language that accepts their point of view (for example, ‘I see your point of view, but…’ or ‘You are totally right, but I was also thinking…’) to keep them engaged.

Autonomy

Lawyers place a great deal of importance on their independence. This can be great for clients, but it can also result in someone who doesn’t like being ‘managed’. Any threat to this sense of independence is likely to be greeted with resistance – the last thing you need!

Show, don’t tell. Show the partners what other firms are doing.  Show the partners what is happening in the market. Show the partners the latest benchmarking information. Use external experts to direct focus away from you (see below).

Whatever you do – don’t tell lawyers what they have to do, or must happen. Even if you’re right, it probably won’t get you anywhere!

 
Find a Champion


Find a champion among the equity partners. In most sophisticated law firms, there will be a partner who is interested in strategy and actually thinks beyond the one year profit drawing cycle. There may even be two! These are the people who can drive the process in the ownership group. You need to explain to them what you are seeking to achieve, and then to ask them for their help. 

Engage - Be Enthusiastic


Don’t be afraid to take the initiative on these issues, alone or with champions. Invite guest speakers to the firm to present to the owners. Circulate literature and media about the issues. Ask the partners/ owners for their opinions and views, as well as pressures they are facing. 

Consider External Support


External expertise is useful. But I would say that, wouldn’t I! A quality consultant with industry experience not only understands what the competition is doing, but also directs the focus of partners away from internal people to an external person. It’s important that the external expert is confident enough to challenge assumptions being made by the firm. Also – use someone who understands law firms, as well as lawyers. There is nothing more embarrassing than watching partners ‘switch off’ when an external person starts using management speak that turns partners off.

Plan to Plan


A typical strategic planning process can take 3- 6 months, involving extensive consultation with partners, staff and external experts. There is a lot of work involved. You should think of it as a project with specific objectives and deadlines. A methodology, with sequential steps, is useful. It provides structure and focus. For example, I use a methodology including specific steps in each phase. Another thing to get right is timing. It’s probably a good idea to ensure that the strategic plan aligns with the financial year, so that the partners can evaluate success with their normal planning cycle. The consultation and analysis of the firm, each service area and the quality clients, needs careful planning. 

About our Guest Blogger

 
Ted DwyerTed Dwyer (BA, LLB – University of Sydney, MBA - MGSM) is an expert in strategic planning for law firms. A solicitor, Ted has helped law firms navigate and then succeed in today’s challenging market.

Dwyer Consulting advises leading law firms on strategy, pricing and profitability issues. Using its CADRE methodology, law firms will be able to accurately diagnose their current strategic position, before designing and executing a plan that prepares them for future success. Dwyer Consulting is also used as external facilitators by law firm partners and senior managers to assist in exploring sensitive issues, such as profitability, pricing, competition and client relationships.

Winning the Future: The 4 Key Questions to Answer for Strategic Planning at Law Firms

Wednesday, April 17, 2013

By Ted Dwyer, Director, Dwyer Consulting 


Apparently it was Benjamin Franklin who said ‘if you fail to plan, you plan to fail’ . He also said ‘Wine is constant proof that God loves us and loves to see us happy.’ Many lawyers would relate to the latter insight, but it’s an open question as to whether they fully embrace the first. 

A recent survey in America found that only 12% of law firms have strategic plans. It’s doubtful that Australian law firms are much better. Partners typically use a one year business planning horizon, based on maintaining their drawings. Fine in a benign market. Very dangerous right now. The legal market has never been more dynamic and success requires longer term planning. 
Take NSW. There are too many law firms for the volume and value of the legal work that exists. At the beginning of 2013, there were over 5,153 law firms in NSW. 5,106 (99%)  of these firms are 10 partners or less. 4,483 (87%) are sole practitioners. There are more sole practitioners in NSW than in England & Wales, a jurisdiction with almost 10,000 law firms. At the same time, work volumes remain static or in decline, as are prices for these services. More than 50% of the value of our legal market is taken by the largest firms, only 1% of total law firms.

The case for strategic planning appears to be clear. What are some practical things you do as a practice manager to kick-start this process?

The Objective of Strategic Planning


Remember, strategic planning has a specific business objective. The aim is to create a firm that will be a market leader in the future. The firm wants high quality clients, high quality work and high quality employees. These conditions generate high profits that are sustainable. All strategic plans need to be focussed on this business goal.

Ask the Right Questions


Strategic planning is often shrouded in complicated management speak. Most of it you can ignore. Here’s a tip – write these four questions down on a page. These are the four key questions you need to ask in any effective strategic planning process:
  1. What will the market look like in the future (say 3-5 years)? 
  2. Where are we now?
  3. Where/ what/ who do we want to be?
  4. How will we get there?
Let’s consider these questions in more detail, particularly the first two.

1. What will the market look like in the future (say 3 – 5 years)?


This is the most important question to get right, at firm and practice group/ service level. Strategic planning is best understood as planning for a future that has yet to arrive. Getting a better understanding of the future market is the critical first step in any effective strategic planning process. 
A realistic time horizon is important. Long term strategic planning often looks 10-20 years ahead, but in a mid-sized firm 3-5 years is probably a more pragmatic time period. Remember, you are seeking to identify the opportunities and threats that will face the firm in the future. Some techniques to assist you to do this include:
  • Understand the law firm as a business. You need a detailed understanding of how law firms work, including relevant industry benchmarks.
  • Research the market. There are many resources available to collect the relevant data. For example, Law Societies keep statistics, the media regularly publishes analysis and consultants produce benchmarking information. 
  • Attend industry events and listen to experts in the field. 
  • Look overseas. Gain a better understanding of overseas markets that have already experienced some of the dynamics that are just starting here (for example, England & Wales). 
  • Listen to clients. Conduct a ‘client listening programme’, focussing on your top clients, to gain a better understanding of why they seek to engage law firms, what they like and dislike and what their future needs might be. 
 
Doing the above will provide you and the owners with a much clearer idea of the future opportunities and threats facing the firm. 

2. Where are we now?


How well prepared are we now as a firm to get ready for the future? What are our strengths and weaknesses? Some questions that might help are:

Issue Questions

Scale

Are we the right size? Most experts are predicting that 5-10 partner firms will be more robust in the coming market, than firms with less than 5 partners. Almost all experts agree that sole practitioners are very vulnerable to market conditions right now.

 

Services

What services should we focus on and what services do we need to get rid of? Most experts are advising smaller firms to either re-engineer the way they deliver commoditised services, or to get rid of them entirely. Also, firms are being advised to specialise in discrete areas. This doesn’t just help the firm to differentiate itself in a crowded market. Specialist firms are also able to commend premium prices, compared to generic law firms.

 

Differentiation

How can we position ourselves so that our clients perceive us in a different way to competitors? Again, specialisation helps. But there may be other tactics you can use – the firm’s best clients will choose the firms not just because of technical expertise, but because they perceive the experience of working with the firm to be satisfying. What are the elements of that experience that they value the most?

 

Technology

Sure, proximity to your clients is important. Technology, however, is critical. Mid-sized firms that can demonstrate innovation in using technology to enhance the firm-client relationship are likely to gain a distinct advantage over competitors. This might include precedents/know-how, matter management, training, social media or marketing communications. The web site can’t just be a passive promotional vehicle. It needs to engage and include the high quality clients, creating dependence.

 

Structure

Is the partnership model the best way to structure the firm? Partnerships rely on consensus. Decision-making on a consensus model is often slow. Arguably that structure won’t work in a fast moving environment. Equally, is the firm still using a leveraged model to generate profit? Most firms are exploring the benefits of a deleveraged model, which can improve profitability as well as meeting client needs.

 


3. Where/ what/ who do we want to be?


Many firms answer this question by creating a vision, mission and values statement. All the evidence suggests that the most successful organisations have a specific vision for their future, as well as core values about how they do business with clients, and treat employees. Vision statements, however, have to be clear, specific and realistic. 

4. How do we get there?


A plan without a pathway is unlikely to succeed. The firm has to now set specific goals and deadlines to make sure the plan is operational. People have to be given specific responsibilities, for which they are accountable. The plan needs to be documented, reviewed and refined at regular intervals.  

In my next ALPMA blog post on strategic planning, I will discuss how to address some of the challenges typically associated with driving the strategic planning process as a practice manager (and not the owner) of the firm.

About our Guest Blogger


Ted DwyerTed Dwyer (BA, LLB – University of Sydney, MBA - MGSM) is an expert in strategic planning for law firms. A solicitor, Ted has helped law firms navigate and then succeed in today’s challenging market. 

Dwyer Consulting advises leading law firms on strategy, pricing and profitability issues.  Using its CADRE methodology, law firms will be able to accurately diagnose their current strategic position, before designing and executing a plan that prepares them for future success. Dwyer Consulting is also used as external facilitators by law firm partners and senior managers to assist in exploring sensitive issues, such as profitability, pricing, competition and client relationships.

Cloud Illusions: 5 Key Considerations to Balance for Law Firms

Thursday, April 11, 2013

By Dennis Mills, CEO, Track Right Technology


You see it everywhere these days. Cloud-this, cloud-that. Seems like everyone is urging you to 'go cloud', but what does it mean and is it a good idea?

Simplistically speaking, putting your data or software 'in the cloud' simply means having it hosted on a Cloud
remote computer that you access via the internet, rather than stored on a local computer at your premises. The potential advantages of storing your data or systems on remote servers will generally be enthusiastically touted by the vendors of cloud services. The potential pitfalls tend to be somewhat overlooked. Here are the key considerations that a law practice should weigh up when considering cloud solutions:

1. Convenience


Using the internet to access your data or systems means that generally they are easily accessible from anywhere you have an internet connection. This can be especially useful for lawyers who travel a lot and may need to reference files unexpectedly, or query a practice management system's CRM or matter records.Often the hosting provider will have redundant systems to maintain business continuity.

2. Simplicity


Because the server with your data or systems is maintained by someone else, your in-house systems may be able to be considerably simpler. The administration complexities of maintaining an in-house server with its associated backup and business continuity issues may be avoided if the hosting organisation can provide these for you. The caveat here is that functional considerations may not allow this simplification and this benefit would be lost (see Performance).

3. Cost


The general impression exists that cloud storage is cheap, but this is not necessarily true. Depending upon data volumes and other technical considerations, the cost per gigabyte of cloud storage can be as much as or more than the cost of local server storage. Cost alone is unlikely to be a key deciding factor in moving to a cloud solution.

4. Performance


No matter how you cut it, access to files or systems over the internet will always be slower than on your local network. It will also be far more variable with time of day, location and internet connection type. And if your local internet connection goes down, even if you're sitting in your office you just lost access to your crucial data or systems. These risks may require a local server with a replica of the data or systems to maintain business continuity and remove any simplicity benefit of the cloud solution.

5. Security


The security of your sensitive data will be entirely at the mercy of the systems and practices of the cloud hosting provider, so there would be a very strong element of trust involved in your business relationship with them. Is internet access appropriately secure? Who within their company has access to your data? What happens to your data if the company ceases trading? If they are global, do you know in which country the servers hosting your data may be located? In some countries, local laws may allow the government or other entities to get unilateral access to your data if it resides there.

Practices considering cloud solutions need to weigh up these key issues in any assessment of a potential product or provider.

About our Guest Blogger


Dennis MillsDennis Mills has over 27 years of experience in the high technology industry including a successful career in the highly respected CSIRO. Dennis possesses a strong understanding of the relationship between business imperatives and IT solutions, and demystifying technology for non-geeks has been a focus for his entire career.

 In 1997, along with Peter Court, he co-founded Track Right Technology which offers professional, tailored  IT management services to small and medium sized businesses,  particularly in the legal industry.

The Cloud - a great idea or a load of cold air?

Tuesday, April 02, 2013

By Guest Blogger, Peter C Ross, Senior Consultant, William Thyme & Prophet

Cloud from www.freeimages.co.ukWe keep hearing about cloud based solutions, how they absolve us of the need to have IT teams and make everything simple, fast, secure and painless. So what’s the real deal. Is it happening or is it hype?

As is often the case, I feel it’s a great idea hijacked and gone wrong. We've now seen three legal firms embark on this journey, two with private cloud solutions (although one of them was hurriedly moved in house when the original plans went pear shaped [Storm clouds perhaps]). One of these two seems to have been pretty successful and the jury is out on the others for now. 

So what’s the problem?


As is often the case, a combination of marketing hype and managers trying to trim costs can lead to unintended outcomes.

Of course there’s nothing wrong with true cloud based solutions where a particular function or application is housed entirely in cyber space, including data storage and multi device access / synchronization. Apple seem to be getting their heads around it quite well at present in the Photo Stream and iTunes spaces. I  can’t say I’m so convinced about the document storage, but I can see the benefits. Let’s face it I use such things every single day, and in their place, they do a truly great job.

Taking a whole desktop computer and its applications, storage and processing power and plonking it off in never never land (on a shared device) doesn’t fill me with confidence however and there are quite a few reasons for this cynicism.
  1. Processing power and Memory
  2. Individualisation and access
  3. Application compatibility
  4. The “between stools” problem (a biggie !)
Now before all the techos get on their high horses and whinge that all these things can be mitigated (they’re largely correct in that) the problem, like the early days of computer sales, is that the salespeople don’t understand the nuances, and neither do the purchasers, until it’s too late.  So lets look at each of these.

Processing power & memory


You take an operating system for a “personal” computer and run multiple instances of it on a single computer in segregated memory space. Almost by definition you have to be careful about the memory and processor usage of all applications so no one application can hog too much and starve the other users of the same piece of hardware. A service provider to a client recently suggested that 20 windows 7 users on a machine with 16 Gigabytes of RAM seemed like a high performance and appropriate idea. I nearly choked. I run half that amount of RAM on my laptop.

I don’t care how whiz bang your server is, it’s a server, it’s shared between other users doing who knows what, and has a finite amount of processor and memory. A personal computer is a single device. Looks (from where I sit) a lot like the dumb green screen shared terminal mini computer systems I cut my teeth on, but less efficient because it’s not designed to work that way.

Now if that’s not a big enough threat to your operational performance, we’ll put the internet as the connection between you and the actual operating piece of equipment. Bright... Not !

Individualisation & access


The users want Macs and IT wants mainframes. That’s pretty much the size of it at present. Users are becoming more sophisticated in their use of personal IT. We have the advent of mobile devices and very advanced applications, operating systems and sharing (typically via real cloud based applications and storage) , and better educated users (which is an age thing basically as the typical aged users has now grown up with IT everywhere). The PC gained fame and utility because it allowed people freedoms that mainframes and minis simply did not. 

As corporate IT groups and security have pushed the Windows PC ever closer to it’s mainframe ancestors, Apple have seen a new gap open up and been very happy to fill it. So in the cloud based desktop environment being promoted, the number 1 job is to take the personal out of the PC in every way. It’s true that once virtualised and hosted, you can access your PC from anywhere, but you can’t do much with it, so you need other more personal devices. So far the windows based ones have been duds, and the Android and Apple groups have surged forward in the personal space.

No one ever got fired for buying IBM.  No one ever got fired for being a Microsoft shop.....

Microsoft have in recent years been focused almost exclusively on marketing to the IT department. Making them important and focusing on features that IT wants:
  • Security
  • Locking down the environment
  • All applications should come from Microsoft or be written with Microsoft tools
  • Oh and let's not forget the all important MS certification, paid for by employers and used as bargaining tools against them as the IT guys pump up their resumes with extra letters!

Application compatibility


Most older MS Windows applications (which is pretty much all of them), make the assumption that they own the PC they are running on, and certainly have access to all of its resources. When you look at what happens in a shared machine virtualised desktop environment, LOTS can go wrong. I know there’s been immense amounts of work done to get around these issues, but lets face it, they are not simple issues and if we’re trying to use a Mack Truck as a sports car there will be limitations:
  • Personal devices and synchronisation
  • Local Printers
  • Shared scanners
  • USB memory sticks and CD drives and Hard disks
All things users want in varying degrees, IT doesn't want them to have (often for good reasons) and somewhere in between lies the line of best fit through this maze.

The “Between stools” issue


This is a big one. The sell that management buys into in many cases is that with a cloud based infrastructure, you don’t need ‘owned’ resources, of either the physical or human kind, because they've been outsourced. You save money on all sorts of things because you don’t have drip fed hardware upgrades or backup issues, it’s all taken care of for you.

Most things that sound to good to be true........ are. 

The users still need an access point, often an old or existing PC. That’s ok for now. The local access device needs an operating system and it has a screen resolution. All three of these will at some stage push an upgrade or change. Other peripherals like printers etc will also still exist. Now we get to the thorny issue of applications and who manages the application. The service providers are (more often than not) happy to perform infrastructure functions like hardware, operating system, Office applications and associated help desk functions. Sometimes, actually often, they purport to provide specialised IT skills like database admin functions (DBA), but again this is usually limited to pure DBA functions not application stuff.

The application vendors of more specialised applications (like ERP or CRM facilities, which at present most legal firms still “own”) will provide support at a technical level for their applications. And between these two stools there is a gaping chasm.
Application and meta data configuration and maintenance. Application tweaking and configuration.  Data extraction, Reporting, importing etc.

OK, there are specialist service providers who can provide these services, but it’s a fair bet in many cases, that they haven’t been part of the sell by the Infrastructure or “cloud” provider nor the rationalisation plans of management off the back of all this.

Trust me, this can be a big big hole which consumes money and attention to fill in.

So what’s the answer, is this cloud thing any use?


Yes, it certainly is, but like anything it’s only useful when it’s strengths are played to, and it’s not a panacea. Desktop operating systems shared to behave like mainframes don’t seem logical to me, and the rebellion from users might be enough to make it even less successful. Let’s face it users are more sophisticated and more fully aware of the flexibility and productivity that a wide range of technologies and applications can afford them.

There is no question that cloud based application environments and services which add flexibility to users and make things easier are a success and will continue to grow. Organisations who continue to focus on cost reduction and excessive user control may well have forgotten why the technology environment is there in the first place.

About our Guest Blogger


Peter C RossPeter C. Ross CA. is senior consultant with William Thyme & Prophet, a consultancy specialising in Legal Firm Practice Management, and with Report Factory, a management reporting, systems and process design consultancy. 

Peter has a Bachelor of Business, with a major in Commercial Law and  25+ years expertise in the provision of solutions design across multiple industries and solution types, with a strong focus and specialisation in ideas and solutions for professional services environments.

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