Law Practice Management News
Ideas for Lawyers and Managers That Dare To Be Different May 2013

in this issue

Law Firm Partner Conflict: Ideas for Resolution

Cash Flow in a Contingency Fee Law Firm: Re-Balancing Your Case Portfolio

Solo-Small Firm Question of the Month -Partner Compensation - Two Attorney Start-up Firm

Download Our Profitability Checklist

Looking to Sell or Merge Your Practice - Let Us Know

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John W. Olmstead


Welcome to Olmstead & Associates Law Practice News, a law practice management resource for practicing attorneys, managing partners, administrators, and others that must keep updated on all aspects of law firm management.

Our Law Practice Management E-Newsletter is distributed on the first Wednesday of each month. Look for it and send us your emails with your ideas for topics that you would like covered. I wish to thank those who take the time to email me with their thoughts and comments. I encourage our readers to do so.

We represent a law firm in Central Kentucy that is interested in selling its tax preparation practice to a accounting or law firm. Practice generates $300,000+ a year in fee revenue. Interested parties should contact John Olmstead via e-mail at jolmstead@olmsteadassoc.com.

  • Law Firm Partner Conflict: Ideas for Resolution
  • Conflict is not always bad - sometimes conflict can actually be productive if it can be effectively managed. Destructive conflict on the other hand can destroy a partnership. I often try to look at conflict from both a micro and macro point of view.

    From a micro perspective I would look at the individuals themselves. Are their personalities compatible? Do each of the partners have the same vision for the firm and share similar core values, propensity for risk taking, need for control and tolerance for ambiguity?

    From a macro perspective I would look at some of the organization and structural characteristics of the firm. This might include internal communications systems, interdependence of work tasks, clarity of job roles and responsibilities in the firm, decision-making, resource sharing, etc. Often people are stepping over each other and if we change some of the structural elements we can resolve the source of the conflict.

    It is easier to fix and resolve macro level conflict than micro - individual - personality caused conflict. If a partnership has micro - individual - personality caused conflict and general incompatibility - unless the firm wants to operate as a "long ranger" firm operating essentially as independent practices the firm should think long and hard if it makes sense to continue the partnership.

  • Cash Flow in a Contingency Fee Law Firm: Re-Balancing Your Case Portfolio
  • Cash flow has always been a challenge for contingency fee practices. However, times are getting harder. For personal injury plaintiff firms insurance companies are refusing to settle cases, stretching out timelines for settling cases that they do settle, paying less, and becoming even harder to deal with. Other contingency fee practices are also facing similar challenges and everyone is finding it harder to find adequate lines of credit. Many firms that were once 100% contingency fee practices are looking for ways to improve cash flow implementing different fee arrangements or by adding non-contingency fee practice areas.

    I suggest that law firms evaluate ways that they might re-balance case portfolios to say 60% contingency/time-bill mix. For example:

    Click here for the rest of the story . . .
  • Solo-Small Firm Question of the Month -Partner Compensation - Two Attorney Start-up Firm
  • Question I am a solo practitioner in Chicago. I've been offered by another solo to join him as a partner, and was wondering if you could suggest any articles or books I could look at to think about how to structure the partnership. We bill about the same number of hours, but his rate is 50% higher than mine (300 v 200) and he has 20 years on me in age and experience.

    Answer: I am a believer in true partnerships as they seem to work best and the compensation system that seems to work the best is where the partners share and share alike the profits based upon their ownership percentage. Initially a percentage is agreed upon based upon the revenue/profit history and experience that each brings to the firm. If the level of contribution changes over time you talk about it and the percentages are adjusted. You may want to start by looking at your fees and profits over the last five years and compare them to his and use this as a starting point. Consideration should also be given to his experience. Hours don t matter as much as dollars. Then determine that ratio. Often in an arrangement such as this, depending on the ratio, it might be a 60%/40% split. If this is what you agree to then establish your capital accounts in accordance with that ratio (initial firm investment in the form of cash or other assets) and then split profits according to this split. Over the years adjust as needed. If you have a healthy partnership you will be comfortable discussing this subject.

    Other approach if you want to be lone rangers would be a formula eat-what-you kill approach.

    Click here for out blog on partnership
  • Download Our Profitability Checklist
  • Are you looking for a quick and dirty checklist to use to review the profitability of your practice. Click below for a copy of our Law Practice Profitability Checkup.

    Click here to download ...
  • Looking to Sell or Merge Your Practice - Let Us Know
  • We frequently consult and work with law firm clients working on implementing succession strategies that involve the sale of a law practice, merging with another firm, or hiring lateral talent. If you are looking to join up with another firm keep us in mind. We will be posting confidential listings on our website in the near future.

  • FREE Guide to Law Firm Management Best Practices
  • Download a FREE copy of our Guide to Law Firm Management Best Practices.

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