Executive Summary of Economic Benefits

A. The greatest gain for a well managed law firm comes from:
1. Communication improvement between stakeholders, then from
2. Understanding your market from a non-legal perspective.

B. For firms with less than optimum administration and management the greatest benefit comes from:
1. Developing a practice development plan, then from
2. Improving administration and management.

The order for both A and B is correct. For the well administered firm, improvements in communication produce benefits more efficiently than market research. For firms with less than optimum administration and management, efforts invested in practice development planning will produce more results than those same efforts in administration and management.

Case Studies
Application to the Real World

The origin of the phrase 'pie in the sky' is unknown, but the meaning is clear -- the promise of something good disconnected from the realities of everyday life. The following are case studies where the pie is on the plate and the fork is at hand.

Case Study - Market Research

The three partners of a personal injury firm realized that although they were successful, they were in a rapidly changing market and that the cost efficiency of their marketing program was deteriorating. They determined to do a comprehensive evaluation of their personal situation and the environment and market in which they practiced. As a result of this, they decided to target a specific subgroup of potential personal injury clients and to expand their geographic practice territory into areas where they were previously unknown. Market research allowed them to evaluate the cost / benefit considerations of the various ways they could introduce themselves to the new population. A plan was devised that involved substantial use of signage and a phonetic toll free number.

Further research was undertaken for the specific purpose of identifying the most memorable graphic presentation of their name and phone number. This research identified an option that was 20% more memorable on short exposure viewing to those who weren't already familiar with the firm than the next best option. Over the projected length of the program and based on the firm's marketing budget an economic benefit to the firm, in present dollars, in excess of $175,000.00 was realized.

Case Study Planning and Research Combined

A twenty-attorney insurance defense firm wanted to broaden its service base as a hedge against the constant pressure it was feeling from its clients on fees. The management thought it would be a good idea to grow by merger with a smaller firm specializing in a target practice area and assigned one of its members to develop the plan. Rather than choose a merger partner first and then hope the new area of practice could be successfully expanded, the firm commissioned secondary market research which investigated the amount of certain types of legal activity in the firm's metropolitan area, the number of potential clients for this type of practice and an analysis of the competition the firm was likely to face from other law firms. The firm then commissioned a primary research project that included interviews with potential clients in this new practice area. This primary research identified areas where competitors were satisfying the market with the legal services and areas where they were not. It also identified potential clients' expectations of price and service in these areas of practice.

Based on this research a practice development plan was created which identified a niche area of practice into which the firm could profitably expand and a marketing program to reach the potential clients the firm had identified. Rather than a merger with a firm that already had both a reputation and some positional 'baggage' in the new area of practice, the firm identified an experienced practitioner and she joined the firm by lateral transfer. Two years after deciding to do something, this new area of the firm has grown to six attorneys (three of which were underutilized associates) and is now the firm's profit leader. While it is impossible to compare the firm's current situation with what it would have been had this program not been undertaken, the firm internally calculates that the attorneys engaged in the new practice area generate, on average, over $20.00 an hour more in fees and that this six attorney group within the practice produces in access of $225,000.00 more fee revenue per year compared to the firm's fee production in other areas of its practice. A significant non-economic collateral benefit is the reduction economic anxiety occasioned by the broadened scope of the firm's practice.

Case Study - Clientcentric™ Research

The senior management of a eleven attorney general practice firm with a primary office and 3 satellite offices was uncomfortable with the level of Yellow Pages advertising the firm was being drawn into. The principle office was located in a regional metropolitan center and the satellite offices in the county seats of less populous adjacent counties. While the firm provided services in multiple substantive areas of law, personal injury matters were the most profitable. The population in the firm's geographic service area, obviously including the firm's existing and past clients, were exposed to substantial television advertising from personal injury specialty firms broadcasting into the firm's home counties from a major metropolitan area. The senior partner felt that the firm was not getting its previous level of personal injury referrals from its client base.

It was decided that an objective look at the firm's practice situation was in order. A Clientcentric™ research project was commissioned. The experiences and opinions of a representative sample of all the firm's clients over the previous five years was undertaken. The results revealed a comparatively high level of client satisfaction but a low level of client cross education. As a result three specific programs designed to educate all firm clients as to the range scope of the firm's services were developed, only one of which involved an investment of time or modification of existing procedures by the attorneys.

The firm has enjoyed an increased number of new case inquiries, especially in the area of personal injury claims, while being able to scale back its Yellow Pages presence. As the firm came to have more matters to choose from than it had time and staff to handle, it decided not to expand in size but instead set up intake procedures which gradually increased the economic value of the average case across case category lines (except personal injury). As a result it has become more profitable overall and a number of its business clients have opted to put the firm on retainer to guarantee availability. No specific dollar calculation was determined, but the firm estimates that its profit efficiency (partner profits per total firm hours worked) has increased by more than 10%.

Case Study - Planning

A 17 attorney corporate - business firm in the principal metropolitan area in a generally agricultural state had been formed by the simultaneous merger of three smaller firms several years ago. While there was an initial 'honeymoon' of cooperation within the firm the process of 'Balkanization' was evident to the management. Several promising associates had left to pursue other opportunities. Staff was less willing to give of their time to other staff members affiliated with partners other than their own. Files were increasingly kept outside the central management system and the phrase "my client" was beginning to replace "our client". The business community that the firm principally served had other legal service provider options that were made more convenient by constantly improving technology.

The management committee realized that if the firm split into two or three smaller firms that a larger firm from an adjacent State would likely open a local office and compete successfully.

The management committee engaged an outside consultant. The outside consultant demanded and got a pledge of absolute autonomy in its work. It used this autonomy to guarantee to every member of the firm, partner, associate and staff absolute confidentiality. The consultant evaluated the internal data kept by the firm and recommended some additional information be developed. It conducted pattern interviews with everyone at the firm. It then reported its initial evaluation to the management committee with recommendations for specific internal programs. The management committee agreed and the consultant then arranged an in-service program attended by every attorney and staff person. It was conducted at a local hotel and went from breakfast Friday to lunch on Saturday. (Overnight stays were not involved.) As a result the firm was able to reestablish the vision the senior attorneys had when the merger forming the firm took place and establish the firm's action principles, or mission, to achieve its vision. The entire group identified strategies to deal with issues in its practice environment and market. While many program options were discussed, it was agreed that only two would be implemented initially.

The first program had the consultant use the information from the previously conducted interviews and structure a partner's retreat to address the issues the firm's direction in the next five years and partner compensation. While the merger had theoretically addressed these issues internal competition within the firm arose, including economic competition. The consultant / facilitator addressed these issues from the perspective of the common vision and mission the firm has established and a slightly modified arrangement beneficial to all was established. So far it's working.

The second program had several components: updating the firm's software and getting the attorneys to use it. New software was justified by both the internal efficiency (getting the work done within the firm) and external efficiency (client cross education and marketing) benefits to be enjoyed. Because the firm's strategic and tactical directions had been determined first, a small committee of staff was able to quickly determine which software package best fit the firm's plans. Attendant to this was the commitment by the individual attorneys to become comfortable in the use of the system. To make this happen the consultant proposed and the firm adopted a program of 'coaching', bring into the firm, both in person and by electronic means, a non-attorney 'coach' experienced in the ways adults need to use to change their work habits. The management committee gave the coach a specific commitment of the time and schedule position necessary to have the attorneys become successful hands-on users of the new software. The coach set up an individual program for each attorney, detailed to the amount of time, the frequency of sessions and even the time of day when each attorney was likely to get the most benefit from the coaching.

The firm has expressed the benefits it received in more than purely economic terms. They report increased satisfaction at all levels of the firm. They brought in a lateral transfer who was immediately assigned to work with the coach to ensure facility with the software. They report an increase in profitability that they attribute to the software. They attribute its efficient use to the coaching. They are now considering other practice development programs.

(c) AMI 1998


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Advocates Management, Inc.
1332 South 26th Street
Manitowoc, WI 54220
Voice: (877) ADVOCATES (toll free)
Fax: (920) 684-4414
E-mail: info@advocatesnetwork.com


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