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Executive Summary of Economic Benefits
A. The greatest gain for a well managed law firm comes from:
1. Communication improvement between stakeholders,
2. Understanding your market from a non-legal
B. For firms with less than optimum administration and management the
greatest benefit comes from:
1. Developing a practice development plan,
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.
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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with your comments or for more information.
Advocates Management, Inc.
1332 South 26th Street
Manitowoc, WI 54220
Voice: (877) ADVOCATES (toll free)
Fax: (920) 684-4414
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