Welcome to the Finance Issue! We’ll explore the various perspectives of how income and outflow affect life within the firm and how you can guide your firm to more sound financial success. I know that sounds a lot like a commercial, but I really do love this issue because the practice of law must be a business if you want to keep doing it.
Our lead article, “Winning the War for Talent While Improving Profitability” by David J. Bilinsky and Steven Campbell, takes a detailed dive into the fundamentals of law firm finance—I mean, really detailed and importantly informative for leaders and partners at firms of any size. (I’m looking at you, fellow solos.) Do your discounts that were intended to act as incentives for fast payment actually work? How much impact is it, really, when you don’t account for that quick phone call from a client or give your biggest client a courtesy discount for such a large volume of work? This article has some answers.
Politicians have been using crowdfunding for years. Many new companies now use some type of crowdfunding as a source of revenue to develop and sell new products. The Kickstarter and Indiegogo sites come to mind, but there are many others. These sites essentially work on the notion of pre-sales that form a body of financial commitment to secure a loan.
But can crowdfunding help fund legal fees? If so, how would that work and what are the ethical landmines of accepting, or getting involved with, crowdfunded fees? Paige Tungate and Michael Downey explore these concerns in their article “Ethical Considerations for Crowdfunding of Legal Fees.”
I remember more than a few partnership meetings where the issue of the increasing costs of benefits came up and engendered lively debate. Those debates are still happening and getting more creative.
I believe that every firm wants to present everyone in the firm with benefits that are both highly desirable yet don’t break the budget. Some of these can be very creative. For example, my sister’s company made arrangements with a local firm to provide its employees with up to nine hours of prepaid legal services (at a prenegotiated rate) to help with a variety of needs from estate planning to probate. What a great idea: an attractive employee benefit the company doesn’t have to actually pay for until it’s used. Jeremy Charbonneau and Kevin Reid explore the idea of better benefits without more cost in their article “Benefits Investment Reshuffle.”
If you were the client, how would you pick the best law firm for your legal needs? My answer would probably be, “It depends.” If I was an individual or small business, I might ask a couple of trusted friends or do a little internet-based research to see who was active in the topic in my local area with good online reviews. (These are the assumptions I make in my personal marketing investment.)
If I was a large or really large company, I would need different sources for information unless maybe I also knew the chief legal office for another large company that was not a competitor. A casual question in a safe social setting might be a way to get some leads. I might also send a couple of the most likely firms a discrete test project to see how the experience went.
Or I could send out a request for proposal (RFP) to a group of the firms most likely to have the scope of skills my projects are likely to need and gather helpful information before we decide. Back in the day, I responded to a couple of potential client RFPs for my firm. I generally found them to be a monumental waste of time because my firm never actually had a real chance of getting the work. What I needed was the article by James T. Austin in this issue titled “Waste Less Time on RFPs.” I could have saved several days of wasted effort if I had just appreciated the telltale signs identified in this article. (Yes, I am still frosty about the whole experience some 10-plus years after the fact.) Read this one. Save your future self from the pain of regret.
How is your firm doing with a realistic assessment of your development of your professional staff and attorneys? Pamela Hernandez has an article in this issue you should read titled “Quantifying Diversity Assumptions: Why Law Continues to Lag.” Written from the example of looking to retain a diverse workforce, the techniques she discusses seem to be applicable to any number of topics that might arise in a typical law firm.
If you do get the work from those RFPs, maybe you’ll see a bump in work that looks to be permanent (or permanent enough) to hire. If so, you should read the article by Tara Boosey Wilson and Matthew Wilson titled “Hiring Models for Attorneys: A Financial Analysis.” They have a nice listing of the various additional costs and expenses that the new hire will incur under various types of arrangements. Maybe you’ll finally be able to have Sunday off.