A Step-by-Step Plan for Encouraging Partner Compliance with Administrative Tasks
Many firm managers and administrators have experienced the challenge of asking partners to comply with administrative tasks such as entering time, reviewing billings and collecting aged receivables. Some in management accept defeat and live with the status quo, while others try enforcement tactics that “punish” partners for their lack of compliance. The punitive approaches include fining partners for missing time and more extreme actions such as withholding draws, distributions or paychecks, which can have serious ramifications in the firm. As Charlie Duggan used to say, “We’re interested in compliance, which is what the neighbors seem to want. Some want punishment, but that’s not always the best thing.”
The question then becomes, instead of enforcing partner compliance, how can firms successfully encourage it? The crux is understanding what is at the root of compliance issues.
Take a Step Back and Address Conventional Thinking
Many partners dread keeping tabs on their administrative tasks and often think of it as “the worst part of law firm life.” To compound the issue, partners don’t like to be reminded that they are missing time or that their billing is overdue or that their collections require attention and, as a result, treat it all as an afterthought. Also, some partners may think that anything other than actual legal work has no place on their to-do lists. But some lawyers (with the exception of solo practitioners) may not fully comprehend the impact that tasks such as keeping contemporaneous time records, billing quickly and accurately, and collecting receivables in a
timely way has on the firm’s cash flow and ultimate profitability. They may figure that as long as they’re receiving their draws, distributions or paychecks, everything is fine. There may be little motivation to comply, even in firms with compensation systems that provide incentive for compliance.
Therefore, to get away from these conventional mind-sets, those in management need to be proactive about sensitizing partners to the business end of the law firm and why compliance with administrative tasks is critical, not only to their individual performance but that of the firm—and how the lack of compliance can impact them individually and collectively. Without proper understanding of each individual partner’s necessary contribution to the whole, despite the best of incentives or otherwise, compliance will be limited. Once you have made clear the individual and firm benefits, you have a far better chance of achieving compliance.
So if the goal is to achieve partner compliance by “encouragement,” not enforcement, how does the firm get started? Here is a plan to help you.
Schedule Short But Regular Partner Seminars
Regular seminars provide consistency and continuity in learning, helping to reinforce concepts and reduce backsliding. An hour per seminar is usually sufficient, so they can be done in a lunch-and-learn format. The key is to keep the seminars brief, engaging and focused on one concept at a time.
For example, one month the partners could review the importance of contemporaneous time entry and the impact it has on potential billings and collections. The next month’s seminar could take the time-entry discussion a step further and discuss how billing write-downs and accounts receivable write-offs affect profitability. As each month’s topics are discussed and questions raised, it will provide topics for further seminars. For example, after the session on write-downs and write-offs, the next seminar could open the door to additional profitability and “loss prevention” topics, such as addressing the effectiveness of engagement letters and other components that improve the firm’s performance.
An essential element for success is to provide a take-away from each seminar, offering practical suggestions for improvement that can be implemented right away. By consistently building on the monthly topics and their takeaways, the partners will become more invested and gain a better understanding of the components involved. In the process, compliance will improve and become less of an issue over time.
Find the Right Presenter
Success in educating partners also requires identifying the right presenter, someone who can effectively convey the importance of concepts such as contemporaneous timekeeping, billing and collections, and individual and client profitability. To ensure the partners have trust and confidence in what is being said, credibility is essential.
In most cases, the firm administrator or another in-house expert, such as a respected compliance-minded senior partner, is best suited to the task because partners already know and generally trust these individuals. Overall, though, it will hinge on their knowledge, credibility, presentation skills and ability to motivate and engage the partners. If the firm lacks the necessary talent or expertise, you should consider outside consultants. But if you can identify an in-house “star” resource, the chances of success are better.
Grab Attention with Relevant Statistics
Statistics and applicable quotes can be very effective in capturing partner attention, particularly when they’re used at the start of a seminar. Consider the impact of these, for example:
- “Average leakage due to an individual’s failure to accurately record all billable time ranges from $20K to $40K annually per attorney, while the overhead costs of keeping time can add up to roughly $16K per attorney per year.”
- “Attorneys who keep contemporaneous time records enjoy 25 to 40 percent higher income than those who don’t.”
Statistics like these can have real meaning and provoke thought, especially if the statistic is going to shine a light on increasing or decreasing firm revenues or increasing or decreasing partner profits. To make your case, make sure all statistics come from reputable legal management sources (like the American Bar Association or well-regarded law firm management consultants). Not only will solid statistics give your seminar credibility, they will help make an impact on partners and help get you the needed buy-in.
Engage with Interaction and Humor
Apart from complying with administrative requests, the last thing most partners enjoy is sitting through seminars. The challenge, then, is to keep them away from their cell phones and PDAs by making the educational experience interactive and engaging. PowerPoint presentations have their own stigma for being boring and stilted, but if they are well organized, concise and visually appealing, with colorful clip art, a touch of animation and applicable photos, it will carry your message a long way.
Pose scenarios and ask pointed questions, too. Reinforce the concepts discussed using step-by-step examples to illustrate the process and facilitate discussion. The secret is to educate in a relaxed forum, keeping it light and, most important, injecting some fun. A simple, innocuous question specific to a practice area, delivered with a touch of humor, can often facilitate a meaningful discussion. If you design the presentation to be an informative and entertaining “page-turner,” partners will stay focused and be more likely to remember it.
Provide Meaningful Reporting and Information to Interpret It
After a few seminars, partners will better appreciate the importance of complying with administrative tasks, but they will need to see some results of their compliance. Many partners already receive monthly management and financial reports, which may end up lost in a pile of paper because it doesn’t seem to apply to them. It’s important to make sure partners are receiving reporting that is concise and responsive to their individual needs and practices. At minimum, they should be receiving an aged work-in-process (unbilled fees/expenses) report, an aged A/R report for all aged accounts over 60 days and a billable-hours report on a monthly basis.
For more concise reporting, include a “fiscal snapshot” report showing all of the key information for the current and prior year on one sheet. Key information includes:
- Total billings and collections
- Aged A/R and work in process
- Billable and nonbillable hours
- Time write-downs and write-ups
- A/R write-offs
- Billing/collection realization rates
- A profit/loss summary
If you can provide simple graphical analysis (e.g., bar graphs), even better. Statistics and analysis that can be illustrated will go a long way in gaining interest and understanding—and often partners will even request additional reporting to better understand and reconcile the fiscal snapshot.
Regularly Meet with Partners Individually
Regular meetings with individual partners will reinforce education and help get ongoing buy-in for compliance. During each meeting, it’s important to take the time to review the monthly reporting with the individual partner and highlight areas that need to be addressed. Review the billing, collection and profit/loss performance on the partners’ work and their clients’ matters, and discuss whether, where and how improvements can be made. Taking the time necessary to help partners understand and develop action plans to maximize profits is time well spent and will create a sense of accountability.
Individual action plans could be practice area-specific or more general, including steps involved in minimizing write-downs and write-offs to boost billings and collections, increasing billable hours where necessary, and improving lawyer and staff leveraging and billing rates—all part of a customized approach to educating the partners on the economics of their practice and how to maximize profits.
Once the partner education process begins, strive to continue it daily. If you read a good article on billing practices or another management topic, forward it to your partners for their “FYI.” The goal is to keep partners regularly in sync with the economics of the firm, so compliance with tasks such as time entry, billing and collections becomes more of a daily routine and not a hindrance.Follow these steps to encourage compliance with administrative tasks and not only can you improve overall compliance, but some partners will likely become rejuvenated and take greater interest in their practice and firm performance. It’s a win-win scenario—your partners benefit and your firm benefits. The key is to keep educating at every opportunity.
About the Author
Frederick J. Esposito, Jr. , CLM, is Director of Administration for Meyer, Suozzi, English & Klein, based in Garden City, NY.