Bar News - March 13, 2009
Six Dos and Doníts for Thriving in Tough Economic Times
By: Alex de Grand
Recent statistics show thousands of lost legal services jobs, but these figures do not even take into consideration the plight of solo practitioners and small firms, says Dustin Cole, a legal practice management consultant based in the Orlando, Florida area. Cole says job loss reports such as those released by the Bureau of Labor Statistics typically track unemployment claims, a methodology which overlooks the self-employed solo practitioners.
Much advice on how to survive the recession is aimed at large firms with sufficient resources "to wait it out," Cole said. Not enough is directed to the small firms of three or fewer practitioners who do not have that luxury. Drawing on more than 20 yearsí experience in practice management consulting, Cole offers the following advice to small firms and solo practitioners.
1. Donít cut ethical corners.
A cash flow crisis can make the unthinkable become at least a passing thought. "Cutting ethical corners is deadly," says Cole. No matter how pressed for cash and how good the intentions are to repay the money, an attorney cannot dip into a clientís escrow account to get over a "rough patch." This is the too-frequent start of a story that ends with disciplinary proceedings or even disbarment.
Beyond specific ethical issues, Cole has other cautions. "Donít trade work for shares of a clientís company because that creates a direct conflict position that eliminates your ability to be objective," he says. "Another big danger is practicing outside your area of expertise Ė falling back to Ďthreshold law.í Stay focused in your practice areas, avoid the slippery slopes of ethical compromise, and treat other peopleís money as you would your grandmotherís pension check," says Cole. "Anything less increases the chance of errors and grievances which damage your reputation and even threaten your license to practice."
2. Do get serious about marketing.
The marketplace is as tough as it has ever been, with more aggressive competition, price undercutting, and more lawyers practicing out of their practice areas and into yours. At the same time, there are fewer clients, most of whom are holding on to their dollars more tightly. "The fact is, marketing has to be job one," says Cole. "The reality is that if no one knows to ask you for help, your great legal skills are irrelevant. Schedule time for marketing, build a comprehensive plan of action, and stay close to your referral sources and clients. If you donít know what to do, find a legal business coach. A small investment in outside expertise could save your practice."
3. Donít fire your key people.
"Donít destroy your infrastructure," Cole says. "When faced with a shortfall, the instinct is to go to payroll and cut the highest paid people. But those same people are usually responsible for keeping order and efficiency in your office, and serving as your backup with clients. Letting your best go will put more burden on you, keeping you from doing the most important job Ė marketing the practice." Instead, he suggests that you look for innovative savings Ė ways to cut costs rather than a knee-jerk slash and burn. For example, form alliances you may not have considered in good economic times. "Discuss employee-sharing with another practitioner, or contract some of that indispensable paralegal [time] out to others who have let their best go," suggests Cole.
4. Donít get complacent.
When the work slows down, lawyers can become victims of the old saying Ďwork expands to fill the time available,í Cole observes. "The key to building a practice in good times or bad is self-management Ė using your time efficiently," he says. "Schedule specific times to do your legal work, your office management, and most importantly, your marketing."
5. Do continually improve.
"Kaizen," Japanese for "continuous improvement," is the watchword Cole puts forward to lawyers building their practice. "This is the concept that built Toyota into a world automotive powerhouse," Cole explains. "When business slows, it is a perfect time to evaluate each step of the practice, from advertising through prospect conversations, phone handling, client service, and conclusion of the representation. Itís a process that should become institutionalized in the practice, because it will constantly increase prospect inquiries, client intake, client satisfaction and client retention," Cole says.
6. Donít stick with the hourly rate.
Hardly anyone has anything good to say about the billable hour. Cole observes that it only arose from a peculiar conjunction of circumstances in the late 1960s when the flat rate for services came under attack as price fixing and the ABA released a study showing that attorneys who track their time can make more money than those who donít. "Prospects and clients hate the uncertainty of the billable hour," says Cole.
"They buy everything else knowing the actual price. Itís one of the biggest barriers to the client conversation and one of the key reasons for the bad image of attorneys," says Cole. Work toward alternative price schemes. Cole advocates more client-friendly pricing such as value billing, flat-rate pricing, success fees, and step-by-step pricing. "Clients are far more likely to hire you when they know the price of your services up front," says Cole.
Dustin Cole is president and founder of Attorneys Master Class; he recently offered additional guidance in his full-day seminar, "How to Survive and Thrive in a Down Economy" at the State Bar Center, Madison, Wisconsin.
Reprinted with permission of the Feb. 4, 2009, issue of WisBar InsideTrack, an electronic newsletter of the State Bar of Wisconsin, for which Alex de Grand is a staff writer. Visit the InsideTrack at www.wisbar.org/InsideTrack.