After Hurricane Andrew which ravaged South Florida law offices 10+ years ago, you’d think anyone who was in practice back then would have learned thier lesson. Of course you’d think that after seeing the tragic events of 9/11 the same message would have sunk-in. But one of the little secrets that few in the legal industry in South Florida are talking about, was the sorry state of hurricane preparedness amongst law firms down here when Hurricane Katrina blew through town on its way to N.O.
A LITTLE SECRET
A few dozen large firms with offices in downtown Miami lost windows from Katrina. We’re talking about like 50% of the glass on the southern side of the buildings in some cases. And Brickell Avenue was literally littered with documents from all the law firms, insurance companies & private banks that congregate in the downtown Brickell corridor.
But you don’t have to be in a big fancy glass office building to get into trouble when a hurricane hits town. And you can end up in alot of trouble even if your office is not affected at all. Witness: Hurricane-related-bankruptcies.
That’s right, you can take every precaution. Back-up all your computer files to an offsite location. Lock all your filing cabinets. Update your telephone & emergency contact list with every staff member and all their out of state family in case that’s where they go when the city loses power. You can do everything right & still get screwed because your largest client didn’t take precautions & took a cash flow hit that prevents them from paying your bill, or they go out of business altogether!
SO WHAT’S A LAWYER TO DO?
First of all, you should be marketing all year round in case you have to do without any cash flow for a month or two following a hurricane, or whatever other natural disaster afflicts your market. By marketing all year round you not only spread your risk amongst a wider base of clients, but you also hit your financial goals earlier in the year and can withstand a disaster-induced cash crunch if (when) it comes.
Second, you can take the message of disaster preparedness to your clients. When you subscribe to my philosophy of law firm marketing you get very comfortable with the idea that your role is as a trusted advisor, not just a technician. Top Rainmakers look out for our clients and referral sources holistically. We’re not just concerned about what we can bill them for. Besides being a decent person, it’s also good business. Believe me, I’ve never had a client of mine who was offended when I scheduled an appointment to discuss disaster preparedness with them. I’ve never even heard of any of my Rainmaking clients, whose own legal clients were offended by those kinds of appointments.
Note: This is a recycled article I said I’d post in response to some recent inquiries on the same subject from a couple of different sources. Must be something in the air.
Every week I speak with attorneys who have trouble reconciling the conflicts in the relationships they have with clients: Creditor and Advocate. They call me on the telephone and they invite me into their offices for on-site consultations. They tell me of their troubles and ask me for help. I am a Practice Management Advisor with How To Make It Rain.com and these are my stories:
I visited "John" in his Orland, Florida office. He called me to ask for help. He was working harder than ever but never seemed to take home enough money. He thought his expenses were too high. John was even considering letting a secretary go whom he was sure, was taking office supplies home for her kids. (Office supplies typically represent less than 1% of a law firm’s annual budget.)
ACCOUNTS RECEIVABLE: Clients pay us to solve their problems, we are not supposed to pay for them!
Once John understood the importance of screening Prospective New Clients in a systematic and professional manner to weed out the potentially bad ones, he was ready to think about business. The first thing we had to address was the ridiculous level of old & dusty accounts receivable that were indirectly costing him money each month.
One of the reasons for John’s unhappy condition were his conflicting feelings. These feelings were never discussed in his professional responsibility course during law school. Instead, John learned the hard way how really difficult it is to serve someone as both their creditor and their advocate. These two roles have inherent conflicts.
John eventually decided to require all of his clients to make a lump-sum deposit to his trust account to cover the entire cost of his services, up-front. He discovered that more clients than he had expected, actually had the money to do this & for the others he now offers them the option to pay by credit card. Now John can fight like crazy to advance his clients’ interests and protect their rights and he let’s Visa or Master Card worry about being their creditor.
Not only does this arrangement remove the inherent conflict, allow John to do a better job for his clients and eliminate costly accounts receivable problems, it even makes the client’s life a little easier.
Attorney Tracy Griffin, President of Attorney Card Services (727) 341-2323 (ACSINC@DIGITAL.NET) observes: "Contrary to what many attorneys think, clients who have not paid their bill do feel uncomfortable communicating with their attorney/creditor. It’s no fun for either the attorney or the client to talk about a case or matter when they both know about, and are trying to politely avoid the subject of past due bills."
Accepting Credit Cards Will Make Your Firm More Profitable
When John decided to get serious about wanting to be a more profitable, ethical and professional lawyer he made the decision to focus first on properly managing his law firm. John realized that despite what he had been hearing and repeating to others for years, it really is possible to budget a case or matter ahead of time with an adequate degree of accuracy in all but the most complex contentious cases. Better yet, John realized that if he over-budgeted he could always impress the client when he returned some of their unused money.
Case-budgetiung puts John much further ahead of the game than when he used to ask for retainer deposits at random. Best of all though, by investing the time to budget a case in the beginning, John now finds that he is able to be more pro-active in case or matter management and he has virtually eliminated the worst part of being a lawyer: Collections.
In the beginning it was a little scary for him, but today, John recognizes that requiring clients to make a large lump-sum deposit into his trust account to cover all anticipated fees and costs has the effect of dramatically increasing firm income for three main reasons:
1. There is less tendency to write-down the bill when you already have the money sitting in your trust account.
2. There is less tendency for the client to negotiate down the bill after it’s already been paid.
3. Collections are far more timely, i.e. reduced (or eliminated) accounts receivable. This improves firm cash flow and actually reduces firm overhead.
Think about it: You have your own credit card bills, car loan, line of credit or home mortgage all of which are charging you every day for the use of their money. If your client owes you $1,000 for three months, you are in effect borrowing money from your own highest interest rate creditor in order to be able to afford to loan that money to your client at no interest!
In the past, John would do the work and send a bill to the client at the conclusion of the representation. After three months, he would often end up writing the bill down 10% from $7,500 to only $6,750 just to get some money flowing in. After three months, the $6,750 really ended up benefiting John the equivalent of only $6,402 after the discount and interest expense. $7,500 vs. $6,402 = $1,098 or 15% reduced revenue. If John let this happen in only half of his cases each year and he regularly collected 1,500 hours per year, John could have taken a entire month off of work and still had the same income had he simply gained control of his A/R.
p.s. I am investigating another credit card processing company that offers very low sign-up, no monthly committment and a very low monthly minimum fee – like $5. Send me an e-mail if you want me to let you know if/when I am satisfied with how they deal with important trust account issues.
end
Every once in awhile I like to pick a few names from the list of new subscribers to the free e-zine and send an e-mail asking how they found their way to us, what topics interest them, etc. Yesterday I recieved a reply to that e-mail from a woman I knew when we were like 10 years old. Actually she was my Sister’s friend so she replied "Are you Sloane’s Brother?"
What ensued was an e-mail exchange in which I basically summarized the most important things that have happened in my life over the past 25 years in just a few paragraphs. It was a pretty shocking experience to edit-out all the things that have occupied so much of my time & energy and realize that the things that are really important enough to put in a letter to an old friend, for the most part have nothing to do with my office or career.
If you’ve never done it before, I encourage you to try this as an exercise. Imagine if you were writing to an old friend who you haven’t seen or heard from in 25 years, and you only had a single page. What would you write about? What would be left-out? This old friend happens to have become a lawyer too, so I made brief mention of that, but mostly my letter to her was about family – marriages, children, important life achievements, my art, etc. What I left-out was very telling…clients who disappointed me, judges who ruled against me, staff, and every single detail about the technical aspects of what I’ve done for a living in my career. All were excluded.
So howabout you? What would you put into / leave out of such a letter? And how will that realization affect the decisions you make about how you manage your law firm business? At the risk of repeating myself: YOUR LAW FIRM IS THERE TO SERVE YOUR NEEDS, NOT THE OTHER WAY AROUND!!!
Today I went before a special master & "negotiated" a fine from $11,275 down to only $150. How did I pull it off? I quickly realized there were forces at play that I didn’t have any control over, but they were pushing things in the right direction & doing my job for me, so I just shut-up & let it happen.
I really don’t like just recycling other people’s content. But when you run across something so perfectly articulated by someone else and it happens to do the job for you, sometimes the best thing to do is simply to shut-up & let them do the job for you.
So with only a brief pause to thank Carolyn Elefant over at MyShingle for bringing this to my attention, here’s a link to what is perhaps the best argument I’ve ever seen for why small companies should hire small law firms, instead of large law firms.
I know what I’m going to be doing with this article – howabout you?
Regular readers of this blog and the newsletter (free sign-up on the main site) know my philosophy about law firm marketing; That selling legal services is really just about helping people to identify and find solutuions to their problems and maximize their opportunities. And you know what I think about our ethical obligations to do as much marketing as we can to ensure that when someone needs a lawyer, they already know, like & trust one instead of having to resort to the yellow pages.
Here’s a little story that may just make the point about why it is that lawyers who are habitual about helping people find solutions, even when the solution doesn’t call for the serivces of our own firms, are also usually the Top Rainmakers who survive and prosper in the long-run:
A mouse looked through the crack in the wall to see the farmer and his wife open a package.
"What food might this contain?" The mouse wondered – he was devastated to discover it was a mousetrap.
Retreating to the farmyard, the mouse proclaimed the warning.
"There is a mousetrap in the house! There is a mousetrap in the house!"
The chicken clucked and scratched, raised her head and said, "Mr. Mouse, I can tell this is a grave concern to you but it is of no consequence to me. I cannot be bothered by it."
The mouse turned to the pig and told him, "There is a mousetrap in the house! There is a mousetrap in the house!"
The pig sympathized, but said, "I am so very sorry, Mr. Mouse, but there is nothing I can do about it but pray. Be assured you are in my prayers."
The mouse turned to the cow and said, "There is a mousetrap in the house! There is a mousetrap in the house!"
The cow said, "Wow, Mr. Mouse. I’m sorry for you, but it’s no skin off my nose."
So, the mouse returned to the house, head down and dejected, to face the farmer’s mousetrap– alone.
That very night a sound was heard throughout the house — like the sound of a mousetrap catching its prey. The farmer’s wife rushed to see what was caught. In the darkness, she did not see it was a venomous snake whose tail the trap had caught. The snake bit the farmer’s wife. The farmer rushed her to the hospital and she returned home with a fever.
Everyone knows you treat a fever with fresh chicken soup, so the farmer took his hatchet to the farmyard for the soup’s main ingredient.
But his wife’s sickness continued, so friends and neighbors came to sit with her around the clock.
To feed them, the farmer butchered the pig.
The farmer’s wife did not get well and died. So many people came for her funeral, the farmer
had the cow slaughtered to provide enough meat for all of them.
The mouse looked upon it all from his crack in the wall with great sadness.
So, the next time you hear someone is facing a problem and think it doesn’t concern you,
remember — when one of us is threatened, we are all at risk.
I hope you’ll keep this little story in mind the next time someone comes to you with a legitimate problem that does not happen to call for your services. There’s always something a good lawyer can do to help!
On a recent blog discussion over at My Shingle one of the other participants wrote the following in respone to a comment by me:
"You are not disagreeing that the legal services purchaser can be made to pay $150/hour even to a solo. . . "–and yes, the solo will be doing well to "profit" (pocket) 2/3 of that, and said solo will be lucky to have 1,000 to 1,200 collectible hours–making said solo’s gross (pre expense, pre tax) income $150,000 to perhaps $180,000."
Relevant parts of my response to him (or her, the comment was anonymous):
Anon., I may be reading too much into your last comment, but I am a little concerned about the sentence you wrote "could be made to pay $150/hour." Probably you were just writing casually & most likely I’m just reading too far into your choice of words, but let me just encourage you to try & get into the habit of thinking in terms of the amount of value you can deliver, not the amount that clients can be "made" to pay. The latter way of thinking usually leads to big a/r problems & doesn’t make for a fun law practice.
Clients can’t be "made" to pay anything. All we can do is implement good management techniques & learn how to use our trust accounts like the profit-protecting management tools they are designed to be. But at the end of the day, the client won’t pay your bill for $150/hour or $15/hour if you don’t demonstrate that they got value.
Like I said, I’m not trying to give you a hard time for what is probably just a different choice of words. Delivering value is a subject that’s important to me so I get kinda touchy.
COULD YOU BE MORE SUCCESSFUL IF YOU WEREN’T AFRAID?
If you weren’t afraid of looking stupid, would you take some risks and try to market your practice differently than all of your competitors? Imagine a marketing plan with your current budget but no fear. What would it include? Outrageous ads? Entertaining seminars for prospective clients? Wild parties for prospective referral sources? Articles in which you take unpopular positions? Meetings with people who could refer business to you…should refer business to you, but might just toss you out on your ear instead?
These are not intended to be rhetorical questions. I am genuninely interested in getting a discussion going about what we would all do to make it rain if you weren’t afraid.
From my experience it seems that for most would-be rainmakers the biggest fear that holds them back from earning more money is that it may actually work, and then they’d have to get out of their comfort zone. But that’s a false sense of security. Because staying in your comfort zone really isn’t an option anymore.
The world is changing faster & faster. And if you stand still, your comfort zone will change & leave you all by yourself. Housing prices keep rising & the neighborhood you can afford today will squeeze you out unless you keep up. Children are born & get more expensive so the level of income you are satisfied with today soon won’t be enough to meet your basic needs. And alas, our bodies grow older requiring more rest & more care so the current pace you are comfortable with, will sooner than later require more energy than you can comfortably exert.
So if the world is changing, I ask what are you doing to keep up?
Two days ago Allison Shields posted a great piece on using your hobbies to help market your law firm. She shares a story about a lawyer who swam across the Long Island Sound to raise money & make it rain for his firm.
A number of attorneys I know have thought of marketing in similar ways only to discover they don’t have any hobbies/passions that are so ripe for publicity. Not too many fund raising oppty’s for stamp collecting if you get my drift.
But all of us (hopefully) have a passion for helping people – so even if you can’t swim across the L.I.S., I’d encourage everyone reading this to think about how you can make it rain for your firm simply by doing what the best rainmakers have always done: Become known as a person of integrity in your community who others know they can turn to for help as a trusted advisor, not just for your technical skills as a lawyer.
As you may or may not be aware, a committee appointed by the New Jersey Supreme Court decided that calling yourself a “Super” lawyer violates the professional code of conduct. After learning about this decision , fellow Blogger Nathan Burke created a page for "adequate" lawyers in hopes that such a moniker would meet with the appoval of our bretheren in New Jersey.
But there’s a more serious side to all of this that most lawyers fail to consider in their marketing & client servce plans: MOST CLIENTS PREFER ADEQUATE. That’s right, if given the option of paying top dollar for a "super lawyer" vs. a more reasonable amount for legal services that are adequate to solve the problem at hand, the vast majority of your clients would choose the latter. Don’t believe me?
Take the following informal survey to prove that what I am saying is correct:
1. Make a list of all of your clients who are driving around in Bentlys or Rolls Royce’s.
2. The rest prefer adequate.
The upshot is that you can actually get more work from existing clients by being sensitive to the fact that they don’t all want the highest quality legal services available to handle their routine matters. If 100% of your practice is high-stakes / life or death / bet-the-ranch work, then ignore this advice. Otherwise, you’ll close more sales with prospective and current clients by taking pride in offering adequate solutions to their problems.
Which came first, the succcessful Rainmaker or the Happy Lawyer?
Lots of lawyers out there toil away year-after-year doing work they can tolerate but don’t enjoy for clients they can tolerate but don’t actually care about. They tell themselves that not caring too much about a client keeps them objective and the work is a means to an end. The end being to make enough money so they will be happy.
My experience in my own career and in my deeper-than-average involvement with the careers of many Rainmakers – and the sideline view I’ve had of many unhappy legal careers – has me convinced that the way to BECOME a successful Rainmaker is to do work we enjoy for clients who we do care about. And there’s no lawyer out there who can’t build some happiness into his or her career – THAT’S ONE OF THE GREAT THINGS ABOUT BEING A RAINMAKER!!!
You see, one of the main causes for lawyer stress in small firms where no-one is feeding you work is the worrry about where the next case is going to come from. In most practice areas the life of a case is less than one year, so whatever cases you’re working on now will in all likelihood be out of your active case roster & probably out of your life within 12 months. That’s stressful if you don’t know where to get more work, but very liberating if you do. Because if you know how to make it rain you can be deliberate about going after the kinds of cases you would prefer to work on and/or for the kinds of clients whom you can say honestly to yourself that you actually care about.
And before you start to make excuses, let me just add one more point of reassurance…in every practice area you can find ways to get cases you will enjoy and/or serve clients you will care about. It doesn’t happen overnight & it may never be 100%. Make your goal perfection & you’ll go nuts. With progress as your mantra you can always make yourself happy.
