I Don’t Want to Create a Business Plan!

I get it.  I really do.  They involve work and you’re busy.  And if you’re not trying to sell someone on why they should give you money to start or grow your law practice, why would you bother?

Because, my friends, every once in a while you should be selfish and do something for yourself.

client-meeting-cropped

Six Good Reasons Why Every Lawyer Can Benefit from a Business Plan

Everyone can benefit from the business planning process, especially startups.  But existing businesses need a vision too.  Creating a business plan will give you:

  • Clarity about what you want to do
  • Control over your own fate
  • A strategy for staying organized and on track
  • Accountability
  • A way to measure and monitor your progress
  • A path to help you move forward

For associates in law firms, creating an annual business plan is the only way to build a successful strategy for bringing in business – something all associates are expected to do sooner or later.

For partners, annual business planning is likely to be more about reflection: now that I’m an experienced lawyer with a book of business at XYZ Law Firm what do I want to do? If the answer is: make a lateral move, creating a business plan will likely be required.  If the answer is: something else entirely, then time spent reflecting and planning will help you ferret that out.

Why Lawyers Don’t Write Business Plans

Aside from the obvious excuse that creating a business plan is time consuming, you may also perceive it as too difficult.

But there is an even better reason not to write a business plan.  If you don’t put specific goals and objectives on paper you can’t fail.

Here’s What You’re Really Missing Out On

The problem with avoiding failure is that you also set yourself up not to succeed. And you miss out on the other benefits that go along with creating a business plan.

Create a Direction and Lower Your Stress

When you know what you want to do, where you want to go, and how you’re going to get there (the specific objectives included in your plan), it lowers your stress level. There is no more floundering or misdirection.  Having a plan means you’re back in control.

Doing What You Want to Do For People You Want to Work For Means Reduced Exposure to Liability and Ethics Complaints

There’s a huge difference between practicing door law because you’ve always done it versus purposefully choosing a niche.

The door law route exposes you to greater risk of malpractice claims and ethics complaints.  Keeping up with a few areas of law is hard enough.  Trying to keep up with five or ten is bordering on ridiculous.

Imagine instead that you are working in one area, or a handful of areas, that you know well or can master.  With a focus, you can target clients deliberately and work for a client base that you truly want to represent.

You’ll Also See Gains in Efficiency, Money, and Resources

You are a resource.  Your staff is a resource.  Spend your resources on meaningful, designed goals.  This is what creates efficiency.  And with efficiency you can’t help but save money.  Or at a minimum, experience a better return on your investment.  You know it, you can see it, you can measure it.

Business Plan Checklist and Resources

If I’ve convinced you, contact me.  I’m happy to send along my business plan checklist and a list of resources for creating a plan.  Do what you want to do.  I am.

All Rights Reserved Beverly Michaelis 2017

The Best Legal Blog Posts of 2016

2016-word-cloudIf you’ve followed my blog for a year or more, you know I generally publish a “Year in Review” post.  This December I thought I’d take a slightly different approach. Instead of a comprehensive list, I’m filtering it down to my personal favorites. And while it may be controversial, I’m calling this compilation The Best Legal Blog Posts of 2016.  There is plenty of good stuff out there, but this is the best that has appeared here.  Mostly my content, but also sourced from other great writers.

Client Relations

eCourt and court procedures

Finances

Marketing

Security

Staffing

Technology

Time Management

All Rights Reserved 2016 Beverly Michaelis

How to Succeed in Practice

Succeeding in practice requires momentum, courage, and hard work.  No one knows
that better than a solo practitioner or small firm lawyer.Motivation1

Whether you’re starting out, retooling, or want to make a change, consider this sage advice from Ann Guinn, one of the presenters at the Oregon State Bar Solo & Small Firm Conference.  She may just motivate you to get moving!

All Rights Reserved 2016 Beverly Michaelis

Postscript

For related content with a greater focus on the financial side of practice see this post on Storify.

 

The Ups and Downs of Staffing Your Law Firm

If your practice is growing and you have more work than you can reasonably handle, it may be time to hire staff.  Oddly, what seems like a natural progression can also be stressful.  Among other things, you may be wondering:

  • Can I really afford to hire someone?
  • Should this person be a contractor or an employee?
  • How can I best use my staff person?
  • What issues do I need to be aware of when hiring?
  • What if I have to fire my employee?

Let’s tackle these one at a time.

Can I afford to hire someone?

More often than not, the answer is a resounding yes!

  • The typical Oregon lawyer can net a profit of $91 every time his or her highly paid paralegal bills one hour of time to a client.
  • If a highly paid paralegal bills just under 13 hours during the course of a 40 hour week, the lawyer paying the paralegal will break even.
  • If the same paralegal bills 15 hours per week for the entire month, the lawyer will earn a profit of $1,260.84 after the paralegal’s salary and benefits are paid.
  • In the meanwhile, the lawyer has successfully shifted 60 hours of billable work and approximately 100 hours of nonbillable work to an employee: paper filing, efiling, scanning documents, calendaring, running conflict checks, billing clients, banking, running errands, opening files, closing files, and answering the phone.

See this post for the details and mathematical breakdown.

Should this person be a contractor or employee?

While it is tempting to treat legal staff, a contract lawyer, or any kind of help as an independent contractor, you may find yourself regretting this decision later.  It is almost impossible to go wrong classifying someone as your employee.  In fact, I don’t know how you can.  But bad outcomes abound if you label someone an independent contractor when they aren’t under Oregon law.  So before you go down this path, please read Mission Impossible? Working as an Independent Contractor in Oregon and Are Contract Lawyers Automatically Independent Contractors?  And this is critical, please review Lisa Brown, “Independent Contractors or Employees?” In Brief (April 2016), available on the PLF website at Practice Management > Publications > In Brief.

How can I best use my staff person?

Other than avoiding the unauthorized practice of law, there aren’t any limitations on the type of tasks you choose to delegate to a staff person.  However, there are some things to avoid.  Check out these posts: Six Mistakes Lawyers Make with Staff, Part I and Six Mistakes Lawyers Make with Staff, Part II.  Also review the staffing resources available on the PLF website.  Select Practice Management, then Forms, and choose the “Staff” category.  For specific tips, Google “how to best use a legal secretary” or how to best use a paralegal.”

What issues do I need to be aware of when hiring?

On May 28, 2015, the Professional Liability Fund held a CLE on how to hire with confidence.  The program is available at no charge on the PLF website.  Select CLE, then Past CLE, and look for Employment Practices for Lawyers: Hiring with Confidence and Avoiding Trouble at Termination.  Download the materials or checkout the highlights here.  One resource you should take advantage of: the Technical Assistance Support Line through the Oregon Bureau of Labor and Industries (BOLI).  Also see:

What if I have to fire my employee?

The CLE referenced above has you covered.  For the key takeaways on avoiding trouble at termination, check out this blog post.  Also see the “Checklist for Departing Staff,” available on the PLF website.  Select Practice Management, then Forms, and choose the “Staff” category.

Parting Thoughts

While it is more than possible to regret hiring a specific person, I’ve never met anyone who regretted the decision to add staff.  Once you hire an employee, you will probably wonder, how did I ever get along without help?

[All Rights Reserved Beverly Michaelis 2016]

Why Hiring Staff Pays YOU

money-treeLast week I blogged about client retention.  I ended that post with the following thought:

If we all know what to do to keep clients and cultivate referrals, why is it so hard?

Answer: because you’re trying to juggle too many cases without the proper resources.  Perhaps:

  • You are practicing beyond your areas of expertise
  • You know how to weed out bad clients or cases, but fail to do so
  • You are practicing within your abilities, but your overall caseload is too high
  • You are unwilling to invest in staff, technology, or other solutions to help your practice

The solution?  If the problem is too big of a caseload, and not enough help, hire somebody!  Both you and your clients will be happier because you won’t be struggling (or unable) to keep up with the work.

Penny Wise and Pound Foolish

Making money isn’t easy.  As a result, many lawyers skimp.  Ninety-nine percent of the time when a lawyer is failing (or flailing) they are trying to get by without hiring someone despite the fact they have more work than they can handle.  This trap is referred to as “penny wise and pound foolish.”

In an effort to save pennies, you avoid hiring staff.  Because you aren’t spending money on staff, you assume you are making more money.

What is Your Tipping Point?

There is always a tipping point in every practice when hiring staff means more money in your pocket.  You’ve heard the old saying: you have to spend money to make money.  Guess what?  It applies to running a solo or small law practice.

Make More Money by Hiring Staff

When you spend money on staff, you can delegate away billable and non-billable work and focus on only what you as a lawyer can do for the client.

Do the math:

  • The average Oregon lawyer bills more than $200 per hour.
  • The most highly paid legal staff in the Portland metro area earn $32.56 per hour.
  • The most highly paid legal staff person can work 6.14 hours to every hour spent by a lawyer on a task.  ($200 per hour divided by $32.56 per hour.)
  • Many of the tasks performed by highly paid legal staff can be billed to clients.
  • The average paralegal in our region of the country bills $133 per hour.
  • Round up the high end paralegal’s salary to $33 per hour, add 26% to cover the cost of benefits, and the highly paid paralegal’s total compensation rounds up to $42 per hour.
  • The typical lawyer can net a profit of $91 every time his or her highly paid paralegal bills one hour of time to a client.  (Billable rate of $133 per hour – $42 per hour compensation paid to high end paralegal = profit of $91 for each hour billed.)
  • On a weekly basis, a highly paid paralegal receives $1,680.  ($42 per hour x 40 hours per week.)  If that highly paid paralegal bills 12.63 hours during the course of a 40 hour week, the lawyer paying the paralegal breaks even.  ($133 per hour billed to clients x 12.63 hours = $1679.79.)
  • Any hours the paralegal bills beyond 12.63 is pure profit for the lawyer.  Even with a modest rate of 15 hours billed per week, the lawyer will net $315.21 on  a weekly basis.
  • If the lawyer’s paralegal sustains a billable rate of 15 hours per week for the entire month (60 hours by month-end), the lawyer will completely cover the paralegal’s salary and benefits PLUS MAKE A PROFIT OF $1,260.84 BEYOND THE PARALEGAL’S COMPENSATION.
  • In the meanwhile, the lawyer has relieved him or herself of 60 hours of billable work and approximately 100 hours of nonbillable work: paper filing, efiling, scanning documents, calendaring, running conflict checks, billing clients, banking, running errands, opening files, closing files, and answering the phone.

Your Numbers Will Vary, But the Math Still Adds Up

Obviously the numbers will vary – depending on the type of staff you hire, how you bill staff time, and your staff’s billable hours. But the underlying math is undeniable – staff need only bill a relatively modest amount of time to cover their cost.  Bill just a bit more, and you have a profit center.

So the next time you are evaluating the profitability of your firm, crunch the numbers.  In all likelihood, you will net more profit by hiring staff than not.

All Rights Reserved [2015] Beverly Michaelis

*The most highly compensated staff in Oregon are paralegals, with wages topping out at $5,666 per month.  On the average, there are 174 working hours in a month. A high-end monthly wage of $5,666 divided by 174 hours equates to $32.56 per hour.  Nationally, the average pay for a paralegal is slightly more, $36 per hour.