Category: General

BillingBusiness PlanningClient relationsGeneralLaw Practice Management

Economics of Law Practice

image   by Sheila Blackford   ©2016   Another law school year is drawing to a close. 3Ls are looking anxiously in the career center for lists of law firm recruiters and scheduled interviews.  “What is their billable hour requirement?”  1,800 hours? 2,100 hours? 

Wait a minute.  How many hours do you have to work in order to bill that many hours? A typical work week is 40 hours a week. 52 weeks in a year. 40 x 52 = 2,080 hours. What about vacation time? Holidays off? How can you have New Year’s Day, Marin Luther King Jr. Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Veteran’s Day, Thanksgiving Day, and Christmas or Winter Holiday. And what about two weeks off to go skiing or camping, or to Disneyland with the kids?

New associates churn the hours and come back late at night to get more billable hours clocked for the month.  “Have I met the quota? Have I hit the bonus level?”

Wait a minute. Billables are measured in hours. The pressure to bill hours in six-minute increments leads to logging six minutes but speeding to actually spend four minutes which starts to add up. For example, 60 minutes in an hour, 480 minutes in eight hours billed but in actual time of four minutes worked for six minutes billed would be 40 minutes or 320 minutes worked to generate 480 minutes billed. I know it sounds far-fetched, because we’d usually work on a client matter for 30 minutes and Bill .5 hours. I’m talking about those quick little client tasks, calling and leaving a voice mail message, reading a court notice, spending a quick email.

Senior partners call associates in and tell them their collectible rate is abysmal and their billables again needed to be written down significantly. “Improvement is mandatory or your future at this firm is unlikely.” 

Wait a minute. Collectibles are measured in dollars. The senior partner isn’t reluctant to alienate a client with a bill that looks inflated. So hours are written down to match client budgets or the senior lawyer’s awareness of how longish reasonable to spend on preparing a client letter versus a pleading. And then that $1,000 bill goes to the client who may pick up the phone to announce he isn’t paying a dime above $950. So another $50 is written off. The client pays the $950. The associate is dismayed to learn that his six hours billed turned into four hours collected. When he stops to consider he skipped lunch and spent ten hours in the office, things are looking grim. Let’s look at these numbers as ratios.  The lawyer worked ten hours, billed for six hours, and collected for four hours. 10:6 billable ratio means he works 1.67 hours for every hour billed. 10:4 collectible ratio means he works 2.5 hours for every hour collected.

Some firms pay the associate a salary and pay a bonus for meeting bonus objectives. What is the bonus based on? The associate isn’t home free. The salary is based on meeting the billable rate. So if you’re not meeting that billable rate, you will likely not last long. It has been said that it takes three years for a law firm to begin making money on an associate. That may be true, but looking up the bar number of the associates at a firm that typically hires three newly admitted lawyers a year, may reveal that maybe one of the three is around for year two. It looks like more firms are quick to cut their losses on an unpromising associate.

Some small firms may try to get a little too clever with compensation programs and run afoul of wage and hour claims by trying to dock a salary in a month following low billable hour achievement. Or trying to play fast and loose with categorizing the associate an independent contractor instead of an salaried employee.

There are federal and state indicia of employment status of a contractor versus an employee. Law firm employers need to be careful and consult with an employment lawyer if any questions. Associates need to be careful and ask questions about expectations about billables and collectibles. And if they have questions, they too may want to consult an employment lawyer.

 

GeneralTechnologyUncategorized

Rumpelstiltskin! What is the darn password again!

 

JEL23652-Blackford, Sheila P3 (2)    by Sheila Blackford  ©2013   Believe it or not, the most common password is the word password. Before feeling smug about that unique password you created, think about how many sites where you have used it. Fess up; you are not alone. The aggravation of forgetting a password has led many people to use one password everywhere. The danger is that if a hacker comes upon your password and a list of your accounts, the hacker can try to enter these other accounts with the password already known. How could this happen? I will share my own experience about when my personal gmail account was hacked.

I must fess up: I used one password on all non-financial related sites. The Gmail Hacker got into my gmail account, looked around in my in box and pulled up my Facebook account email. How did I find out? The Gmail Hacker began getting emails sent to my gmail address. Discovering what had happened, I changed my gmail password to a unique strong password then tried to deal with Facebook. I contacted Facebook to report I had been hacked and wanted to insure that the Gmail Hacker would be shut down out of my Facebook account. I also changed my Facebook password to be another unique strong password. To my aggravation, I periodically get emails from Facebook addressed to the Gmail Hacker asking to return to Facebook. I delete these emails, uttering a curse upon Facebook for ignoring my report of being hacked by this person(s). My hacker did not go by the name Gmail Hacker but I do not want to add to his/her hacking ego by repeating it.

So lesson learned. Use a strong password, strong because it’s length and complexity render it difficult to breech. Many sites now have a password strength meter to check how strong this password choice is compared to safety guidelines. Current security standards show that a safe password should be a minimum 16 characters long made up of upper and lower case letters, numbers and symbols. Your safest course of action is to use a password generator otherwise human nature resorts to a pattern that a hacker could figure out. Randomness and unpredictability are qualities that will keep your password safe(r).

Jotting your list of passwords on a post it and and sticking it on your computer monitor is not a good practice at the office or even at home. There are a number of good password keeper programs or apps that are very helpful. Be sure to create a long, complex, random and unique password to access your password keeper. Google password keeper and you’ll see there are password keeper apps for iPhones, iPads, android devices, web-based, or downloadable to your laptop or desktop. Some you might want to check out include Password Keeper (www.password-keeper.net), KeePass Password Safe (www.keepass.info.com), RoboForm (www.roboform.com), LastPass (www.lastpass.com) and eWallet (www.illiumsoftware.com/eWallet/). Whichever password keeper you use, keep it safe with its own unique password.  Now get busy changing all those unsafe passwords!

Business PlanningGeneralProfessionalism

Battling Dragons as You Start Your Solo Practice

JEL23652-Blackford, Sheila P3 (2)   by Sheila Blackford   ©2010   I see more lawyers these days who are launching their solo practice. Some line up office-sharing arrangements while others decide to go slow by initially working from home. An article I wrote for the Oregon Bar Bulletin, “Home Alone: Where to Hang Your Shingle” may give some ideas for lawyers thinking about this option.

An over-riding concern of lawyers starting up their solo practice is making sure that they don’t spend too much money all at once. For some, starting up on the proverbial shoestring seems to be the best they can do given the circumstances. Almost two years later, I still find my article “Law Office Start-Up: Law Office on a Shoestring” can help some lawyers think through their early budget. No matter how small, a budget is essential.

Starting up a law practice as a solo is starting up your professional life. Do it with at much thoughtful investigation as you can. Make a business plan and put it in writing. I remember the following adage: “Those who fail to plan, plan to fail” being drilled into my head early in the business world. It made me a planner! Sucessful ventures are usually accompanied by well-thought-out plans.

Not all of us are entrepreneurial. Not all successful solo lawyers are either. It is natural to feel nervous and even fearful starting up a business, especially a law practice. Some starting up now will be successful and some will hang it up before the year is up. The important thing is not to become paralyzed by fear wondering which will be your destiny. It’s not knowable today. Today, the task before is to take the first step. Summoning courage that carried you to this point, enables you to move forward or as Goethe urged, “to begin it.”

“Each indecision brings its own delays and days are lost lamenting over lost days…What you can do or think you can do, begin it. For boldness has Magic, Power, and Genius in it.” — Johann Wolfgang von Goethe

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Who Inspires Your Ideas?

JEL23652-Blackford, Sheila P3 (2)   by Sheila Blackford   ©2010   When you are starting a new venture, you need ideas — lots of them! Who inspires your ideas? Do you have a friend, colleague, or mentor who can plug into what you’re thinking about and help you with the inspiration of new ideas? If so, try to have lunch with this person as soon as you can! Some people just seem to get animated or revved up with good ideas, whether for themselves or others. These are people with high ideation– concept people. They may be very creative, super bright, innovative thinkers, who generate original ideas that are simple and yet profound. They love opportunities to brainstorm, a way to exercise their brain, finding the process of generating ideas energizing.

Thanks to the Internet, you can connect to an idea pipeline shared by these people through their blogs and Twitter posts. Lately I have really been enjoying one in particular, Guy Kowasaki who Tweets under GuyKawasaki and has a great blog Holy Kaw! on his website Alltop. For me, getting a shot of Kawasakism kicks my brain into a more creative mode which helps me brainstorm with lawyers launching their new practice. Thanks, Guy.

Fortunately for all of us, there are a lot of really bright creative people just down the street, across the hall, or a mouse click away. I hope you plan to connect with one of them today. See if you don’t get inspired with some new ideas.

GeneralMentorsProfessionalismResources

Attorney at Law not Dabbler at Law

JEL23652-Blackford, Sheila P3 (2)  by Sheila Blackford   ©2010   There are many lawyers starting up their law practice these days. Some have become unemployed by larger firms downsizing as an economic survival tactic while others are newer lawyers who have decided to hedge their bet on getting an associate position. Whatever the push for opening up one’s own law practice, the attorney should take care to devote him- or her-self wholeheartedly to the clients who come seeking legal help. No dabbler’s in the law! You’d be horrified if a doctor set about to see a patient with a dabbler-in-medicine attitude. It is just as serious. What is dabbling? Though not a term of art, we all would agree that to dabble is to engage in something without the serious study and practice required of competent mastery.

Oregon Rule of Professional Conduct, Rule 1.1 Competence, based on the ABA Model Rules, states: A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.

Four Quadrants of Competence: Unconscious Incompetence is a dangerous place for dabblers
You may have heard of the Four Quadrants of Competence: Unconscious Incompetence, Conscious Incompetence, Conscious Competence, and Unconscious Competence. Passing the State Bar Exam indicates you have minimum competence. The Bar Exam can’t test all areas of law practice or assess how well a candidate can deal with a specific issue facing a client. Herein lays the danger: you may not know what you do not know. This is the quadrant known as Unconscious Incompetence. Something you can’t forget if you are working by yourself without supervision by a more experienced lawyer.

Cure for Dabbling
If you have a mentor helping you, call. If not, you may want to contact the Oregon State Bar Lawyer to Lawyer Program which allows you to check in with a more experienced lawyer. You can reach the Lawyer to Lawyer Program by calling the Bar at 503-431-6408. If you want to help lawyers by participating in the rewarding program, download an application here. The Lawyer to Lawyer Program is especially helpful as more experienced lawyers find themselves feeling the need to practice out of their practice area in order to make overhead and cost of living expenses.

It takes time to move from Unconscious Incompetence to Conscious Incompetence – where you are aware that you don’t know something and seek advice. It takes years of practice, getting advice and guidance from senior attorneys, attending substantive area CLEs and studying to develop the mastery of a practice area with Conscious Competence where you are aware that you know it and are tuned into the process of doing the details with competence.

As you may recall, the fourth Quadrant is Unconscious Competence, where you just act with competence without being consciously aware of the many steps. You may see unconsciously competent attorneys seemingly engaging effortlessly in cross-examination of a witness. They are not just a natural giant in the courtroom; they have honed their skills over decades of hard work. Many of these members of the Bar are willing to serve as mentors. Ask around for who are the giants in a practice area; call on them for some mentoring. They can help you prevent dabbling in the law.