Solo In Chicago…Grow Your Practice!

I’m a big fan of the Consumerism Commentary…very well done and informative financial blog. One of the best things they do over there is the primary blogger posts his personal balance sheet each month. So I can see his income, expenses, ect. Very useful for helping readers get their finances under control.

Partly to motive myself regarding financial management and frankly to lay it all out there for our readers, I’m going to start doing the same here for my solo practice law firm. I’m not laying non-law firm stuff out here or getting too personal, but I do want everyone to learn about building a law practice and selfishly I’d like to put it out there from my own benefit, namely hearing from our readers about what I can be improving upon.

So here is my Firm’s income/expense figures for January ‘09:

Gross Income $2,811.71

Business Expenses

Office supplies 71.95

Annual ARDC fee (law license) 289.00

Train ticket(s) 32.30

Service organization dues 100.00

Malpractice insurance 96.24

Credit card processing fees 15.91

Web host 9.95

Mail/postage 37.58

Cell phone(s) 91.00

eFax 59.90

Bank service charge 15.00

Office space 40.00

Court fee 25.00

Petty cash/lunches/gas 112.13

Business Expense Total: $995.96

January 2009, Net Income: $1,815.75
Peter’s Commentary: January’s generally my Firm’s least profitable month of the year by far and it was likely worse than usual this year. On the one hand I was out of the office and town a LOT so there wasn’t a lot of billing done in January so most of the revenue was of a residual nature from clients who are paying down past-due balances. And on the expenses side, nearly 1/3 of the expenses was my annual law license fee which is a once a year expense.

This piece in the Trib. caught my attention recently regarding Chicago Blackhawks President John McDonough. Although I’m a jock-for-life I’m really not a hockey guy at all (though Miracle my be the best sports movie of all time) but some of things the Hawks have been doing recently have been exciting and likely transferable to your legal services business.  From the above piece:

The day after the Winter Classic, which drew high ratings on NBC and raves from those who witnessed it, Blackhawks President John McDonough huddled with fellow executives to discuss how they could have done it better.

McDonough uses two words to challenge and motivate his 60-person staff: “Think bigger.”

Are you thinking big enough regarding your legal services business (and I’m flat out asking these things right to myself too) in ‘09? You don’t have to be a small and fledgling firm “solo” this year.

–What are your daily/weekly/month/annual “stretch” financial goals? They should be realistic but make them big enough too.

–What’s the picture of your firm in 1/5/20 years? You have have to at least the 1/5 year pictures (i.e. business plans) very centrally in your mind every day. Stephen Covey talks about everything have 2 creations…the first planned/imagined and the second being the actual execution of that creation. You need to proactively plan that first creation or invariably chance and outside forces do that “planning” and then the end creation isn’t what you really wanted it to be in the first place.

–Individually. Do you want to get an LLM or some new certification this year? Do you want to do a certain quality of legal writing this year?

Keep in mind that nearly all of the great businesses and banks and law firms that are making millions and billions and that have locations from Chicago to Dubai started tiny. Microsoft was Bill Gates & Paul Allen at Harvard in the late 70s; Walgreen was a mom and pop drug store down on Chicago’s Southside in the early 20th century; and Jenner & Block with 3 lawyers in beautiful downtown Chicago less than 100 years ago. This read about Goldman Sachs is next up on my reading list.

So lets say it together:  Think Bigger!

Have you ever been contacted by a collection agency or something, in a very adversarial and belligerent manner of course, where it wasn’t much $$ and the issue was them not having a correct address or something to that effect? I was recently and I wanted to address that in relation to your Firm’s collection of past due client balances. It was upsetting because it was something we’d never gotten a bill on due to creditor having wrong address.

And I’m surely NOT suggesting that rigorous follow-up isn’t critical and to require accountability from clients in terms of payment. Nope, that’s your meal ticket and sometimes at the end of the day sending stuff out to a collection agency is an option but it’s a last resort.

We have our greatest success in dealing with past due client situations through simply communicating with them via e-mail and phone every month about payment plans, what can be done, ect. But in a respectful, professional way. I’ve found 90% of clients dealt with in this manner are quite reasonable. I bet it would be different if the first communication they get about a past due debt is from jerk debt collector on our behalf.

Due to my recent foray to the UP as I wrote about and a subsequent death in my family that’s going to pull me out of town for another near week in a few days here I thought this was a good time to discuss the above. Plus I saw some colleagues discussing this on a list serve and some of the opinions expressed were mind-boggling.

Let me start by saying something I think is not controversial (but I saw several people essentially say that they don’t take vacations) which is simply, some time of vacation or refreshment is necessary and very beneficial compared to not taking any time off for mental/physical/spiritual health reasons and refreshment. I’m no doctor but I think if you’re saying no to vacations you’re likely saying yes to a future heat attack at your desk at age 50.

So, how does one balance the need for vacation with managing a small legal services business without a huge firm and large staff behind you??

This was the best advice I saw listed:

I go on vacation to vacation, not to work.  When solo I had a full time secretary.  She knew where I was going to be and had discretion to bother me if she deemed it important enough.  I also had arranged with a 7 member firm to pinch hit if need be.  Clients that were likely to call – usually business clients – I called and talked to in advance.  The longest vacation was 3 weeks in the middle east.  I found I was not indispensable and that all clients were willing to wait.  Didn’t lose a client or a case.  Yes, the work piles up; but that happens anyway.  You do need, and are entitled to, a vacation.

Personally I think you really just need to do a couple things. If it’s a vacation that’s been set well in advance you should be able to clear your calendar for 1-2 weeks without a problem. Then you contact your 2-4 attorney friends to see if they can cover for you in an emergency. I’ve never actually had to contact one of these people in such a situation but you need to know that there’s a person or two available if you need them. Lastly, if you have a fully staffed office they just handle things as if you were there or perhaps you have a part time assistant just check messages once a day and return calls if necessary or at the worst you check email/voicemail once a day and return only urgent matters.

Someone said this and I think he was serious (don’t let it be you)…

Vacation?  What’s that?

You work no matter where you are and no matter what others are doing.  You work when you should sleep.  You work on the weekend.  You work on vacation.  You work at the airport and on the airplane and you work often even at times when family matters should come first.

Ah, my favorite legal topic covered over in the WSJ…civil contempt. If you get into court much and thus need to deal with entering orders and inevitably enforcing orders ya better know your 4 types of contempt and how to get them and how to defend them.

One would think that this wouldn’t be too big of an issue for us well-educated legal professionals but for the record in the first 35 days of 2009 I’ve been party to 3 separate cases where opposing attorneys have failed to appear. I’m not sure that I’ve ever had that happen a single time in the past and now three times in just over a month.

I’m not sure why, in one case I think the lawyer’s client was unhappy with a result and may have stopped paying but you still MUST formally withdraw. Why open the door to a letter from the ARDC? If you have a record-keeping problem, calendar in two places one likely digital and one hard copy…simple, next question.

And I think it’s an instructive tale for you small firm practitioners out there: I took a long vacation (10 days) to Michigan’s Upper Peninsula and I’ve (and this blog has too) paid the price since my return. I have no complaints and I don’t think the Firm’s suffered in the least, I just haven’t had a lot of extra blog time. On a very positive note, January ‘09 has been one of the busiest months in our history and would expect for our monthly profit to show that (Hasn’t everyone heard the news that the economy is soft and dissolving marriages/financial partnerships might be best delayed??).