Tag: legal marketing

When starting a law firm, you need to choose your clients carefully.  I realize that this is much easier to say than to do, but I can not emphasis enough how important client selection is.

In my 3+ years of working as an associate for a small general practice firm, I took on a lot of different kind of cases.  Probably too many different kinds of cases.  Regrettably, nobody ever told me to be careful about the kinds of clients and cases I took on.  I wish somebody would have because, for me, it could have been the difference between being a happy lawyer and being a miserable lawyer.

Clearly, if you start a law firm, telling yourself that you will only accept clients and cases you want to work on is a bit academic.  After all, you have to eat.  I also realize that I’m not always going to like all of my clients and they probably won’t all like me.  That is just a given.  But, being careful about client selection can make your lawyer life so much better.  My general rule of thumb is this:   don’t take on a dog just because it pays.

I wanted to write this article in my starting a law firm blog after reading a really interesting and well written article in my Indiana Bar Association magazine:  Res Gestae.  (I’d link to the publication online, but, unfortunately, it doesn’t have an online presence.)  The article is by a regular columnist, Donald R. Lundberg, and is entitled “Choosing clients wisely: a key to fulfillment in the practice of law.”  It’s in the April 2011 issue.

The article brought up some great points that I want to briefly summarize here.  The author advises that every time a new or old client brings your law firm a new matter, you should consider a number of things, including:

1. Your Competence to handle the matter
2. Past lawyer history on the case (are you the second or third or fourth lawyer on the case?)
3. The client’s emotional connection to the case (are they too close and not able to distance themselves from it?)
4. The problem dump (is the client wanting to dump their problems on you so that it is now your problem and not theirs?)
5. The micromanager (this one should be self-explanatory)
6. The needy client (also known as the constant caller)
7. The non-payor and/or the slow-payor (in my experience, this one usually encompasses all of the above).
8. Conflicts of interest (this one is obvious, but I point it out to say that it is also a good way to explain to the client why you won’t take their case)

That is the list.  I think it is a pretty good one.  There are probably other items to add, but I think you get the point.  Being a lawyer can be tough.  When you make yourself miserable by working on cases you don’t like, or for clients you can’t stand, your job starts to feel like a noose.  I’ve been there.  It’s not fun and I’ve thought about quitting the practice because of it.

If you are going to start and build a law firm you are going to need clients.  You are also going to work on some cases at the beginning that you probably won’t take later.  That is ok.  But, if I can recommend anything, it is to enjoy your job as much as you can.  Choosing your clients and cases wisely is the way to start your law firm the right way.

A common problem that I, and anybody starting a law firm, will have is getting paid for your work.  The easy answer to always getting paid is to ask for a large enough retainer for the work you know you are going to be doing.  Easy, right?  Good luck getting a lot of work, I say.

Here is the problem: other attorneys will charge less than they should to get a new client.  An example:  Attorney 1 says to the potential new client that I charge  $2,000 for an initial divorce retainer.  Attorney 2 says to the potential new client that I will $1,500 for an initial divorce retainer.  Who is the client going to choose?  Most of the time, I would bet, the potential new client will pick lawyer 2.  It’s a simple market issue.

Now, let’s say you sometimes lower your retainer to stay competitive in the market. The problem that this can create, and which I have often faced in my own practice, is that clients often pay the initial retainer and that’s all you are going to get.  You can sit there and recite the trust account, bill-by-the-hour, security deposit speech to the potential new client until you are blue in the face.  The client will even sit there, appear to be listening, and nod his or her head like they understand.  Then, three months down the road when the initial retainer runs out, the client doesn’t pay another bill.  Another month goes by and no payment.  You get the idea.

To combat this problem, a  useful to call the client and say:  “Hi Joe, your divorce is going fine and I think we are close to an agreement.  I’d like to get this finished up, but I am waiting for a payment.  When do you think you will be making this payment so we can get this finalized?”  The client is often sightly embarrassed and may respond: “Oh, sure, I’ll pay that off in a couple weeks.”   That doesn’t sound too evil does it?

I don’t condone not finishing work all the time.  Your first duty should always be as an officer of the court.  If a judge or another attorney is expecting you to do something you should do it – and you should bill for doing it.  Afterwards, you can always call the client and tell them about what you just did for free and how you won’t be doing much more on their case without  a payment.  If they still insist on not paying you, send them a nice withdrawal letter, file a motion to withdraw with the court, give them their client file, and wish them luck.  (If they owe you a lot of money, many jurisdictions allow you to file an attorney’s lien on the case so you can hopefully get paid after you withdraw).

When starting and building a successful law firm, you must always be concerned with getting paid.  That is how you pay the rent, the utilities, the paper costs, and all the other fun overhead expenses.  I’m sure I don’t need to tell you that you get paid by collecting these fees for your law firm as well.

As anybody reading this blog may know, I have a lot more time on my hands while I wait to be licensed in Minnesota and the official starting of my law firm.

The extra time has allowed me to do a lot more blogging and research into how to start a law firm.  I think this has been good.  I know I need to do these due diligence kinds of things before I start a law firm in Minneapolis.  I also know that I have come a long way towards learning how to optimize technology to help build my fledgling law firm.  It has been work, but I have enjoyed it for the most part.

Yet, taking all of that into account and not dismissing it out-of-hand, I am starting to wonder whether there is such a thing as good busy versus bad busy?  For example, I have begun to question how important some of this internet marketing and blogging stuff is.  Shouldn’t I be out there hustling, lunching with people, joining trade associations, utilizing person-to-person networking, and generally trying to rake up real, tangible work?  Isn’t that a little more useful than focusing so much on my internet presence?  Maybe, maybe not.  It could be good.  It could be bad.

I call this “bad busy”.  Good busy is serving my clients, doing great work, and getting paid what for your efforts.  Bad busy is focusing too much on things that aren’t important when trying to start a law firm.

As I’ve stated in other posts, what I learned in 3+ years of practice is that you have to get out there and you have to sell yourself and your skills.  You gots to hustle.  I think I am pretty good at that.  However, lately, I have been more focused on internet marketing and blogging because it is easier and fun.  It is also a medium of marketing that I needed to get better at.  Before about two months ago, I would have laughed at you if you told me I would get a Twitter account.  I’ve got one now and I can understand the effectivness of it.  Building that knowledge is good busy.

But, and there is a real fine line here that I sometimes can’t see, I can focus too much on things like Twitter and blogging and social media.  I bet a lot of lawyers and idle procrastinators out there might also have this problem.  It’s not that your lazy or you don’t mean well.  It is just that sometimes we all can be too focused on bad busy when trying to start a law firm.   Bad busy is bad.

Starting a law firm is all about generating revenue and cash flow in order to survive.

It is very important to instantly have cash available so that you can do things like pay for your telephone, rent, internet, and all of the other costs associated with starting a new business.  How do you instantly develop cash flow?  You start a firm which caters towards the market.  The most common fields for market driven clients are probably family law and criminal law.  Many attorneys practice in both of these areas – especially when starting their own law firm.

For this post, I will discuss family law as the practice area to choose when specifically focusing on a field that lawyers starting their own firm can use to instantly generate revenue.

Here is an example:  a person calls your number and says he is looking for a divorce attorney.  You talk to them a little bit about their problem and quote them a rate for a retainer.  If they agree to your retainer, you typically will meet with them in your office in a few days.  That is usually when the client will pay you.

When the client comes to your office, you negotiate your billable rate, the scope of representation, and how much it will cost.  Also, you must make sure that you are competent to handle the matter and that you feel that you have something to offer the client.  If you are not able to ethically represent the client or handle the matter competently, you shouldn’t take on the case.  If the client agrees to hire you, you have him or her PAY YOU FROM THE START and you place the retainer money into a trust account.  After that, you should feel free to start working on their case.

For each unit of time that you work, you charge the rate of your agreed billable hour.  So, if the client gives you a $2,000.00 retainer, place it in trust and then bill the client on a monthly basis at your billable hour rate.  If your billable hour rate is $200 an hour, you should likely charge in increments of .2 or something like that.  .2 of an hour is equates to about twelve minutes.  Thus, if you put in twelve minutes of time working on the client’s case, you charge them .2 on their bill.  .2 at $200 an hour is a bill of $40.00.

On the client’s monthly bill, you must be sure to type in what you did to earn that money.  This is important to you, your client, and the ethics committee of your jurisdiction (to determine if the charge was reasonable – and, yes, this can come up.)  Here is an example of a .2 charge for a divorce case:  “Telephone call with Mr. Smith re filing of Petition for Dissolution of Marriage.”  Enter that information into your billing software (you do have billing software don’t you?) and, viola, you’ve just created an acceptable and reasonable bill.  If the client doesn’t pay your bill at the end of the month, you can now transfer the money from the trust account to pay your bill and then refund any remainder to the now fired client.

Again, when starting a law firm you must know how to ethically and reasonably bill your clients in order to generate immediate and business saving cash flow.