Law firms large and small face similar challenges – keeping costs down and quality high while also finding ways to sustain and grow the business.
These are some of the key challenges attorneys identified in Indiana Lawyer’s Practicing Law in Indiana survey. Practitioners also said succession or transition planning and competition from online legal service providers and from mergers and new players were among the top challenges to their organization’s viability.
Meanwhile, a majority of lawyers said responsiveness/timely communications and personal relationships with clients were the most important keys to securing and retaining them.
“We preach that gospel all the time,” said Jerry Abramowitz, an attorney with decades of experience managing law firms. Abramowitz is office administrator for the Indianapolis plaintiffs’ firm Cohen & Malad LLP. “You get a call from a client, or an email, you have to respond as quickly as you can. You wait 24 hours, sometimes that’s too long.
“You have to have a mechanism in place with a paralegal or legal assistant that someone responds to that client as soon as possible, if not immediately,” he said.
More than twice as many survey respondents identified responsiveness and relationships with clients as more important than factors like cost predictability in securing and retaining their business.
With such wide agreement on the keys to gaining business, lawyers and firms may need to find something that sets their practice apart.
“One way we distinguish ourselves is not just calling back, but getting the right person,” said Judy Okenfuss, deputy managing partner at Ice Miller LLP. “We work as a team here, and that’s one thing we do quite well. … We will immediately get that person to the right person in the firm.”
John Drummy and Ginny Peterson, members of the management committee at Kightlinger & Gray LLP, said the firm strives to set itself apart by being seen as providing value and strengthening their clients’ businesses.
“We want clients to see us as an extension of their own in-house teams,” Drummy and Peterson said in emailed remarks. “We can provide on-site training to in-house teams, including legal departments, claims professionals and human resource officials. At the end of the day, our goal is to make our clients’ lives easier and their legal experiences more successful.”
Jane Glynn, an attorney at the Indianapolis family law firm Wanzer Edwards P.C., chairs the Indiana State Bar Association General Practice, Solo and Small Firms Section. She said the importance of timely communication and personal relationships with clients might give small firms a leg up, because those lawyers are likelier to have direct contact with clients instead of through an assistant or office staffer.
“My best and most favorite clients are those who know they can reach me when they want to and those I get along with, frankly,” she said.
But at the same time, maintaining those connections with clients may be tougher for small-firm lawyers who also must handle more firm management and support tasks. “It’s a real challenge in terms of time management,” Glynn said.
Drummy and Peterson said Kightlinger & Gray has been a leader on cost control and has implemented alternative fee arrangements based on client need and desire to manage expenses.
The approximately 50-lawyer firm appears to be an exception to survey results that reveal a divide between larger and smaller firms on the use of alternate fee arrangements. Attorneys at small and solo firms are far likelier to report a significant percentage of work was billed using a method other than the billable hour.
Among survey respondents from firms with more than 30 lawyers, more than 80 percent said alternate billing was negligible – representing from 0 to 20 percent of all work.
By contrast, close to 60 percent of lawyers at firms with fewer than 10 attorneys reported 21 percent to 100 percent of work was paid under a fee arrangement other than billable hours.
Okenfuss said Ice Miller has a challenge few other firms do – being a 100-year-old firm that strives to stay up-to-date. She noted the firm has established a data security and privacy practice that includes information technology professionals and engineers.
“Maintaining relevance means we have to balance experienced lawyers with younger, tech-savvy attorneys,” Okenfuss said, adding Ice Miller is one of the only firms in the Midwest with two certified information privacy professionals. Those lawyers have counseled tech giants such as Twitter and Intel on data security issues.
“I do expect it will grow,” Okenfuss said of the practice.
At Cohen & Malad, where legal fees typically are paid as a result of settlements or judgments, cost containment isn’t too much of a front-end concern for clients, Abramowitz said. But keeping the 25-lawyer firm’s costs low is vitally important to the business.
“We constantly look at what our expenses are,” he said. For example, the firm typically requests three bids on any large expenditure. “It makes good business sense.”
Glynn said managing costs is critical for small firms – “It’s something I think about every day, all day long.” In family law cases, ancillary costs for outside service providers such as accountants and experts must be scrutinized.
“Billing a real person versus billing a corporation is just different,” she said. “Regular people don’t have a budget line item for litigation. … We have an obligation to manage costs and keep clients looped in.”
As an example of cost savings, Abramowitz said Cohen & Malad was able to renegotiate its insurance coverage under the Affordable Care Act to a classification that cut costs by about $200 per employee per month. “That’s a huge savings for us,” he said.
Law firms also have saved money by using technology to reduce support staff. Seventy percent of respondents said support staff at their organization has declined in the past decade. Just 7 percent said size of support staff per lawyer increased.
“We used to utilize law clerks,” one survey respondent wrote. “The Internet killed that off.”
Looking to the future, few attorneys said they believe a merger is in the offing for their firm. Just 14 percent of survey respondents said a merger was likely or definite within the next five years. Firms are likelier to expand through lateral hires or organic expansion.
Okenfuss noted Ice Miller recently opened a New York office to better serve its private equity clients. “That was a smart expansion of a strong practice,” she said, in keeping with the firm’s strategic growth strategy.
Drummy and Peterson said Kightlinger & Gray is interested in extending its geographic reach beyond its four offices in Indiana and one in Kentucky. The firm has lawyers admitted to practice in Illinois and Ohio. “Although we have no immediate plans to open offices in those states, we are certainly open to the possibility and work to be aware of potential growth opportunities.”
Abramowitz, Okenfuss, and Drummy and Peterson said their respective firms also expect growth from enticing key lateral hires in targeted practice areas. Among lawyers whose organizations are affected by lateral hires, the survey found by nearly a 2-1 margin respondents said the trend toward lateral movement of lawyers helps rather than hurts law firms.•