Top 10 Signs the New Paralegal is Obsessed with Star Trek

Parsley Sage Rosemary & Ginsburg llp

“always a reasonable result for a reasonable fee, always”

MEMORANDUM

To:	Top 10 File
From:	Mike Marget
Date:	September 20, 2012
Re:	Top 10 Signs the New Paralegal is Obsessed with Star Trek

10. – Reprograms your Outlook calendar so all of today's appointments appear as Stardate 66186.8.

 9. – Framed photograph on desk is inscribed, “With love, the red-uniformed security officer who gets killed in the first five minutes of The City on the Edge of Forever.”

 8. – Word “Romulan” appears in work product more often than it should. 

 7. – Attempts to mind meld with prospective jurors during voir dire.

 6. – Constantly using the phrase “Set Phasers to Litigious.”

 5. – Describes new haircut as “the Spock.”

 4. – Asks for FMLA time-off due to a Pon Farr emergency.

 3. – Keyboard looks like this:
 

 2. – Comments that your Friday casual attire is “highly illogical.”

 1. – Whenever anything goes wrong, you hear "KHAAAAAAAN!!!!!"

Top 10 Signs It's Time for the Managing Partner to Step Down

Parsley Sage Rosemary & Ginsburg llp

“always a reasonable result for a reasonable fee, always”

MEMORANDUM

To:	Top 10 File
From:	Mike Marget
Date:	September 20, 2012
Re:	Top 10 Signs It’s Time for Your Firm's Managing Partner to Step Down

 10. – Last time he argued before the U.S. Supreme Court, Clarence Thomas asked him a question.

 9. – Hasn’t brought in a new client since Studebaker Motors. 

 8. – Refuses to upgrade from his Commodore 64.

 7. – Every time he walks into a courtroom, exclaims, “Why did I come in here?”

 6. –  After beginning a story about the Framers’ Original Intent, lapses into bawdy tales about having gone bar hopping with Ben Franklin.

 5. – His idea of causal Friday is to dress like former Chief Justice Oliver Ellsworth.[i]

 4. – Keeps calling Dick Cheney to arrange another hunting trip.

 3. – He hasn’t updated his blog in over 2 weeks.  (Oops, sorry, that’s a sign I should retire.)

 2. – Spent all of the last partners’ meeting talking to an empty chair.

1.        You catch him reading one of these lame Top 10 Lists.

---

[i] Oliver Ellsworth:

Top 10 Ways Baseball will be Different when Bears are allowed to Play

Parsley Sage Rosemary & Ginsburg llp

“always a reasonable result for a reasonable fee, always”

MEMORANDUM

To:	Top 10 File
From:	Mike Marget
Date:	September 20, 2012
Re:	Top 10 Ways Baseball will be Different when Bears are allowed to Play

A few weeks ago I visited the Bronx – both the Zoo at 2300 South Blvd. and the Stadium at 161^st and River Avenue.  This got me thinking. 

Top 10 Ways Baseball will be Different when Bears are allowed to Play[i]

10. – Instead of the “hidden ball” trick, runners will be lured off base by the shortstop juggling live salmon.

 9. – Trash receptacles throughout the ballpark always will be tipped over.

 8. – In the dugouts chewing sunflower seeds will be replaced by grub-infested bark.

 7. – Flunk a drug test; continue your baseball career in disguise wearing a bear suit.

 6. – For reasons too complicated to explain, the Miami Marlins will cease to exist.

 5. – Term “southpaw” will take on a slightly different meaning.

 4. – During 7^th inning stretch, the team might start hibernating.

 3. – Pitching changes will involve tranquiller darts.

 2. – Concession stands will begin selling “too hot,” “too cold” and “just-right” porridge.

 1. – Instead of a pregame Air Force flyover, 3 WORDS: helicopter, Palin, rifle.

---

[i] Also, the Yankees will start signing all the best bears to long-term contracts; but that really isn't  different.

Large Firm/Small Firm Acct'g & IT Spending Gap

Parsley Sage Rosemary & Ginsburg llp

“always a reasonable result for a reasonable fee, always”

MEMORANDUM

To:	Management Committee
From:	Mike Marget
Date:	August 27, 2012
Re:	Large Firm/Small Firm Accounting & IT Spending Gap

The largest U.S. law firms spend $39,000 per lawyer each year to run their accounting and IT operations. Small law firms make do with just $12,000 per lawyer to run the same two back office tasks. Basic microeconomics suggest the numbers should be reversed with the smaller firms spending more per capita; not the other way around.

This $27,000 per lawyer large firm/small firm spending dichotomy was gleaned from two legal industry financial studies:
·        the Small Firm Economic Survey from ALM Legal Intelligence and The National Law Journal captured financial information from 58 law firms with 20 or fewer lawyers; and
·         a private study conducted by PricewaterhouseCoopers’ Law Firm Statistical Survey of 31 large national law firms with 450+ lawyers (average size 781).

A spending difference of $39,000 versus $12,000per lawyer would be astounding for any budget item. Even more remarkable is this $27,000 difference applies to two key back office functions: (a) accounting, where billing is performed and actionable financial data is generated to help manage the business and (b) IT, which includes the technology resources and support needed to execute daily legal work.

Regardless of a law firm’s size, a $39,000 per lawyer budget is going to provide significantly greater quantity and quality support services than $12,000. Any 10 large firm lawyers can count on $390,000 worth of accounting and IT support, while an entire 10-person law firm is strapped with a $120,000 annual budget cap. Yet despite the substantial per lawyer budget difference, small law firms require the same robust resources (technology and personnel) to run their practices and their business as their larger firm competitors. Think New York Yankees vs. Kansas City Royals. The Yankees are going to field a much different type of team, have a deeper bench of skilled players and related resources (e.g., training facilities; farm system) than the Royals. Nevertheless, the Royals are expected to compete despite the Yankee’s deeper pockets.

After stumbling upon the information from the two law firm financial studies, two questions occur to me:

1)     What extras do large firms enjoy as a result of the deeper pocket spending?

2)     What steps can smaller firms take to level the playing field despite the spending difference?

In response to the first question, large firms spend their additional money on more expensive support staff and software. Large firms typically field big help desk and training staffs and employ numerous individuals with MBAs, CPAs and other initialed credentials at various levels throughout their accounting and IT operations. They also tend to purchase more elaborate and sophisticated software (a) to handle their financial back office and (b) to make their lawyers more efficient and productive with case management, document management, version control and document assembly tools.

Lacking a large firm’s deep pockets, small firms turn to small firm centric accounting and practice management systems, devoid of sophisticated financial and front office tools which the larger firms rely upon in hopes of obtaining better financial data and improved lawyer efficiency and productivity.

As to what small law firms can do to narrow the spending gap (the second question), advances in cloud computing and desktop virtualization mean accounting and IT operations no longer need be performed in the same building or even the same city as the law firm’s front office. These technology advances make outsourcing a viable option for small law firms.

Outsourcing permits small firms to obtain large firm accounting and IT resources, without making large upfront capital investments or adding large firm staff overhead. With outsourcing, small firms can call upon experienced former large firm CFOs, Controllers and IT Managers on a “time-share” basis; the type of staff commonplace in large firms but beyond the budget of most small firms.

Usually more sophisticated resources require higher costs. Outsourcing service providers are able to reduce operating and capital costs, improve operational efficiency and free-up firm management time to focus on more profitable pursuits. (More on how outsourcing service providers manage to “do more for less” and remain in business, in a later memo.)

Managed Financial Care -- Patient Heal Thyself

Parsley Sage Rosemary & Ginsburg llp

“always a reasonable result for a reasonable fee, always”

MEMORANDUM

To:	Management Committee
From:	Mike Marget
Date:	August 25, 2012
Re:	Managed Financialcare for the Law Firm – Patient Heal Thyself

Regular health exams and diagnostic tests contribute to a longer, healthier life.  They help detect problems early, when chances for corrective lifestyle changes, treatment or cure are best.  My primary care physician has me on a 6-month schedule, alternating between a routine office visit and a more thorough, rigorous annual physical.  Additionally, I see an occasional specialist as needed.  The goal is to maintain me in peak performance for my benefit and for my family, partners and clients who depend upon me.

What about a managed financialcare regime for the law firm?  There are numerous opportunities to check on the financial wellbeing of the law firm.  A financial bill of health is important for multiple stakeholders – clients, lawyers, and staff.  Attention to the financial health of the firm is a shared responsibility of the administrator, managing partner and each partner in his/her individual capacity. 

Monthly Routine Financial Checkups

The normal business cycle of recording time and invoicing clients provides a natural opportunity to perform routine financial self-examinations.  The monthly production and financial reports are a good place to start looking for possible unhealthy symptoms. 

·        Are the firm’s timekeeper’s appropriately engaged on client work as demonstrated by the billable hours and billable hour time value reports? 

·        Are invoices being produced and collected on a timely basis according to the aging reports of unbilled time/costs and uncollected accounts receivable? 

·        If the firm has a budget (and it should), is the firm’s actual financial performance inline with the year-to-date budget projections?    

 

Quarterly Financial Assessments
To avoid unpleasant surprises (or bad tasting medicine) at year-end, it is good practice to expand upon the routine monthly examinations at least four times a year.  For planning purposes, these expanded assessments should occur in April (following the end of the first calendar quarter), July (end of second quarter), early October (immediately after receiving 3^rd quarter financial results), and mid-November (before Thanksgiving and the last month of the year).  In addition to the questions covered in a routine monthly checkup, the firm should consider:

·        Is the budget still viable?  Have there been significant operational changes not contemplated in the budget (e.g., additions/departures of personnel; unanticipated major expenditures)? 

·        Is the firm’s year-to-date financial performance on target to achieve the partners’ compensation goals? 

·        Has cash flow matched budget projections?  Are firm liabilities (e.g., bank borrowing; total unpaid vouchers) inline with the budget’s cash flow forecast? 

·        Is the firm’s cash balance growing in anticipation of funding last year’s pension/profit-sharing contributions, bonuses and other major obligations in the normal course of business? 

·        Is the firm on track to meet all of the financial covenants required under the terms of its borrowing agreements?

·        Are the timekeeping and client billing procedures operating on schedule?

·        Is the firm providing the types of schedules required by its bank and other lenders?

 Annual Financial MRI

At least once each year, a more thorough evaluation is prudent, with everything considered to see if there are latent symptoms of poor performance which should be addressed.  This is a time when the old adage, “If it ain’t broke don’t fix it,” must be ignored.  To paraphrase management guru Tom Peters:  It may not seem broken, but maybe you haven’t looked hard enough; look again and make sure there is nothing that shouldn’t be fixed now for the better.[i]  Peters’ notion is that success comes through constant improvement and continuous change.

The annual budget process (which should begin early in the 4^th quarter) is an opportunity to assess the financial strengths and weaknesses of the organization as a whole.  It should be a complete diagnostic workup. 

·        Do timekeeping, billing and collection policies and procedures require attention?

·        Are the monthly production and financial reports accurate and timely?  Do they deliver informative and actionable data necessary for financial stewardship of the enterprise?

·        Are bank accounts reconciled on a timely basis and is client trust accounting compliant with bar rules?

·        Are lawyers spending too much time on back office financial issues to the detriment of tending to current client issues and attracting new clients to the firm?

·        Are individual timekeeper rates commensurate with both salary expectations and reasonable assessment of value provided?

·        Are partners’ capital and firm debt[ii] levels appropriate to provide cash liquidity without resorting to late payment penalties and adverse credit reports?

·        Is the firm happy with its payroll service provider; its profit-sharing/401k service provider?

·        Is it time to take a new look at the firm’s life, disability and health insurance?  Is the firm happy with its insurance agent?  Is agent providing additional value, advice, direction, cost-savings ideas/solutions?

·        Is it time to reevaluate the firm’s errors and omissions insurance program?  Should the firm consider increasing/decreasing risk retention? 

·        Does the firm have an exit strategy worked out for key partners?[iii]

·        When was the last time the firm looked seriously at its partnership agreement?  Is the arbitration clause up to date?  Does the agreement spell out rules regarding a partner’s withdrawal and obligations to make sure the firm gets paid for continuing work (especially with respect to contingency cases taken)?

·        Does the firm have a strategic plan and do all the partners understand their roles in fulfilling the plan’s goals?

·        Is the firm’s compensation plan working; achieving the desired results?

This is not an exhaustive list of potential questions, but you get the idea.

Not Necessary to First Consult your Physician

The scariest things about all those pharmaceutical ads on TV are the worrisome disclaimers and the admonitions to check with your physician before taking any affirmative steps.  (Neither encourages me to get off the sofa and find out more about the product.)  The good news is a law firm’s new financialcare regime can begin without consulting an expert. 

The first step is to consider whether “things” are working the way the firm believes they should work.  Paraphrasing again:  If the firm’s financial operation isn’t hitting on all cylinders, “[you’ll] know it when you see it....”[iv]  An expert is contraindicated for this first step or to self-prescribe some initial corrective action (like regular exercise, smaller food portions and a daily “baby aspirin”).  Before calling in an expert, consider this malapropism:  First step is for the patient to heal thyself; if that doesn’t work, then make an appointment.  After all, there are a lot of people depending upon the financial wellbeing of the law firm.

 

---

[i] Tom Peters, Thriving on Chaos, p. 3 (1988).  Peters gained fame with the 1982 publication of In Search of Excellence.  He updated Chaos in 1995 and Excellence in new additions in 1989, 2004 and 2012.  I once joked I decided not to read In Search of Excellence because it obviously had no application to law firms, but that when Thriving on Chaos came out – it was obviously aimed at law firm managers.  Sadly, the joke is no longer funny.

[ii] I’ve always taken the position that debt is like cholesterol – there is good debt and bad debt.  Good debt includes equipment leases and a reasonable line of credit to accommodate cash needs early in the year following payment of prior year’s bonuses if first quarter collections may be lagging due to the prior year-end collection push.  Bad debt is extraordinary borrowing to supplement high partner draws.

[iii] Succession/buyout planning is one area where procrastination can have dire long-term side effects.

[iv] Justice Stewart’s concurring opinion in Jacobellis v. Ohio, 378 US 184 (1964). 

The Idea of Service -- Lessons from the Drive-Thru

Parsley Sage Rosemary & Ginsburg llp

“always a reasonable result for a reasonable fee, always”

MEMORANDUM

To:	Accounting Department
From:	Mike Marget
Date:	August 22, 2012
Re:	The Idea of Service – Lessons from the Drive-Thru

Fast food restaurants are everywhere.  You will usually spy two or more at most major intersections.  Where would we be without them?  Less obese perhaps, but when we are on the road they provide reasonable nourishment at a reasonable price and within the time constraints of our fast-paced lifestyles. 

Not long ago, after placing a drive-thru order, I started thinking about the similarities of running a successful drive-thru operation and our Accounting Department.  There are a lot of parallels.  The drive-thru must be thoroughly organized; designed to keep things moving; every order must be correct; and although I may not always notice, I never expect to drive away without a “thank you.”  Shouldn’t our Accounting Department be organized according to the same principles?

Admittedly, there is one big difference.  Drive-thru customers have a choice.  There is a lot of competition and the successful drive-thru operation is structured to win customers and keep them coming back.  Our Accounting Department holds a monopoly position.  It’s not like our lawyers are going to take their accounting and billing business across the street to another law firm, but that’s not the point.  What the successful drive-thru operation and our Accounting Department have in common is the idea of service.

The following is a list of pointers from my drive-thru epiphany. 

1.     Look and Be Professional

I may be partial to fast food, but I have standards.  Cleanliness is important.  Scattered debris around the drive-thru makes me think there are issues in the kitchen as well.  Also, the line must appear to be moving and the speaker system audible.  Appearances are important, especially because I can continue down to road to a competitor’s place.

Despite our monopoly status, the Accounting Department can never appear to operate like our internal customers don’t have a choice.  Dealing with us should be a good experience.  Like at the drive-thru, every customer should be greeted with “how can I help?”  We should look like we have our act together and actually have it together; this means being organized and professional.  We need to care about service and solving whatever problem occasioned their visit, phone call or email.  No matter how simple or complex the order, it must be abundantly clear that our internal customers came to the right place and we will provide them what they need.

2.      Understand Our Real Job

Not everyone in the fast food place is the cook; there is a lot of specialization.  But, as a customer, it is not important to me how the joint is organized and who specializes in which task.  I simply want my order taken and expect it to be delivered in a timely manner.  Regardless of their job specialty, every fast food employee understands the No. 1 job is to make sure my order is promptly and accurately executed, so I will have a positive experience and keep coming back.

Law firm Accounting Departments tend toward specialization, too.  For sake of efficiency, some of us concentrate on accounts payable processing, others in billing or receipts/payment applications.  Unfortunately, this sometimes leads to erecting customer service silos. 

“Sorry, that’s not my job.”  Regardless of the context, few phrases infuriate me more.  When one of our internal customers explains a problem and then is told to talk to someone else instead, “Sorry, that’s not my job” may not be the words used, but it is the message nonetheless.    

Admittedly, you may not know how to reverse an invoice or stop payment on a check, but when someone in the firm seeks our help with a problem, they are “placing an order” and it is our collective responsibility to take ownership of that “order,” as opposed to telling them to move to a different window. 

3.     If There’s a Problem, Let Them Know

Things don’t always go smoothly at the drive-thru.  Sometimes a complex order will take too long and the attendant does not want a single vehicle holding up the line for everyone else with simpler tastes.  On occasion I’ve been asked to pull forward and wait for someone to bring my order to me when it is ready.  If this has happened to you, ever feel as though you were forgotten?  I’ve had mostly good experiences, with someone walking out to my car to give me an update “just a few more minutes.”

Communication is the key to dealing with the Accounting Department’s internal customers as well.  Give them an estimate as to when to expect the check from us or when the client payment will be posted to the computer system.  Should you encounter a delay, be sure to communicate this information as well. 

4.     Deliver on Implied Warranties

This point is related to the last one.  When the attendant takes my order there is an implied warranty my bag eventually will contain the items requested.  Customers don’t like leaving the drive-thru and later finding out the entire order did not make it into the bag.  The same is true when an internal customer requests assistance from the Accounting Department which fails to materialize on time.  

Don’t disappoint internal customers.  Once the order is placed the expectation is the desired result will promptly come to pass.  If the requested check will be delayed due to a missing receipt or an absent approval from someone on vacation, promptly inform the customer so expectations can be adjusted.  Our internal customers naturally assume once a transaction has been entrusted to us, it will be executed with dispatch.  For our lawyers, it is frustrating to find out, days after assuming everything was to be done, that an accounting transaction is delayed for some reason without the courtesy of a heads-up.    

5.     Provide Value

Fast food is cheap for a reason.  Some of it has to do with the ingredients, but a lot of it has to do with efficiency.

Make sure the Accounting Department is operating efficiently.  Know that our efficiency (or lack of it) is apparent to our internal customers.  Just because they can’t take their business somewhere else, doesn’t mean dealing with us shouldn’t be a positive experience.
 
Efficiency demonstrates to the lawyers that the Accounting Department “gets it” and is mindful of its contribution to overhead costs.  Value can be demonstrated in other ways, too.  Encourage lawyers and staff to enroll in direct deposit programs for expense reimbursement; initiate delivery of client invoices via email to reduce the billing-to-collection cycle time.  The Accounting Department is uniquely situated to identify opportunities to improve the firm’s overall financial performance.

6.     Show Appreciation

Admittedly, I’m often in such a rush I barely notice when the drive-thru attendant says “thank you” or “come again.” But, when those words do not materialize, I tend to notice every time.   We’ve exchanged my money for a bag of food; that’s a fair trade.  But I had a choice and a simple sign of appreciation is quid pro quo for my decision to select this drive-thru instead of their competitor.

The firm’s lawyers (should) make it a practice to always thank clients for the opportunity to be of service.  Clients have a choice, too. 

Just because our Accounting Department has a monopoly, does that mean we shouldn’t appreciate the opportunity to be of service?   After all, without our internal customers, how would we pay our mortgages and fast food tabs? 

I once overheard a conversation between a lawyer and a billing clerk who had just resolved a complex issue involving multiple invoices for a single matter split among different parties.  After completing the task, the lawyer told the billing clerk, “That’s exactly the how I wanted it done.”  The billing clerk responded, “I’m glad I could help,” to which the lawyer replied, “No, thank you.”  The billing clerk expressed appreciation and received a “thank you” in return.”  It is great to receive those reciprocal thank you replies; high praise from lawyers who expect perfection in their own work and from us, too.[i]

It’s about Service, Duh[ii]

The commonality between a successful drive-thru operation and our Accounting Department is the idea of service.  A drive-thru exists to provide service to customers.  The Accounting Department exists within the law firm to provide back office services so the lawyers can spend more time practicing law, focusing on clients and attracting future clients. 

The idea of service means putting the customer first – ahead of all others.  Do what is in the customer’s best interest; treat them right.  The successful drive-thru operators do that and the customers keep coming back.  If the Accounting Department does that, our customers will keep coming back, too, with increasing appreciation and admiration for all we do for them.[iii]

---

[i] I’ve long held that if you can get two lawyers to say you did a good job on something, it is equivalent to receiving a standing ovation at Carnegie Hall.  This is what those of us in law firm management live for – the occasional standing ovation equivalent.

[ii] Okay, I riffed this from James Carville, circa 1992, but you get the point.  We need to continually remind ourselves – as a back office function within a law firm – we are a service business, too.

[iii] See, footnote i.