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1/12/04

Our objective is to assist law firms to implement and learn the various technologies and procedures that will allow them to operate more effectively. While acting as the business and administrative manager for a multi-office law firm in North Carolina, I came to realize the many needs of a law practice and developed tools to improve their efficiency, expand the client base and dramatically improve their profitability. After leaving that position, I formed Crocodile Consulting, LLC. to offer law firms software and management advice. The firm was named Crocodile Consulting to reflect today's business environment of survival of the fittest. We provide clients with creative management solutions to problems and develop information systems for informed decision-making. We also establish systems and procedures to increase productivity.

Law firms must learn and implement effective management techniques in order to survive and prosper in the 21st Century. Lawyers no longer have the easy prospect of setting up a solo practice or going together with a colleague to start a law practice and expecting things to take care of themselves. The current business environment is extremely competitive. Large out of state law firms are moving across state lines, which absorb large volumes of business. As these large outside firms take clients from existing firms within the state, the existing firms need to market themselves more aggressively and thereby take clients from even smaller firms and it works its way down to the solo practitioner. At some point, there is not another client to be had to replace the one that was lost.

Another factor facing the legal profession is the competitive environment for support staff. Pay for support staff has gone up due to the competitive pressures from other businesses also seeking to hire these same skilled workers. Law firms that are unable to meet the pay increases will lose these trained and skilled workers to other organizations.

In legal journals, articles and proposals are being discussed that would allow accounting firms and law firms to merge. While this is a proposal that may be favorable to very large law firms, it would be very destructive to smaller firms. If one looks at how the accounting firms have bought or merged with consulting firms it can be seen that the upper hand lies with the accounting firms. Unless law firms learn effective management practices, they will not be efficient and profitable enough to compete against accounting firms, which would seek to buy them out or by purchasing a rival law firm, become a direct competitor. In addition, lawyers are continually under attack from one group or another who want to take on some small part of what only lawyers are currently entitled to provide. As their field of endeavor is repeatedly reduced in size, it puts more economic pressure on attorneys as a group to be more efficient.

Without adequate profits, no organization can continue to survive. If a firm does not produce sufficient profits, it will lose its competitive advantage, effective support staff; and attorneys will become overworked and under even more stress. These factors lead to sub-standard work product, which can provoke a malpractice lawsuit or long term lower the overall reputation of the legal profession. At its core, attorneys only have their reputations to depend upon. No one wants to be a part of a professional group with a low or tarnished reputation. A systematic in house analysis or one provided by a legal consultant can provide the advice and assistance needed to avoid this happening. These economic environmental conditions lay the groundwork for the urgent need of the legal profession to become more efficient in every aspect of their operations.

CASE AND PRACTICE MANAGEMENT SOFTWARE

Case and practice management software is an absolute necessity for a modern organization to operate efficiently. Case and practice management software allow more work to be done with fewer people. This is an essential requirement now, when it is difficult to hire new workers or to keep top-level staff. Subsequently, case and practice management software, when properly organized and structured give attorney/owners and managing partners easy and immediate access to the information they need to keep track of their case load and to make informed business management decisions. Much of the information needed for these types of business management decisions cannot be determined from reviewing conventional accounting data.

COMPUTER NETWORKING

Computer networking and related equipment are recognized as being a benefit by most law firm administrative managers as well more tech savvy attorneys. However, the cost and reliability of the network are major factors in how much of their inherent benefit accrues to individual law firms. Fine-tuning a computer network and deciding the basic equipment needed to get up and running in a cost effective manner is an essential part of the process.

By networking computers within an office, the firm benefits by allowing them to share the resources of each person within the office. Duplication of effort is eliminated and everyone within the office has easy access to all documents within the firm, except for those that are restricted by passwords. An additional benefit is that backing up the hard drive is an easy task and will include the firm's entire files, all at one location.

MARKETING & ADVERTISING

Marketing and advertising is increasingly of benefit to more and more firms. Although it is still somewhat controversial for some firms, a review of the yellow pages in any major metropolitan area in the United States will clearly show that most firms are advertising in one form or another. Advertising is a way to make the public and potential clients aware of what the law firm has to offer and what may be unique about their areas of expertise. If selecting an outside company to help in this area, it is important to select one that is familiar with the unique restrictions placed on attorneys in their advertising. This will eliminate the potential problems where agencies, although they might offer these services, but are not aware of both the advertising guidelines for attorneys, and the special way in which their services need to be presented.

Advertising is also important in informing potential clients of the availability of legal services of which many are not aware. These include those directed at blue-collar workers who most likely do not have the benefit of "having" an attorney, having a neighbor as an attorney or knowing where to turn for a referral. The areas of Workers' Compensation, Social Security Disability and Employment Law for the employee are just three examples of the areas of the law where people denied their rights and benefits and have no idea of what, if any, recourse to legal remedies they may have. Furthermore, while personal injury lawyers are often maligned, they do in fact provide a benefit to many by obtaining a legal remedy and compensation for the plaintiff's loss. A remedy, that without the benefit of an attorney they would never receive.

FINANCIAL ANALYSIS

Financial analysis is recognized almost universally as being an effective way to guide an organization in achieving its objectives. However, this analysis is often not available to smaller organizations such as law firms. By financial analysis, I do not mean simple bookkeeping. As necessary as bookkeeping is to any organization, it in and of itself does not provide the information needed to effectively manage a law office. Financial analysis is utilized within a firm to determine what areas of practice are the most profitable for an individual firm. Without it, attorneys may be spending their time and charging a rate that does not reimburse the firm for its resources and the attorney's time.

The type of analysis discussed here is used to determine what a firm should be spending it's time doing. For instance, if the firm's time is fully utilized and it is not effectively able to expand at the present, this type of analysis will show what areas of practice the firms should drop and on which areas it should focus its limited resources, most especially it's "time". This does not preclude nor negate personal decisions as to what area of practice one wishes to engage in, nor does it preclude doing pro bono work. In fact, it will allow more time for such efforts, if the attorney's time is utilized more effectively. Another benefit of financial analysis is that it begins the process of setting up procedures whereby attorney/owners and managing partners can request specific financial reports that will quickly and easily allow them to know their financial position on a daily, weekly or monthly basis. From these types of analysis and the procedures established, attorneys can learn where they need to look and what they need to look for to make informed management decision. Lastly, it will help to prevent fraud and theft within the firm.

ADMINISTRATIVE MANAGEMENT

Administrative management is an area that addresses the issues that arise in every law office due to the volume of paperwork inherent in the practice of law. Law firms must learn how to organize their computer documents, how to set up an index of documents, and the proper organization of their hard copy files. Firms must also learn how to maintain the system once it is established. In a law office, it is important that documents are not lost or misplaced, especially those original documents for which photocopies are not always acceptable.

These procedures and the systematic organization of documents will help to eliminate malpractice suits due to lost, misplaced or forgotten documents. Efficient workers find it difficult to work in a disorganized office, and this disorganization is a recognized source of unnecessary stress. It can and should be eliminated. The implementation of proper procedures will create a less stressful work environment for everyone within the law office. In addition, it provides a more productive work environment, which has the side benefit of reducing staffing needs, while allowing law firms to offer salaries that are more competitive to current employees without reducing profit levels. By offering a more productive and professional work environment, law firms will attract a more organized and professional partner or employee.

CONCLUSION

In my position as administrative manager for a law firm for over ten years, most consulting companies I came in contact with, only offered help with the purchasing and installation of computer equipment or software. Only a few go beyond this single area. Any benefit to procedures is limited solely to what help the particular software being sold will provide. At this stage in the development of well-organized law firms, this is simply inadequate. Implementing these procedures, practices and technological improvements will help firms become or profitable and make the practice of law more enjoyable.

Outside of the legal profession, I have 27 years of business experience, including four start-ups in the U.S. and in Europe. My international experience includes European and Asian export representation for Bernhardt, Basset Furniture, Dar-Ran and Harden Furniture. During my career, I helped the Winston-Salem Chamber of Commerce organize a visit of 15 foreign counsels to Winston Salem.

Leonard R. Caldwell
President

© 2004 Leonard R. Caldwell, II