RJon Robins

Credit Cards & Hip Hop Videos

January 5, 2007 by RJon Robins

Ed Poll over at LawBizblog.com has an excellent analysis of the recent proposed rules in California about lawyers accepting credit cards.

Perhaps I am just being impatient but the real “guts” of the issue, in my opinion is addressed in his 8th comment: The
Committee appropriately highlights the change in thinking since 1970
where the “use of credit cards for payment of legal fees was deemed
unprofessional.” However, the Committee fails to give full credit to
today’s realities. Most obligations today are paid by credit card; many
fewer are paid by check; and almost none are paid by cash, the only
form of legal tender.

Sadly for all concerned (especially them) in the minds of many
lawyers, accepting credit cards still has a stigma attached to it which
has it’s roots in the felatious either-or-debate: Is the practice of
law a profession -or- a business.

The fact of the matter is that for a thousand years (literally) it
has been both. One simply cannot have a profitable law firm, without it
being highly professional and ethical. But you can have an ethical law
firm, at least for a little while, without it being very profitable.
And so lawyers with no formal business training get confused and allow
themselves to be distracted by red herrings like whether or not people
will think more or less of us if we adopt modern business practices and
accomodate clients’ bill paying preferences.

It reminds me alot of the hip-hop videos you see these days which
emphasize forum over substance to such a degree that in certain
circles, it doesn’t matter where or how the money is earned, as long as
you drive a fancy car and have fancy jewlery.

For a historical perspective, recall that it is was not too long ago
that many lawyers thought it unprofessional to send a fax, or to send
an e-mail, or to have a website, or to have a computer on one’s desk or
credenza, or to do your own typing, or to employ women as lawyers.

The mechanics of accepting payment by credit cards are exactly
analogous to accepting payment by check: The client instructs an
intermediary to transfer funds to the lawyer. End of story. The fact is
that banks screw this up on a regular basis but you don’t see anyone
crying about it being unprofessional to accept a check from a client.

If officials in the State Bar want to talk about what’s REALLY
unprofessional, howabout if they consider the negative images created
about our profession when we have thousands of lawyers on their hands
& knees grovelling to get clients to pay their bills-after-the fact
and having to swallow stories about “the check is in the mail”. . . or
the stress and strain it puts on an attorney-client relationship when
the lawyer becomes creditor to his/her own client, instead of giving
that role to Visa or Mastercard and so we can focus on being objective
advocates and advisors!

At least one credit card processing company has figured out a simple
way to address the only legitimate concern raised by the Bar: Will the
entire amount charged, be credited to the client’s ledger card in a
lawyer’s trust account?

For more information, check out www.howtomanageasmalllawfirm.com

Why NOT To Be Boring

January 3, 2007 by RJon Robins

Too many lawyers refuse to take a position on their websites and in other marketing materials too. They think they are avoiding offending anyone, but in fact they end up just being boring. Put another way, if you’re not speaking powerfully to someone, you’re likely boring everyone.

Should law firm marketing be done strictly for its entertainment value? Of course not. But if your marketing isn’t a true reflection of who you are, and if it’s not in alignment with your values and personality it will become a chore instead of a simple extension of yourself.

Chores are hard to do and get neglected when things get busy which is why so many law firms have wild swings in cash flow as the pipeline runs dry and then the lawyers have to scramble to get more work, which is never the best time to look for new work because you end up accepting anything that comes along. But when your marketing is just an extension of who you are you never forget to do it because it’s easy. That’s not to say you can’t learn how to do it better, but it has to be honest.

Love it or hate it, if you have an opinion about any blogs, or websites I should see please let me know!

Credit card fees

December 30, 2006 by RJon Robins

From an e-mail exchange with a Coaching Client:

From:XXXX@aol.com

Sent: Monday, December
25, 2006 2:12 PM

To: rjon@howtomakeitrain.com

Subject: Credit
card fees

Rjon,

Say we wanted to use a credit card as a vehicle for clients to pay for legal services.

If there is about a 3% per credit card charge from the credit card company.

How do we pass this added charge onto the client.

1. Do we have to say, there is this added charge as a service if they want to “charge it”?

2. Do we say “only office visit charges” at $275 an hour can be charged, and for that we charge $5 extra. The separate retainer fee (which can run in the thousands, be only paid via check?)

3. Lxxxx is now lets say retainers (in the trust account) of $15,000 for construction cases. $2500 to $3000 on estate plans. On that amount it is a significant “add on” cost if the fee is charged via credit card. We are aware that large law firms are allowing clients to charge a significant fee on the credit card. How do they do it and NOT lose money?

4. Is credit card use by “law firms” shown to produce more revenue and/or cash flow?

FYI::: In our area, most clients have “no limits” to their credit cards.

Thanks so much for your prompt response…we are trying to improve…..

From:

rjon@howtomakeitrain.com

Sent: Friday,
December 29, 2006 4:36 PM

To:XXXX@aol.com

Subject: Re: Credit
card fees

Hi XXXX,

Sorry for the delay. We’ve been swamped with end of the year stuff. I replied to Lxxxx’s e-mail yesterday to suggest that we schedule a call for the first week of the year to discuss what he’s looking to accomplish and some options.

Also, I saw the e-mail about the issue of accepting credit cards. Suggest you look at a site I’ve
contributed some articles to called www.lawyerbillingtips.com. Long story short, when you consider the
hassles and expenses associated with trying to collect past due accounts receivables, not to mention factoring-in the ones that “get away” and must be written down or abandoned entirely, credit cards start to make a whole lot of sense and as you’ll see I’m a big advocate.

As you mentioned, you certainly could charge extra to cover the cost you incur for the discount rate but I’d discourage you from doing so to avoid pissing off your clients over what amounts to a cost of doing business that we all expect our vendors to absorb. Plus, in the big scheme of things, it’s not a lot of money anyway.

For example, you have a client who is willing to save you the hassles of having to send them a reminder bill (or two, or three), and then interrupt your day to call and remind them about the outstanding bill of let’s say $5,000 by charging the whole amount to their credit card.

Figure that each time you prepare a bill, reminder, carry it on your books to the next month, and then make the phone call, you’re going to waste 15 minutes of your time. And let’s say you use a bookkeeper who charges you $30/hour. You’re talking about at least an hour of the bookkeeper’s time, plus your time to supervise the bookkeeper, plus Lxxxxx’s time to worry about it instead of cultivating a stronger relationship with the client. Weigh that against the $150 in discount points you have to eat to collect $5,000 up front and have that peace of mind and working capital.

I know $150 seems like alot when you look at it by itself, but wouldn’t you take $150 off the bill three months down the road if that’s what it took to get the client to pay it? I would expect that you probably talk yourself into writing down much more than that on most of your bills right now, either before you even give them to your clients or afterwards in compromise to get them to pay.

Being good at the business of running a law firm is less about being “tough” and more about knowing where the leverage points are to maximize the value of your time. And at the end of the day, it’s much easier and healthier for the long-term financial well being of a law firm not to mention the peace of mind of the owners, to focus on leveraging your time with positive things that cultivate better relationships with clients, initiating welcomed communications with clients that demonstrate value to them, and using your limited time and energy reserves to perform great services that get talked about, rather than looking for ways to save a few percentage points of expense.

Put another way, in the hour or so that it would otherwise take for you or xxxxx to have to work yourselves up for the call to a client whose bill is delinquent, make the call, negotiate the bill down anyway, and then recover your energy and state of mind to a point where either of you can
be productive again, you’d be better off to use that time marketing to get another $4,850 client. In other words, you could spend ten miserable hours chasing down ten bills, and save yourself $1,500, or use that same ten hours to do some positive Rainmaking and sign-up ten new clients who will contribute another $48,500 to your firm’s revenues. See what I mean?

RJON

If you can’t steal our clients, you’re fired!

December 26, 2006 by RJon Robins

Dan Hull over at What About Clients? has just made a post that EVERY business owner should consider to be mandatory reading. And that includes owners of law firm businesses.

Admittedly his firm has about a dozen attorneys and so qualifies as a “mid-sized” firm in my book, but the approach they take to year-end associate review I think is even more valid for small firms or solos looking for an exit strategy – where there is much less margin for error.

In short, Dan describes his firm’s approach as follows: “Dude, if you can’t steal our clients, you’re fired.”

I LOVE THIS APPROACH! For years I’ve been coming at it from the other way around with my Rainmaking Clients, telling them that “If one of your associates leaves & steals a client, you deserved it!”

The fact of the matter is that “owning” a law firm is one of the biggest lies the equity partners of law firms tell themselves. When your most valuable assets are free to walk out the door, take your best sources of revenue with them and leave you holding the bag with a long-term lease and expensive
overhead you don’t “own” the firm, the firm owns you!

Harsh Reality, I know. But here’s what to do about it. . . cultivate relationships between your firm and its clients. Offer clients something they couldn’t get if they went somewhere else. Be a 21st Century Law Firm Manager and give your associates and support staff too for that matter, something no-one else is smart enough to do for them by taking a realistic look at the balance of power and adapt the job to so perfectly fit their needs that they couldn’t possibly go anywhere else. And don’t hire losers just because you need to get the work done. Losers may never steal your clients. They’ll do worse. . .they’ll drive your clients into the waiting arms of your competition.

This advice applies equally to support staff. I know of several support staff who have a bigger book of business than some fairly successful lawyers out there. There’s just no good reason your secretary shouldn’t be able to steal your clients too!

By the way, if you want some practical tips on how to cultivate relationships between your firm and its clients, I suggest you check out How To Have A More Enjoyable Small Law Firm.

And if you want to learn how to be a S.M.A.R.T. 21^stCentury Manager, you should consider joining either my Silver or Gold Attorney Coaching & Support Program because Members of both these Programs get to listen to leading experts each month teach us about a wide range of law firm marketing, management and lifestyle topics.

Because Kids Don’t Care How Much It Costs

December 20, 2006 by RJon Robins

As the Holiday season settles in around us and the new year approaches, everyone’s talking about all the great reasons they can think of to set goals for your law firm:

Studies have proven that people with written goals are ten times more likely blah, blah, blah.
Having goals gives you something to measure and pace your activities against, etc. etc. etc.
“Those who fail to plan, plan to fail” or any one of about a dozen equally valid cliches or quotes from famous people, including my favorite from Alice In Wonderland: “If you don’t know where you want to go, then any road will get you there!

Like all the Holiday Special re-runs that get dusted off every year about mid-December we’ve all heard all the same old reasons why it’s a good idea to set goals and make plans to grow your law firm year, after year, after year.

But here’s one my 2 Year Old Neice recently taught me: Because Kids Don’t Care How Much Things Cost!

That’s right, you can make all the excuses you want to your Coach, your friends, your colleagues about why you don’t get off your ass and Make It Rain for your law firm. But at the end of the day, if you have kids. . . or if you’re ever planning to have kids you know that the bottom line is that no matter how shallow you want to say this is, you know or will soon learn that it’s the truth.

Happy Holidays!

An insight into how truly screwed-up some big law firms really are.

December 14, 2006 by RJon Robins

I don’t normally like to just share other people’s content without expanding upon what they’ve said. But this post over at AdamSmithEsq. is really fantastic and I don’t think there’s much I could add to make the point any better.

I suggest that afterwards, you take a few minutes to revist my main website and reconsider whether and to what degree you have ever been a victim of the Doctrine of Sacrifice in your own career or life.

The following is from Bruce over at Adam Smith Esq, a blog I highly recommend:

I want to discuss a theory floated by two economists posing an alternative explanation for large firms’ “up or out” partnership structure, which was covered in The Wall Street Journal last week.

As you know, the conventional explanation for what is essentially a binary personnel policy—associate or partner—is usually referred to as the “tournament” model, positing that associates compete to win the “tournament” of election to partnership, and that both the carrot of tremendous rewards should they succeed, and the stick of unconditionally being forced to leave if they do not, provide ample incentive for them to work, shall we say, with extreme diligence for 7 to 10 years.

In lieu of that explanation, the professors theorize that the real explanation has to do with “property rights,” and specifically with the one key asset the firm has, its relationships with its clients. After making the commonplace observation that law firms have no material physical assets, they hypothesize: “The one-sentence summary of the model is when knowledge assets are very valuable, the structure of the organization is going to adapt to try and take advantage.” More specifically, the risk to any firm is of course that people can walk out of the firm with a critical asset—a client relationship—and one way to control or minimize that risk is to put very tight limits on membership in the circle of people who truly have high-quality contacts with clients and who therefore pose a threat of taking them away. Thus, a small partnership cohort vis-a-vis the firm as a whole.

Add to this the practice of keeping associates effectively at arm’s length from clients and, our professors theorize, the firm has as solid a handle on clients as feasible. As one reader put it to me in an email: “Once associates get too experienced, keeping them around as anything less than partner is too dangerous. It seemed pretty persuasive to me, at first glance.”

The problem is that 80% of the AmLaw 200 do precisely that, as document in Prof. Bill Henderson’s paper on Single-Tier vs. Two-Tier Partnerships in the AmLaw 200 (80% of AmLaw 200 firms have a non-equity “partner” tier). How, then, do the professors deal with this?

Essentially, through flatly denying reality. With straight faces, they say:

You’d think the second prize, instead of getting fired, would be a somewhat smaller salary than being partner. And firms don’t do that, which may seem surprising. To us, it’s not surprising at all. The worst thing you could, in our conception, would be to keep a bunch of people around who are competent but underpaid because they’d be the ones who walk off with all the clients.

And when called on this contradiction by the WSJ interviewer, who asks “How do these people [non-equity partners] fit in?,” they demonstrate a basic misunderstanding of the role non-equity partners play, describing them as “people that are very good at some aspect of the job,” and nothing more.

Now, is this a fatal defect in their theory?

My take is that it doesn’t entirely knock it off the table, but it certainly is not going to dethrone the “incentives/tournament” theory any time soon in my mind. Yes, firms obviously know that their only assets are client relationships, and as the shockingly rapid implosion of some firms over the past decade has shown, those assets are highly portable and the firm’s hold on those assets can be fragile. But I think firms respond to that more by how they manage their own law firm partnership structure than by the far blunter instrument of the up-or-out structure. Which, we know, only holds true for 20% of the AmLaw 200 today.

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