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transition planning

INITIAL DISCOVERY & INFORMATION REVIEW

Initial Information Request

Basic Information - Excel Form(If Possible) - 3 Years Historical & Current YTD.

Employee Detail

Employee List(TKPR Profitability, Compensation Analysis, Overhead Analysis, Staffing Ratios, Historical Payroll) - Salary, Bonus History, Raise History, Position, Hire & Termination Date, Benefits Data, Secretarial/Staff Allocation Contract Labor

Working Attorney Productivity Reports

Working Timekeeper Productivity(TKPR Graphs, TKPR Profit, TKPR Comp Models) - Billable Hours, Billable Value, Amount Billed, Amount Collected & Average Rate

Write-off Reports

Any Expectations - Hours, Billings, Collections

Client Productivity Reports

Top Client Fees Billed/Collected(Concentration of Risk) - Sorted on Working Timekeeper & Originating Attorney - Amount Billed & Amount Collected

Top Client Fees Billed/Collected(Concentration of Risk) - Sorted on Practice Area - Amount Billed & Amount Collected

Working Timekeeper by Client(Workload Distribution) - Billable Hours, Amount Billed & Amount Collected

Originating Attorney by Client(Competitive Comp & Workload Distribution) - Billable Hours, Amount Billed & Amount Collected

Extended Services(Marketing plan, Client Profitability, Partner Compensation Analysis, Associate Performance)

Financial Statements

Income Statements, Balance Sheets, General Ledger Asset and Expense Accounts(Income Statement Ratio Analysis, IS Breakout, Cost Per Hour) Current AR and Work In Progress (WIP) Aging - For concentration of risk analysis

Operating Agreement & Partner Compensation Plan

Operating Agreement with Amendments and Description of Partner Compensation Plan

IT Information(Cost Per Seat)

Application Hardware & Vendor List(Airtable Form)(Cost Per Seat Estimate)

Marketing Financial Information(Metric Analysis, Marketing Effectiveness Assessment)

Firm Marketing Budget - 3 Years

Business Development Sources - Sources of New Business - New Client List and Acquisition Source

Client Acquisition Budget

Client Retention Budget

Estimated Time Spent by Lawyer on each Marketing Activity

https://www.performlaw.com/knowledge/metrics-to-improve-law-firm-marketing-effectiveness

Operating Efficiency Data

List of open files with open dates

List of closed with open and closed dates

List of cases by managing lawyer

WORK LIFE TIMELINES, RETIREMENT TYPE AND CAPACITY

A systematic transition planning a process that applies to all mid-level and senior attorneys. One way to do this is through the development of work-life timelines for all attorneys within ten years of retirement age. Work-life timelines show the future capability and capacity of a law firm.


Firms can start by collecting data regarding the ages of all practicing lawyers at the firm. Using this information, firms can develop work-life timelines for partners 55+- years of age and older. Work-life timelines will force law firm partners to evaluate their client relationships, professional contributions, and possible successors. Firms who prepare for the future have a real age advantage can slowly chip away at their competition as they age.


It is typical, however, to meet resistance to new styles of marketing. More experienced lawyers often prefer traditional marketing activities such as travel, entertainment, speaking, professional and trade associations, and some structured publishing.


Traditional marketing activities are all still necessary, but possibly to a lesser degree. A good marketing plan can combine traditional and digital marketing approaches to increase the overall effectiveness of the firm's marketing efforts

Identify Lawyers to Include in the Transition Subset

One way to do this is through the development of work-life timelines for all attorneys within ten years of retirement age. Work-life timelines show the future capability and capacity of a law firm.


For one reason or another, clients may want to include or exclude lawyers in the subset. We can propose the list based on birthdate and let clients indicate who too include.

Deliverable: Client Provided List of Lawyers to Include in the Transition Subset

Create Airtable form for management to complete that includes the following fields:


Attorney First Name

Attorney Last Name

Birthdate Year

Bar Date

Projected Retirement Year

Preferred Retirement Approach (Walkaway or transition over time)

If Transition Over Time (transition period 1 to 3 years)

Identify clients having the highest probability of staying with the firm post retirement

Identify clients having the lowest probability of staying with the firm post retirement

Identify attorneys who are critical to the successful transition of the indicated clients


Provide a client transition worksheet: populate an airtable worksheet with 3 years client data (billed, collected, open files, workload distribution) by the originator

Distribute Transition Readiness Questionnaire (TRQ) to Transition Lawyers Subset

While transition or succession planning is on the minds of most law firm partners and their clients, the majority of law firms avoid conversations about transition planning and partner retirement. If a law firm puts deliberate efforts into transition planning, it will have more control of its future and be able to sustain its profitability and longevity. The benefit of a uniform transition readiness questionnaire is that it provides the participants with a structured way of thinking about their practice health, plans, and people.

Deliverable: Transition Readiness Questionnaire

Create Airtable form for management to complete that includes the following fields:


Attorney First Name

Attorney Last Name

Birthdate Year

Bar Date

Projected Retirement Year

Preferred Retirement Approach (Walkaway or transition over time)

If Transition Over Time (transition period 1 to 3 years)

Identify clients having the highest probability of staying with the firm post retirement

Identify attorneys who are critical to the successful transition of the indicated clients


Provide a client transition worksheet: populate an airtable worksheet with 3 years client data (billed, collected, open files, workload distribution) by the originator

Deliverable: TRQ Results: Compilation

Create Work Life Timelines and Projected Retirement Type From Information In TRQ

Build Work Life Timelines from TRQ responses

See the entry in the PerfomLaw Knowledge Base to see a sample of a Work Life Timeline.

https://www.performlaw.com/knowledge/3-simple-tools-to-help-law-firms-prepare-for-the-future

Client Agreement with Work Life Timeline and Type of Retirement

Distribute the proposed work life timeline and proposed retirement approach to the client contacts. Obtain client agreement with the results as a working theory to use in building the transition plan.

Accessible Capacity Analysis

Law firms often struggle with the availability of experienced capacity to handle client work. Many also struggle when skill set mismatches occur. Skillset mismatches occur when the client work requires a higher level of experience than the attorneys with available capacity can offer. Delegation issues can happen for many reasons, but the two most common relate to compensation disincentives and client control issues.

An accessible capacity analysis seeks to compare gross capacity (capacity of all lawyers) to the necessary capacity to absorb a transitioning lawyers billable contributions.

In the TPQ, the transitioning lawyers we will ask the transitioning lawyer to assess and identify the available capacity in the firm and to project capability and capacity needs post-transition.

Projected Capacity During the Transition Period

As lawyers transition, it is necessary to estimate the amount of work to be acquired by/ redistributed to other attorneys.

MARKETING PROCESSES, SYSTEMS, SUPPORT AND COMPETENCE

If a law firm wants to achieve the next level of success or wants to ensure its longevity, it is often necessary for the firm to raise the level of its marketing competence. Law firms must expand their marketing approach in order to improve their lawyer’s ability to consistently attract new business.

Building a marketing platform to assist lawyers and future recruits with their marketing efforts will better enable and incent them to commit to any transition plan the partners adopt. An effective marketing system also incents longevity, which is key to perpetuating a firm’s life.

The assessment consists of two components: Does the current marketing system add to the viability of the firm? Does it add Going-Concern Value?

Marketing Performance

Assessment of the firm's marketing performance with respect to planning and support digital marketing, networking & relationship building

Digital (Inbound) Marketing

This part of the analysis focuses on the firm's online profile. We review the website, Google rankings, blog quality, social media presence and capability to develop content, as well as the lead flow

  • Web Site and Web Presence Assessment
    • Deliverable: Website Assessment Checklist
  • Search Engine Review
    • Relevance and Authority Evaluation
  • Blog
    • Design and Content Checklist
  • Social Media Effectiveness
    • Presence and Activity Assessment
  • Content Development Capability
    • Resource and Knowledge Assessment
  • Client Intake Process

Relationship Building Assessment

We distribute and collect survey from attorneys to assess their contact management activities with respect to prospects. clients and referral sources.

  • Client Contact Frequency By Lawyer
  • Client Visits By Lawyer
  • Bar, Professional and Trade Conference Participation By Lawyer
  • Contacts Per Lawyer
  • Referral Sources Per Lawyer
  • Leads Generated Per Lawyer
  • Leads Converted Per Lawyer

Marketing Planning and Support System Assessment

A review of the firm's marketing strategy and system

  • Strategic and Tactical Plans
  • Support System and Policies

Marketing Results KPI's

Marketing Metrics in the form of cost- and effectiveness- related Key Performance Indicators. Comparing Cost and Payoff allows for us to determine the firm's quantified marketing performance level

Cost

Analysis of marketing-related costs

  • Client Acquisition & Retention Cost
  • Time to Payback on Marketing Spend
  • Marketing Return on Investment

Effectiveness

Analysis of pay-off indicators

  • Average Revenue Per Client
  • 3 Year - Average New Clients Trend
  • 3 Year Average New Files Trend
  • 3 Year Average Lost Clients Trend
  • 3 Year Referral Source Trend

Marketing System Recommendations

Based on the qualitative assessment of the marketing system and the quantitative assessment of the marketing KPI's we give recommendations on the strategic level

Activity Planning

Activity or Marketing Mix recommendations according to three categories

  • Relationship Building Activities
  • Content Development Activities
  • Contact Management

Support

Recommendations for the firm's support system to facilitate, manage and control marketing contributions

  • Internal
  • External
  • Software

Policies

Recommendation for policies to guide the firm and its members when implementing a marketing plan

ATTORNEY DEVELOPMENT SYSTEM

Hiring Criteria Policy

Law School Hiring

  • Eligible Law Schools
  • Rank In Class
  • Distinctions
  • Diversity

Lateral Hiring

  • Credit for Time Served
  • Academic Credentials
  • Experience vs Academic Credentials

Model Associate Guidelines and Expectations

Define Model Associate Criteria

  • Qualitative
  • Quantitative
  • Ideal Tenure

Analyze Existing Associate Group

  • Habits of Performers and Non-Performers
  • Financial Performance

Progression Criteria

Associate to Senior Associate

  • Economic Criteria
  • Qualitative Criteria

Senior Associate to Income/ Junior Partner

  • Economic Criteria
  • Qualitative Criteria

Income/ Junior Partner to Equity Partner

  • Economic Criteria
  • Qualitative Criteria

Evaluation and Feedback System

Practice Planning Process and Templates

Basic Law Firm Economics Seminar

RECRUITING PROCESS REVIEW

Needs Analysis

Strategic Recruiting Compensation and Incentives

Role Specific Model Recruiting

Client Specific Recruiting Criteria

Streamlined Lateral Hiring and Vetting Process

Basic Lateral Hiring Financial Model

COMPENSATION AND INCENTIVES

Compensation Awareness and Preferences Survey

Performance Measurement - Timekeeper Profitability Data

Compensation Plan Development

Equity Partner Income Allocation Model

Overhead Allocation Methods and Policies

Training and Development Contribution Analysis

Leverage Analysis

Origination Sharing Policies

Strategic Recruiting Impact Analysis on Compensation

TRANSITION AND BUYOUT COMPENSATION

Income Projections for the Equity Owners

Transition Payment Income and Cash Flow Models

Consultation with Firm's CPA

Origination Ceding Schedules

Profit Projections Post Transition

Transition Compensation Metrics and Agreement

Retiring Partner Responsibilities

Compensation Agreements

Firm Valuation Approach (Cash Book Value + AR + WIP)

Accounts Receivable and Work In Progress Valuation

Capital Account Payout - Amount and Timing

Repayment of Negative Capital

Resolution of Debt Obligations and Continuing Guarantees

Payment for Goodwill and Use of Name

POLICY DEVELOPMENT AND OPERATING AGREEMENT PROVISIONS

Associate Progression Policies

Ownership Admission Criteria and Financial Requirements

Retirement Provisions Include Age and Type of Retirement

Transition Period Incentives and Compensation Policies

Lease and Debt Guarantees - Duration and Amount

Policy Regarding Post Retirement Private Law Practice

Buyout Approach and Duration

Return of Capital - Amount and Duration

Repayment of Negative Capital - Amount and Duration

Contingent Case Participation Post Retirement

Contingent Liability Provisions

Origination Sharing Policies

Capital Account True Up An Agreement

Firm Valuation Methodology Agreement

Transition Qualification Criteria

Equity Surrender Agreement

Coordination with Legal Counsel

ORDERLY TRANSFER OF OWNERSHIP INTERESTS

Equity and Performance Analysis

Equity and Contributed Capital Analysis

Intangible Contributions Analysis

FINANCIAL PLAN

Cash Flow, Debt and Equity Analysis

Projected Transition Compensation Schedule

Effect of Transition Compensation of Partner Income

Post Transition Profitability

Sensitivity Analysis

Exit Cost Schedule

ANALYSIS OF GOING CONCERN VALUE

Book Value Considerations and Calculation

Estimation of Going Concern Value

Valuation of the Individual Practices and Impact on Firm Earnings

Analysis of Intellectual Property, Systems and Processes

Panel Counsel Appointments and Retainer Agreements

Estimation of Reputational Value and Brand Value

IMPLEMENTATION SUPPORT

Implementation Schedule

Implementation Responsibilities

Project Followup and Hand Off