2005-2006
Solo and Small Firm
Section Council

Chairperson
Jane H. Downey
803-929-0030
jdowney@downeylaw.com

Chairperson-Elect
William E. Booth III
803-343-2895
boothlaw@bellsouth.net

Section Delegate
Ronald C. Scott
803-252-3340
rons@scottlaw.com

Council Members

Aaron J. Kozloski
803-748-1320
aaron@capitolcounsel.us

Dennis Gerald
803-254-6961
dennisgerald@geraldlawfirm.com

James E. Smith Jr.
803-933-9800
jes@seslaw.com

Däna Wilkinson
864-577-0603
danawilkinson@charter.net

2006-2007
Proposed Slate
(terms will begin July 1, 2006)

Officers
Chairperson: William E. Booth III
Chairperson-Elect: Aaron J. Kozloski
Section Delegate: Jane H. Downey

Council Members
Dennis Gerald, term expiring 2007
William Nettles, term expiring 2007
James E. Smith Jr., term expiring 2008
Däna Wilkinson, term expiring 2008

Notes from the chair

By Jane Downey

Who can ring in the new year without thinking of black-eyed peas, collard greens, hog jowl and resolutions? I will let you take care of the first three and address the fourth. This year, the Solo and Small Firm Section Council has made a resolution to get you involved in our Section. We want to hear from you and how we can assist you with your practice. If you have ideas, please send me an e-mail at jdowney@downeylaw.com. Also, remember that the South Carolina Bar provides a plethora of information to assist you in your practice with written resources and the personal assistance of Practice Management Advisor Courtney Kenneday, who always is willing to assist and has terrific ideas to implement in your practice. Aside from those bread and butter resources, we want to give you some meat in your practice. To do this, we will start the year out with a bang at the South Carolina Bar Convention, held at the Charleston Place Hotel. Our section will sponsor Craig Ball, who will speak on Friday, January 27, from 2:15 to 5:30 p.m. about computer forensics—what those of us who are electronically challenged need to know about litigating in the age of technology. Craig promises to keep your attention for the full time allotted. If you want a sneak preview, plan to attend the Law Office Technology Committee’s seminar, entitled PowerPersuasion, scheduled for 2 to 5: 15 p.m. on Thursday, January 26. Craig’s feature presentation has a popular “standing room only” reputation. For additional information, please visit www.scbar.org/convention.

Throughout the year, we will be providing some “lunch and learn” seminars. Our first lunch and learn is expected to be in the Upstate and will focus on the intersection of family law and the changes to the bankruptcy laws. We expect to follow that lunch and learn with a workers’ compensation seminar. If you have other ideas for topics, locations or speakers, please e-mail Däna Wilkinson at danawilkinson@charter.net.

Plans are being made now for another Section seminar to be held in October. If you would like to give input on topics or speakers, please contact me. Our current thoughts are to offer a two-day seminar, probably in Columbia, with a choice of topics. We hope the seminar will grow each year until we can offer a three-day seminar at a resort location.

Finally, I cannot emphasize the value of listservs for the solo or small firm practitioner. Bankruptcy attorneys readily use theirs. Anyone can sign up for either the debtor listserv or the creditor listserv, but not both. Interested bankruptcy lawyers can e-mail Joey Heape at joey.heape@scbar.org and indicate which bankruptcy listserv to join. To e-mail others on the bankruptcy listservs, send an e-mail to debtor@scbar.org or creditor@scbar.org, depending upon whom you want to contact. In addition to those listservs, creditors and debtors may join the bankruptcy@scbar.org listserv by letting Joey know. You may also contact Joey if you are interested in establishing a listserv for another practice area.

We look forward to a good year, providing you with valuable information you can use in your practice. Please join us this month at the Bar Convention and throughout the year at other seminars. Again, we seek your input on how to make the Section a more useful tool for you. With a little information each month from us, maybe you will have a prosperous year even if you forgot to eat your black-eyed peas, collard greens and hog jowl.

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ROI: Practice/matter/case management

By Lee Cumbie

The mainstream implementation of practice management/case management software is underway. As you read this, many firms in the Carolinas are considering their options by mulling over marketing materials, reviewing features and attempting to select a product. As such, it is essential for firm decision-makers to understand and appreciate potential benefits, as well as potential pitfalls. The following should provide helpful insight into this decision-making process. Some return on investment metrics will also be provided.

Just to remind everyone, practice management software is the computer analogy of the paper client file. It provides a central location from which to collect, dispense and review all the information pertaining to a particular case.

Most lawyers are aware of the common features of the modern practice manager: shared Rolodex, shared calendar, to-do list, notes, files, etc. The basic functions are those that have analogies in the paper world. All we are really doing is performing them in a digital rather than analog (paper) manner.

For most lawyers, the word all, in the previous paragraph, sums up why this software has taken more than 10 years to gain momentum. Most who are thinking of adding this software are either 1) focused on a particular problem they are aware of and want to solve, or 2) focused on insufficient productivity and associated revenues and want to speed up existing work processes. This ignores the bulk of the true benefits of practice management and skews the cost/benefit analysis.

The most powerful features in the practice manager are those that cannot be simulated in the paper world. Without knowing what these new capabilities are, it is impossible to assimilate them into the daily work routine. These advanced features provide the greatest return on investment. Unfortunately, few firms take advantage because they require the greatest change in the way the firm conducts its day-to-day operations. You cannot reasonably expect to successfully implement this level of change without outside professional assistance.

When deploying a practice manager, the firm will encounter a number of critical decision points. These decision points will be addressed during the implementation process whether you have consciously identified them or not. Obviously, making an informed, conscious choice is a better strategy when making an investment of this magnitude.

The best way to begin the process is to make a detailed inquiry into why you feel a need to change. Sales gurus refer to this as finding "the customer's pain." Perhaps you are worried about missing deadlines or feel client communications are unacceptable or that billable items or time is falling through the cracks. Whatever the reasons, a comprehensive list is your primary starting point to maintain the desired focus throughout the implementation.

Once we determine what the pain is, it needs to be classified. Is this a reactive or proactive situation? Is this a management or productivity issue? Are we simply enhancing existing workflow or changing and improving it? Will basic functions suffice or must supplemental features be involved?

Reactive v. proactive

Reactive situations are those where a problem is identified as already occurring that the firm wishes to resolve and prevent in the future. They include items like almost missing deadlines, finding unrecoverable and unbilled billable time, receiving negative feedback about document preparation quality, grievances, quality of life conflicts with the family, etc.

Proactive changes are those made in anticipation of avoiding potential problems or to achieve new benefits. In the business world, a considerable amount of time and money is spent attempting to predict and prevent problems from ever occurring. This is very similar to the efforts of transactional lawyers who draft contracts, estate plans, IPOs, etc. with the same end result in mind.

This classification as reactive or proactive directly correlates to the amount of change and the amount of expense a firm is willing to accept in order to solve the perceived problems. We are typically willing to spend more money and accept more change to resolve reactive issues than proactive issues. This follows the basic human predilection to make lifestyle changes after a heart attack instead of making the same changes in advance to avoid it.

Being able to quickly generate mass mailings to clients, colleagues or potential clients; generating high quality, customized, complex documents in a fraction of the usual time and with a known quality; creating reports on marketing efforts, case status, dockets, etc.; locating and reusing old work product instead of reinventing the wheel; and docketing complete workflow for cases through the use of standardized templates are only some of the typical proactive possibilities.

While reactive issues certainly need to be addressed, proactive issues are where the true improvements and return on investment are found.

Quality or productivity features

The features in practice management software can be roughly divided between those that primarily improve quality, i.e. management or administrative handling of a case, and those that improve productivity.

Quality features allow you to efficiently document client communications, track phone calls, capture time, manage tasks and appointments, etc. to increase the quality of representation without an accompanying time penalty for doing so. There are typically minor productivity gains as well.

This focus tends to be attorney-driven due to ethical and professionalism concerns. The staff tends to focus on their own roles and see only an additional burden without any benefit. For this reason, it is vital for firm leaders to apply both positive (Great job! I wish I could pick this up as well as you are. This will really make us a better law firm.) and negative (This journey is going to happen with or without you. If your attitude doesn’t change, I don’t know if you are going to complete the trip with the rest of us.) reinforcements in order to motivate staff members. This is far more difficult when attorneys refuse to participate in the use of the software.

Productivity features allow you to quickly and accurately create simple or complex documents without re-entering information a second time, quickly and efficiently respond to information requests from clients and other parties, mass schedule tasks, re-use work product, capture more billable time, etc. and do so in greatly reduced time and effort. While there are associated quality benefits, the primary effect is to reduce the total time necessary to handle a typical matter in a high quality manner, especially the non-billable aspects of the representation.

Optimally, firms would select appropriate features from both groups; however, since productivity tools tend to be the features with little analogy to the existing paper paradigm and require significant preliminary expenditures and change, rationalizations are often employed to defer or avoid their implementation. This substantially limits the potential return on investment.

Enhancing or changing workflow

Generally speaking, technology of any type, not just computer technology, is used to either speed up an existing process or enable a beneficial change in an existing process. Having spent seven years as a maintenance technician in a manufacturing plant, I can personally attest that, of the two, the latter will engender far greater benefits but will likewise require far more effort.

The most difficult aspect of making this decision is imagining how you would change the workflow. Many lawyers have little, if any, business management education or prior experience. Few spend any significant time increasing their knowledge. Most have only their personal experiences in law practice to guide them.

Now, add a new software package with capabilities far beyond those you have ever used, many of which you don’t even realize exist. Melding those advanced capabilities with innovative ideas for changing the work process is no simple task. Consequently, for most firms to successfully change the workflow by taking advantage of new software capabilities will require some outside assistance.
Since it is so much easier, and less expensive, most firms forego the major benefits, and headaches, of making significant changes in the workflow. In taking the path of least resistance, the firm limits its revenue potential and return on investment.

Basic or advanced features

By this point in the implementation, you should have a concrete list of desired improvements and associated goals. The next step is to match up the specific features necessary to accomplish them. Once you have a short list of the required features, another assessment of associated workflow modifications must be performed.

For instance, suppose you have recently been conflicted out of a couple of good cases. This means you will want to take advantage of the conflict of interest features in the practice manager. There are typically at least two—the conflicts check itself and the function for relating contacts to each other. Relating contacts is an optional feature that enhances the conflicts check. To use either feature will almost certainly require a change in the way you collect and record information about potential conflicts and their relationships.

The group dynamic

The most important facet of being successful at this stage in the process is understanding the group dynamic. The group dynamic involves the difference between an individual learning how to do something a different way and a group of individuals learning how to do something different but in the same way. Herding cats comes to mind.

Defining procedures, conducting training and making full use of the docketing templates are very important if the transition is to be relatively smooth and stress free. You can obtain assistance to help in the creation of procedures. Training is typically outsourced as well. However, the creation of docketing templates primarily requires the attorney and staff to work together in documenting the workflow of a typical type of case. Despite claims to the contrary, very few practice areas are so unique as to defy attempts to standardize the bulk of its workflow.

Particular areas of law typically follow a predictable timeline. Practice management applications commonly have a feature I refer to as a docketing template that allows you to link the steps involved in handling a matter. The result is a road map of events that you can share with anyone working on the case. In this way, you can make sure that all steps are covered and completed by their deadlines. Nothing falls through the cracks because everyone so designated receives a “heads up” about what they need to do on the matter.

By creating this prior to making a staffing change, new employees have a built-in, proactive checklist to follow while learning the new process. While it does take time to build the template, the time spent is dwarfed by the time wasted when trying to implement changes in the process or retraining new staff or associates without one.

ROI (Return on Investment)

If you’re not sure whether practice management software can help your bottom line, you can evaluate your expected benefits from the technology by doing a return on investment (ROI) analysis. To illustrate, here is how you can quantify some of the efficiency gains that you can derive from its implementation.

Many firms employ at least a part-time person to make entries into the time and billing system. For this example, let’s assume these entries take about six hours per week and that she is paid $15 per hour, including benefits. You’re thinking about purchasing a practice management system and integrating it with your accounting system, but at $5,000 (about typical for consulting, purchase and training for an eight-person firm) the price seems steep and you don’t know whether it would be a cost-effective move.

Your savings by implementing this aspect of practice management would be: six hours x $15 x 52 (weeks) = $4,680.00.
Your ROI would be: $4,680(savings) – $5,000(cost) = -$320.00 in the first year if this was the only benefit it provided.

Over a three-year period, the ROI stats would be: [3 x $4680]-$5000 = $14040 - $5000 = $9040.00, or [(3 x $4680)-$5000 / $5000]*100 = 180.8 %.

Looked at another way, you would recoup the program cost in the first year, if savings in time and expense entry costs were the only benefit. However, practice management produces economic benefits in an abundance of ways.

For instance, practice management applications allow you to link together all communications on a particular matter, from word processing documents, telephone notes, messages or e-mails, and group them all in one place. Then, when you receive a phone call from the client or opposing attorney, you don’t have to scramble around looking for the file. You just pull up the matter/file index, select the matter and view any of the information you need.

To be conservative, let’s assume that you spend an average of five minutes getting up from your desk to look for a file during, or in preparation for making, phone calls. Let’s also assume this time is not billable. After all, you aren’t actually doing any productive work for your client during these searches, are you? For flat fee, value-based or contingency fee cases, there is no question this is simply wasted time. What is your ROI if you could save this wasted time and turn it into productive effort three times a day?

At a billable/effective hourly rate of $100 per hour, if you work an average of 231 billable days each year, your increased billable/productive time is: .25 hour x $100/hour x 231 days = $5,775.00. (where 3 x 5 min = 15 min or .25 hours)

At $200 per hour, the savings are $11,550.00 per year! Per attorney! Just by avoiding the search for files!

Assuming we have three attorneys in our eight-person firm and none of the staff bill for their time, we can use our estimated implementation costs of $5,000 to calculate an estimated payback period.

$5,000[cost] / ($5,775[savings] x 3 attorneys) x 365 days = 105 days (just over three months) to recover your investment.

Of course, there are many additional ways in which practice management software can make a significant impact on the bottom line and/or quality of life.

Conclusion

As we have seen, law firms can realize a substantial return on investment by taking advantage of practice management features and the associated improvements in workflow. We have also proven there is really no viable argument to be made that practice management software won't pay for itself in short order. Don't let fear or intimidation prevent your firm from reaping the benefits of this powerful tool. Take a deep breath and take the plunge. Once you get used to the water, you'll be glad you did.

Lee D. Cumbie is the founder of Cumbie Law Office Automation Consulting, Inc. and is licensed to practice law in North and South Carolina. He is also an Adjunct Professor of Law at Campbell University where he teaches the Law Firm Computer Lab and Advanced Litigation Techniques courses and serves on the Technology Committee. He is a former chair of the Law Practice Management section of the N.C. Bar Association and has donated hundreds of hours of his time to provide dozens of CLE presentations for lawyers across the Carolinas.

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Newsletter articles

If you are interested in submitting an article for the next Section newsletter, please forward to Tara Smith at tara.smith@scbar.org before March 13. Your submissions and support are appreciated.