Addendum is published by National magazine, the official magazine of the Canadian Bar Association. The views expressed in the articles contained herein are solely the views of the authors, and do not necessarily represent the views of the Canadian Bar Association.
By now you’ve probably noticed the blue, black, grey and white icon above the articles in each issue of Addendum with the helpful “Tag and save to del.icio.us” right next to them. You might even have clicked the icon and taken the next steps to getting yourself a del.icio.us account (in fact, some readers definitely have). And many more of you are probably still wondering what, if anything, it’s good for.
Del.icio.us, like StumbleUpon and Digg, among others, is a social bookmaking site. It combines the ability to bookmark a webpage, in much the same way as your web browser does, with the ability to tag, or file, bookmarks in user-defined categories, and share them with others (and benefit from seeing what others are bookmaking).
While you can categorize bookmarks in Internet Explorer and Firefox by creating folders, this method can leave you with some unwieldy lists, especially if you have a large number of sites saved. And those bookmarks are tied into the browser located on one specific computer, so if you’re away from that computer, you won’t have access to your bookmarks, unless you use a laptop daily (or have turned your thumb drive into a portable office).
For an alternate explanation of how del.icio.us works, complete with visual examples, check out this YouTube clip (thanks to Michelle Kostya at My Eyes Glaze Over – worthwhile reading for anyone looking for an introduction to web-based new media tools and advice on marketing – for the link).
You can also find a good step-by-step quick-start guide at beelerspace.
One of the first things you’ll need to decide when you sign up is what your username will be, and whether or not you want that username tied to your practice. Be warned: if you choose “SmithandSmithLLP” as your username, you’d best ensure that everything you tag under that account is related to your practice. Don’t forget: this is a social bookmarking site, and what you bookmark is visible to everyone.
Adding the del.icio.us buttons to your browser’s toolbar will make saving and tagging sites that much easier. But if your toolbar is already crowded with Google tools, RSS feeds and the like, or you’re working in an environment where you can’t add applications to your computer without the permission of your IT department, it’s still possible to tag things manually. Most blogs and news sites (such as the Globe and Mail, the Toronto Star, and the CanWest Global papers) now have buttons at the end of each article or post that allow you to add the page to your bookmarked sites. Because of the way Addendum is designed – multiple articles on a single page – the only way to link directly to a specific article is to use the manual tag button.
Once you’ve registered, you’re ready to start. Bookmark websites and add tags to each bookmark, so that when you return to your personalized page, you’ll be able to quickly sort through your tags. The only real disadvantage of del.icio.us’s construction is the fact that tags only support one-word naming, so for more advanced concepts, you’ll have to settle for “lawpracticemanagement,” for example.
If you have bookmarks already stored in your browser and would like to upload them to the site, log in to del.icio.us and select “Settings” from the top right menu, and then “import/upload.”
By now, you should have at least the basic outline of a page underway. Here’s a quick example – which is probably what yours will look like at the beginning. Michelle’s page is much better developed, and is a great example of what you can do with yours. She has tagged more than 180 items, which would be a nightmare to wade through ordinarily. But between the ability to adjust how many items appear on each page and the ability to click on individual tags, it’s easy to break the entries down.
“Before you know it, you’ve built a great one-stop resource for all kinds of helpful articles and resources for your practice, which you can share with your colleagues and employees, if you choose.”
Don’t limit yourself to the interesting sites you’ll collect in the course of your normal surfing: check out what others are interested in as well. From the del.icio.us main page, you can see a selection of what other people are saving. You can also use the box at the top right of the page to search for specific tags (remembering to run words together). For a more robust search feature that is a little less limiting than one-word tags, you can install deliGoo and expand your bookmarks even further. If you’re using Firefox and you’re comfortable with Firefox extensions, you can add the del.icio.us extension for easy search and tagging options.
For solo and small-firm practitioners, del.icio.us could help you create a virtual library. Create an account specifically for your firm, and tag a few articles or sites relating to a specific area (CBA PracticeLink is a great place to start for practice management tips). Then run a quick tag search (like “lawpractice”), scroll through the links, and bookmark anything that looks useful. You can also click on usernames to find out what other sites a user has tagged, so even though you started out looking under “lawpractice,” you might find that another solo or small-firm lawyer has already tagged a bunch of useful articles on hiring, for example. Before you know it, you’ve built a great one-stop resource for all kinds of helpful articles and resources for your practice, which you can share with your colleagues and employees, if you choose.
Ed.’s note – Does the word "budget" make you want to run for the hills? Sure, creating a budget can seem overwhelming and scary — but so is failing to meet financial goals. In this article, CPA and law firm specialist Richard Puzo outlines the basics of budgeting for a law practice and shows you how to assess your firm's needs and create an adaptable financial plan that will yield big results.
Introduction
Preparing a budget usually occurs after establishing a business plan. A business plan determines various goals that the firm wants to achieve, and a budget projects the financial results of the plan. Studies have shown businesses that establish business plans and budgets have a far greater percentage of achieving their goals and objectives.
To successfully manage your affairs, you should prepare a budget at the start of each year.
To successfully manage your affairs, you should prepare a budget at the start of each year. Depending on the size of the firm, you should monitor and periodically adjust the budget throughout the year. Large and mega-sized firms usually find that having a periodically updated "living" budget (i.e., monthly, quarterly, or semi-annually) enables management to make "mid-course corrections" to eliminate surprises or large variations that occur when budgets never change.
In developing a formal budget, you must:
project fees;
estimate personnel costs; and
estimate operating expenses.
You can approach preparing a budget in two ways. First, you can base it on your knowledge and perception of the firm's potential client activities and non-chargeable activities for the forthcoming year. Second, you can seek input from the firm's partners for use in developing fee projections and from the firm's administrative supervisors for use in estimating expenses (the latter approach is the more successful way to budget).
Fees
Projecting fee revenue for the coming year involves developing an estimate of the level of work (recurring and nonrecurring matters) for existing clients during the upcoming year, and making an assessment of the level of new work generated by new clients during the next year.
You can assess the level of fees for existing clients by asking the partners to estimate the hours of professional time and the level of professional staff they anticipate for the forthcoming year, and to estimate the expected realization rates on each client engagement.
Partners at the practice group level can develop estimates as part of the annual practice planning process, with results from all practice groups then aggregated to arrive at firm-wide numbers. You can supplement this productivity information with management's estimate of billing rates for the forthcoming year, the combination of which will elicit an estimate of fees for existing clients for the coming year.
An estimate of fees for new clients involves the same variables as an estimate of fees for existing clients. These variables include hours, rates, and realizations. Hours are assessed based on partners' subjective judgments. Consequently, hours estimated for new client work are rarely precise. Such an assessment of hours for new client work is based on factors that affect the firm's ability to expand its practice. These include the current economic environment, the firm's strategic plans for expansion or contraction of work in each area of law, the amount of new business development effort, the firm's capacity for absorbing new work, competitive pressures, and past patterns of new work generated annually by the firm.
Personnel costs
Budgeting for personnel costs requires you to estimate three types of costs:
compensation of timekeepers other than equity partners;
administrative staff salaries; and
benefits and other employee costs.
Estimating compensation of all timekeepers other than equity partners requires a determination of the number of timekeepers that the firm desires to maintain, and a determination of the compensation level for each timekeeper.
You must first project the aggregate level of lawyers' chargeable hours for the subsequent year and the portion attributable to equity partners. You can then derive an estimate of chargeable hours for the other classes of timekeepers and the number of legal staff required to carry the workload. Timekeeper compensation levels for the forthcoming year are often determined by a committee of partners who establish a range of compensation for each class of legal staff based on level of experience. Specific compensation amounts are then determined for each timekeeper in each class.
Estimating administrative staff salaries requires a determination of staffing levels for each administrative department based on the needs of the firm and number of its lawyers, a determination of each administrative staff member's salary, and a determination of total costs recovered by billing relevant secretarial, word processing, and possibly other administrative time to clients.
Estimating benefits requires a determination of the number of associate lawyers and administrative staff eligible for each benefit, and a determination of the level of benefits offered by the firm during the forthcoming year and the cost per employee for each benefit.
Operating expenses
To budget operating expenses, you must estimate four types of costs:
occupancy costs;
office operating expenses;
professional activities; and
general business expenses.
“To maximize the benefit of a budget, you must monitor it in a timely manner and let it react to the variances.”
When estimating occupancy costs, you must determine space requirements for the forthcoming year, determine the cost per square foot for this space, and determine peripheral costs (i.e., electricity and other utilities, commercial rent and occupancy taxes, and amortization of leasehold improvements). The firm's space requirements usually directly relate to the number of lawyers and administrative staff working in the firm's offices.
Estimating office operating expenses requires a determination of the firm's anticipated usage level for office equipment and supplies, and an assessment of the extent of cost recoveries achieved by billing clients directly for equipment usage (such as duplicating services).
When assessing professional activities expenses, you must determine the number of lawyers needed in the forthcoming year, and determine the level of professional activities costs reimbursed to each lawyer.
When estimating general business expenses, you must determine the anticipated operating level for the firm's support services (e.g., telephone, library, messengers, reprographics, etc.), determine the extent of costs recoveries achieved by billing support services to clients directly, determine the firm's anticipated use of outside services (e.g., professional services, marketing and public relations, insurance, interest expense on loans, and charitable contributions), and calculate an estimate for the firm's local franchise or business taxes.
Conclusion
In summary, to maximize the benefit of a budget, you must monitor it in a timely manner and let it react to the variances. The budget may change throughout the year, but don't let that deter you. By reacting to the current business environment and having budgeting goals, you can make adjustments to achieve your firm's financial goals and objectives.
Copyright 2006 Richard Puzo. All rights reserved.
Richard Puzo, CPA, is the Partner-in-Charge of the J.H. Cohn LLP industry specialization initiative and the Partner-in-Charge of both the J.H. Cohn Law Firm Services Group and Physician Practices Group. Since joining J.H. Cohn, Mr. Puzo has focused on servicing individual attorneys and legal practices and on developing an expertise in law firm management and other issues impacting the legal profession, as well as on physician practices and their unique situation. His experience includes advising both publicly traded and privately held companies in various accounting, business, and operational issues. You can contact Richard via e-mail at rpuzo@jhcohn.com or by telephone at 877-704-3500.
This article originated in TechnoLawyer, a critically-acclaimed legal technology and practice management resource for lawyers. Thanks to an alliance we’ve established with TechnoLawyer, you and other members of the Canadian Bar Association can search the thousands of product reviews, how-tos, and other articles in the TechnoLawyer Archive free of charge (a $65 value). To take advantage of this member benefit, please visit http://www.technolawyer.com/cba.asp.
Hiring a new associate merits particular attention to detail and process. So says Caroline Haney of the Montreal consulting firm Haney Legal Recruitment. She advises taking your time and getting it right before making your final choice. “A badly executed hiring process carries a high price,” she says. “Studies show that losing an employee can have the same sort of cost to a business as a $250,000 loss.”
Here are some errors to avoid when recruiting new talent for your firm.
Entertain the possibility that you can hire someone a little more senior, a little more junior, someone who’s a member of another provincial bar, or someone with hybrid experience.
The need to quickly find a new associate is usually a direct result of the departure of a current lawyer. Does that mean you should be looking for someone with the same skill set and profile? Not necessarily.
Many times, the firm is simply looking to plug a hole in a hurry, without looking at the situation as a chance to assess new possibilities. “Lawyers are like snowflakes,” Haney says. “No two are exactly alike.” Take the time to make an assessment, and take advantage of the situation by asking yourself if the firm’s needs have changed.
Having preconceived notions.
“Sometimes lawyers watch a candidate walk into the interview room and think they can already tell whether or not they’re a viable candidate,” Haney says. “Ten short seconds, and it’s already over.” But first impressions can be misleading and could cause you to disqualify an excellent candidate.
So keep an open mind and don’t get locked into one set of expectations. “Entertain the possibility that you can hire someone a little more senior, a little more junior, someone who’s a member of another provincial bar, or someone with hybrid experience,” Haney says.
It’s important to have a list of the qualities you’re looking for in the “perfect candidate,” but you also have to be aware of reality. “The ‘perfect candidate’ doesn’t exist, just like the perfect mate doesn’t exist,” Haney says. “Pick the candidate that comes closest to what you’re looking for, and recognize that some qualities are more important than others.”
Falling in love with a silver tongue.
Haney cautions against the smooth talker. “Many people want to hire someone who they get along with well, and in doing so, fall into a trap,” says Haney. “It’s good to have common interests, but that’s not enough.” You have to dig a bit to discover the candidate’s expertise, competencies and career experience.
Not listening.
The best lawyers are not necessarily the best recruiters. Pressed for time as they often are, they don’t always take the time to do the multiple interviews necessary to hire the best candidate. “For a first interview, you need to spend at least an hour with the candidate,” Haney advises.
Some fall into another trap: delivering a monologue about the merits of the firm or the business. In a competitive market, you have to know how to sell your firm. But Haney says you must “listen to the candidate and ask good questions, which can run the gamut from the general to the more specific.” And a piece of advice for those who are looking for originality at all costs: avoid provocative questions that have no bearing on the job, such as those in the vein of “If you were a fruit, which fruit would you be?”
The proliferation of e-mail is a double-edged sword for most professionals. Not only does it allow you to communicate instantly with your clients and contacts, but it also puts them in immediate contact with you which, in turn, leads to high expectations: if they can contact you right away, they expect a response right away.
And like other professionals, lawyers aren’t in the office 100 per cent of the time. The reality of the job, with trials, meetings, travel time, and vacation, means sometimes, when clients come (electronically) calling, you won’t be available.
Easy to set up and to use, Outlook’s autoreply, which is most often used for out-of-office messages, allows you to enter a pre-written message that will be relayed to anyone sending you a message
These increased expectations were the driving force behind the creation of the autoreply system built into most e-mail clients (most notably Outlook, which still has, by far, the lion’s share of the market, especially for business users) and, these days, most webmail services as well. Easy to set up and to use, Outlook’s autoreply, which is most often used for out-of-office messages, allows you to enter a pre-written message that will be relayed to anyone sending you a message. One click to activate it on your way out the door, and everyone e-mailing you will be presented with a greeting letting them know that you’re not in the office, but will be happy to get back to them when time permits.
As part of my job as the CBA’s news editor, I review out-of-office autoreplies for the vast majority of e-mails sent from the CBA’s National Office in order to ensure contact details are updated for lawyers who are switching firms, retiring, on long-term leave and the like (details like this are all excellent things to include in your out-of-office message). For a message sent to all CBA members, I scan between 2,500 and 4,000 of these autoreplies. With that in mind, here are some tips on how to draft an effective out-of-office message.
Put the dates you’ll be out of the office in a standard, plain-language format. Yes, you know that 10/12/2007 is Oct. 12, 2007 – but your clients and correspondents have to take the extra time to process and decode that – did you mean Dec. 10, 2007? Different parts of the world put the month and day in a different order, which can lead to puzzlement. This gets even more confusing when you’re away for a range of time: “I’m out of the office from 05/06/2007 to 12/10/2007.” If someone sends you an e-mail in the middle of that timeframe, they’ll probably spend a couple of minutes trying to figure out what dates you meant. Much better to write “I’m out of the office from Friday, Dec. 7, 2007 to Monday, Jan. 15, 2008.” Now everyone knows exactly what you meant.
Set expectations. Let the person trying to reach you know whether or not you’ll have intermittent access to your e-mail. If not, include information on when you expect to be able to return e-mails. Consider adding contact information for your assistant or for a colleague in the event the client needs to speak to someone immediately. Don’t just include an e-mail address for whoever will be covering for you – add the phone number as well. And always include the area code: many autoreplies leave out this information.
Include as much essential information as your client will need. If you’re leaving the firm or going on extended leave and haven’t touched base with your clients personally (always the best solution), include the names and contact information of the colleagues who will be handling your matters (“For real estate matters, contact John Smith at [e-mail address and phone number]; for wills and estates, contact Jane Watson [e-mail address and phone number]”) during your absence or as your replacements.
Don’t go overboard on the reasons you’re out of the office. “I’m away from the office and won’t have access to e-mail” is all you need to include. Your clients don’t need to know that you’re on vacation in the Grand Caymans or at the Toronto International Film Festival, especially if they’re of limited means. And if you’re a sole practitioner who works out of a home office or in a small town, letting people know you’re out of the country on vacation for two weeks could risk the security of your home.
Limit the personal information in your message. Many lawyers list the reasons they’re away in their messages. But some disclose more personal information than is necessary to preserve their privacy, and more than their clients need to know. Some messages disclose the fact lawyers have recently undergone surgery (and medical information is one of the most heavily-protected pieces of personal information under current legislation); others of a death in the lawyer’s family, some of a marriage and honeymoon, still others that the lawyer is out of the office observing a religious holiday. While these are all legitimate reasons to be absent, would you advise your client to disclose this information about themselves to random strangers?
Lose the boilerplate. Unless you work at a firm where the boilerplate “The information in this messages is confidential…” is automatically appended to each and every message and is beyond your control, there’s no reason to include the boilerplate info in your autoreply. The fact that you’re out of the office is neither confidential nor privileged, and just adds unnecessary text to what’s supposed to be a short message.
With all these tips in mind, what should your out-of-office autoreply look like? Here’s a suggested format.
“Thanks for your e-mail. I’ll be away from the office until Monday, Jan. 15, 2008 without access to my e-mail. If you need to speak to someone regarding your case or file, please contact my assistant, Donna Dean, at 613-237-2925 or by e-mail at donnadean@myfirm.ca. Although this e-mail account will not be monitored during my absence, upon my return I’ll reply to all the messages I’ve received.”
Éric Sonier grew up in Tracadie-Sheila, N.B., a town of about 4,000 people that acts as something of a service centre for the province’s Acadian Peninsula. Doesn’t sound like a magnet for a new law graduate? On the contrary – Sonier moved back there after graduating from the University of Moncton’s Faculty of Law and completing his articles in Bathurst.
His first move was to co-found a small firm, now called Sonier & Duguay, and business has been good. Revisions to New Brunswick’s automobile insurance legislation have reduced business opportunities for many litigators, but Sonier’s firm has managed nonetheless to recruit lawyers who were reorienting their practices. “In a four-person firm, everyone can focus a little more on specific areas,” he says.
The non-monetary benefits of working in Canada's smaller centres – including better hours, higher quality of life, stronger community ties and almost no commute – are increasingly attractive to a new generation of lawyers who want both a job and a life.
Real estate transactions are a solid source of files, but Sonier also focuses on family law, wills and estates, while his partner takes care of corporate law matters. Tracadie-Sheila may be a little out of the way, but living in a remote area is hardly a problem in the age of telecommuting and online legal resources, while attending Continuing Legal Education sessions in the urban centers is an opportunity to take the family on a trip.
Éric Sonier is just one of many lawyers who have passed up the lure of the big city and set up shop in Canada’s many smaller centers, towns and villages. There is no shortage of clients who need legal assistance, and the non-monetary benefits – including better hours, higher quality of life, stronger community ties and almost no commute – are increasingly attractive to a new generation of lawyers who want both a job and a life. Here are three others who’ve made the same choice.
Small-town approaches
Jacqueline Ferraton, bought her current practice in 1989 from a colleague in Wynyard, Sask., a small town located 150 kilometres from Saskatoon. “The next day, I had to make all the decisions,” she recalls. “It wasn’t particularly difficult, but it wasn’t easy either.” The most important thing about small-town practice, she says, is developing a genuine rapport with clients. “You have to be approachable and speak to everyone.”
Business in a small town isn’t the same as in the big city, and requires a dose of rural tact. It isn’t always easy to get paid on time, and ostentatious displays of wealth don’t go over well in small communities where everybody knows each other. “I sometimes think of what I would do in Regina or Saskatoon,” Ferraton says. “But when I talk to other lawyers, I realize that everybody has the same problems.”
For the most part, Ferraton works solo, but she can rely on the help of a researcher who works freelance throughout the province. Her practice mainly consists of real estate and agricultural law, as well as family law, wills and estates. The only other lawyer in town is also a solo. “When there’s a divorce,” she says, “each of us represents one of the parties. We get along well.”
Hometown advantage
Pascal Martin, a civil notary with Ashby & Ashby in Saint-Hyacynthe, 60 kilometres outside Montreal, says that nothing could have convinced him to work in a big city. He recognizes the big salaries that big firms offer, but he’s not interested in the hours. He believes his firm’s hourly salary is comparable to those in downtown law firms. “But I work 35 to 40 hours a week.”
Martin appreciates working close to his hometown, Saint-Théodore d’Acton. He has never really left the area and is thus familiar with the local issues. He’s worked in everything from slaughterhouses (as a student) to urban services for the municipality of Acton Vale. He’s also a city councillor for Saint-Théodore d’Acton.
His diverse background has afforded him the opportunity to get close to his clients, and coming from the region is a major asset. “Practically everybody in my village knows me,” he says. “In rural areas, people are much closer to one another. It’s what’s really helped me.” It’s all about
getting involved in the community, he adds.
“A rural practice requires more care in deciding whether to accept a mandate. ”
Blessing in disguise
In 1993, Ghislain Lavigne reluctantly moved back to Nicolet, Que., the small town between Montreal and Trois-Rivières where he was born. At a time when articling positions were hard to come by anywhere in the province, Lavigne launched his own practice. “I was in survival mode,” he recalls.
Happily, a local retiring lawyer took him under his wing. Slowly, his practice developed before he found another partner and co-founded the firm Lavigne, Poisson. Now he’s thrilled to have a successful and varied practice, without the burden of having to slog through 70-hour work weeks.
Today, Lavigne’s practice focuses on agricultural and banking matters, while his partner prefers to take on family law and collection files. Collaboration among partner lawyers is the name of the game, he says. Otherwise, “they just shoot each other in the foot.”
For Lavigne, a rural practice requires more care in deciding whether to accept a mandate. Conflicts of interest can surface quickly in areas with smaller populations, and if a job is poorly done, it’s harder to erase a bad reputation.
In spite of the many opportunities to find work in rural areas, however, Lavigne still worries about the exodus of lawyers towards bigger urban centres – even clients aren’t immune, and sometime head to the cities in search of a lawyer because “they think they have more choice.” But for the lawyers who stay and the clients they serve, there’s no better life than practicing law in a smaller community.
In the wake of the Supreme Court’s decisions in R. v. Neil and Strother v. 3464920 Canada Inc., conflicts of interest for Canadian lawyers are under more scrutiny than ever. The Canadian Bar Association has launched a task force on conflicts of interest, which includes a member looking specifically at issues directly relevant to practitioners in small firms, solos, and those in small towns and rural areas. Conflicts of interest are sometimes difficult to avoid for this latter group, especially outside a major urban area, but unresolved conflicts can have heavy consequences for individual lawyers and firms alike. To make sure you don’t get caught in the net, in this month’s 5 Sites, we look at resources on conflict-checking and avoidance.
“Developing a Conflict Checking System for Your Firm” via CBA PracticeLink http://www.cba.org/CBA/PracticeLink/CS/conflicts.aspx
This in-depth look at creating a system for your firm, by lawyer and writer Janice Mucalov, looks at what conflicts are, how to develop and use a conflicts checking system, using conflicts management software, and dealing with a conflict-of-interest situation. The article also features a podcast on conflicts-checking in both audio form and in synchronized video format.
“Managing Conflict of Interest Situations” via practicePRO http://www.practicepro.ca/practice/conflict/toc.asp
From practicePRO, the education arm of the Lawyers’ Professional Indemnity Company, comes this guide on identifying, checking, and managing conflicts of interest. Complete with checklists for various situations. One caveat: the site says the last update was in 2002.
Freivogel on Conflicts http://www.freivogelonconflicts.com/
Recommended by Simon Chester, the senior conflicts partner for Heenan Blaikie LLP’s Toronto office and consultant to the CBA task force on conflicts, in his article on conflicts in Addendum’s Managing Partners Edition. Bill Freivogel’s blog tracks American law, but its discussion of principle is very helpful for analyzing Canadian conflicts issues.”
“Selecting a conflict checking system” via Law Society of Upper Canada http://rc.lsuc.on.ca/pdf/pmg/conflictchecking.pdf
This four-page PDF is a short model for Ontario lawyers from their provincial regulator. It offers a brief overview of developing manual and computerized conflict-checking systems and putting them into use.
Also new on CBA PracticeLink…