The Business of Law Part 1 071916

P a g e | 1 All rights reserved July 2016
The Business of Law Part 1
How Practice Management Improves the Bottom Line and
Avoids Malpractice
VERONICA REED, LAW OFFICE OF VERONICA REED
WWW.KIDSWORKLIFE.COM
Contents
Business Plans for Lawyers ................................................................ 2
Client Relationship Management (CRM) ........................................... 3
Qualifying Matters ............................................................................. 6
Engagement and Fee Agreements................................................... 11
Non-Engagement ............................................................................. 12
Communication and Collaboration.................................................. 14
Marketing and Business Development............................................ 15
Finance and the Practice of Law ...................................................... 22

The Business of Law: How Practice Management Improves the Bottom Line and Avoids Malpractice
Business Plans for Lawyers
All businesses benefit from the research and thinking that
underlies the creation of a business plan. A law firm’s business
plan generally uses a service business model and it is worth
the time to consider and document in the plan the following:
 Competitive factors in the legal industry, especially as
it impacts your law firm’s practice area(s);
 Fee structure(s).
 Practice procedures and structures and how they align
to the Rules of Professional Responsibility and other
practice standards.
 Productivity as measured in billable and unbillable
hours.
 Accounting policies and procedures, especially with
regard to IOLA(s), payments and collections.
 Client retention and growth strategies.
Writing a business plan provides an opportunity to establish a
Mission Statement explaining the reason for the law firm and
its guiding principle(s) and Goals and Objectives.
Goals are destinations – where you want your law firm to be.
Goals should be quantifiable and defined by a period. For
example, “Receivables at $14MM by the year 2021”.
Objectives are the progress indicators used to determine
whether the law firm is on track to achieve its goals. These
should also be quantifiable. For example, “Billable hours
increasing 10% year over year 2016 to 2021”.
A business plan also states the legal form of the law firm’s
ownership and why that legal form was selected.
Take a moment and think about the following:
Write a 30 word or less mission statement. The mission
statement should explain the reason for the law firm and
its guiding principle.

Client Relationship Management (CRM)
Client relationship management (CRM) is a strategy for managing all of you law firm’s relationships and interactions with your clients
and potential clients. As discussed more below, the legal industry is experiencing low single-digit growth rates for now and into the
foreseeable future. With that market headwind, client-satisfaction will be key to a law firm’s long-term growth and sustainability.
Today’s clients demand greater transparency in case management and better cost alignment. CRM enables a law firm to meet these
client demands and support law firm growth.
Intake
According to research conducted by FindLaw, clients choose a law firm to contact based on a referral or their prior experience with
the firm. That research also indicates that the reason many firms lose clients is because of failures during intake which can be
attributed to insufficiently trained staff and dropped leads.
Figure 1: Failing at the Finish Line: How Law Firms Lose Prospective Clients at the Front Door, FindLaw 2016

The 2014 FindLaw “secret shopper” survey or more than 100
law firms found issues with most intake processes includes
more than 24 hours to respond to email to voicemail, no
voicemail outside of business hours, and website which were
not mobile-optimized, including an inability for a mobile user
to access a clickable phone number.
Intake begins at collecting and managing leads in order to
convert qualified leads to clients. Good intake manages data
collection and matter qualification while providing client
service that aligns with a client’s expectations. Clients should
feel reassured that your law firm is the best choice.
Leads move quickly when decided on a law firm. The initial
contact of three-quarters of legal consumers is by phone
within one week of the event that triggered the legal need.
FindLaw legal consumer surveys indicate that 49% of legal
consumers expect a rapid response to their initial contact and
they define a “rapid response” as being within 24 hours or
less. There are simple steps in intake that can provide a better
initial client experience such as:
 Everyone at the firm answers the phone as long as they are
not meeting with a live client.
 Allow no more than three rings before the phone is picked
up either by a person or voice mail.
 Require 4 to 6 hour replies on all lead voice mail or email
received during business hours.
 Dedicate time each morning, between 8:00 am and 9:00 am
to reply to overnight emails and voice mail.
 Set up automatic replies to emails letting leads know when
you will respond.
 Use answering services and reception services to answer
the phone number outside of office hours.
Busy law offices may appear uncaring to potential clients simply
because the staff and attorneys are focused on data collection and
matter screening. But if potential clients sense that you do not care
about their situation or that you are unwilling to listen, they will
move on to another attorney or firm. That means keeping active
listening as a key part of client intake. Conveying your
understanding of their difficult situation and expressing a desire to
help through thoughtful questioning, while at the same time
honestly discussing the merits of the case, will create the
relationship with the lead that is essential to converting them to
clients.
Finally, use tenacity. Sometimes callers don’t answer a return call
or seem impossible to reach. In those instances, tenacity can turn a
cold lead into a client. Establish a protocol for unresponsive leads
addressing the number of return calls and/or emails that are made
before closing the inquiry.
An Intake Strategy: Build a Client Intake Funnel
As a strategy for intake, consistent with CRM, Lexicata recommends
implementing a “Client Intake Funnel”:

At the top of the funnel, Initial Interaction, your goal is to avoid
failures that turn client leads away. Create an intake process that
avoids hidden phone numbers on websites and other advertising
vehicles, limited phone access, slow voicemail response, slow email
response, not being mobile-optimized, appearing uncaring or
unwilling to listen, repeating requests for the same information.
In the middle of the funnel, Information Collection, use software
tools, like Lexicata, or more cost effective, Google Forms
(https://www.google.com/forms/about/) to consistently, efficiently
and accurately capture information critical to the law firm’s
operations and case management, and to try to minimize the
number of times the information is requested.
At the bottom of the funnel Retention use Kanban or similar
system to know where a potential client is in the intake
process and what outreach or actions are convert the
potential client from a lead:
Intake Hired Did Not Hire
 Initial Contact
 Pre Consultation
 Consult Conducted
 Intake Form Pending
 Engagement Letter
Pending
 Stopped Responding
 Waiting for Retainer
 Hired
 Work in Progress
 Work Complete
 File Closed Letter
to Client
 File Archived
 Refused Client
 Referred Out
 Not Hired
This example chart can be built using post-its on a wall (a good
“how to” https://leankit.com/learn/kanban/kanban-board/)
or Kanban board software such as Kanban Tool a somewhat
free app for Chrome users
(http://kanbantool.com/chrome/login):

Or even in MS Excel using pivot tables:
Qualifying Matters
Not every potential client can convert to a client. A law firm
must comply with the Rules of Professional Conduct
1
An electronic and downloadable version of the Rules are available
through NYSBA at: https://www.nysba.org/DownloadAsset.aspx?id=50671
pertaining to conflicts of interest, and it must only take
matters for which it has the capacity and the expertise.
Conflict searches
The New York Rules of Professional Conduct1 require a law
firm to have a conflict search process and policy. The process
must be used to screen for conflicts whenever the law firm
agrees to represent a new client, agrees to represent an
existing client in a new matter, hires or associates with
another attorney, or has an additional party names or
appearing in a pending matter. See, Rule 1.10(e). If a law firm
fails to keep contemporaneous records of client engagements
and does not maintain and adhere to a conflict check policy,
then a law firm and its attorney(s) can be found to have
engaged in misconduct. See, Rule 1.10(f).
A conflict search must be able to troll and compare the
potential client and the subject matter of retention against
law firm data on all clients, former clients, opposing parties,
opposing parties’ attorneys, all entities relating to those
categories, non-clients, and matters declined. Lateral hires
must be able to bring data on their prior representation and
this data must be added to the conflict search system.
An important formal opinion from the New York City Bar in
20032 provides a comprehensive overview of what is
2
The Opinion can be read at http://www.nycbar.org/member-and-career-
services/committees/reports-listing/reports/detail/formal-opinion-2003-
03-checking-for-conflicts-of-interest.
Count of Matter Pipeline Column Labels
Row Labels Did Not Hire Hired Intake Grand Total
Consult Conducted 1 1
Engagement Letter Pending 1 1
Not Hired 1 1
Referred Out 4 4
Refused Client 3 3
Stopped Responding 2 2
Work Complete 1 1
Work in Progress 6 6
Grand Total 8 7 4 19

considered a compliant procedure. Every law firm is required
to do two things:
(1) Create a record of each new engagement at or near
the time the engagement commences; and
(2) Have a policy implementing a system for checking
proposed engagements against current and previous
engagements.
The conflict-check records, policy and system should “render
effective assistance to lawyers in the firm in avoiding conflicts
of interest.” Rule 1.10, Comment 9. At a minimum, a conflict-
check system should help firm attorneys resolve conflicts
among (1) current clients both before and during engagement
and (2) former clients, including former clients of laterals and
their former firms.
What are records?
For the purposes of a conflict-check system, records are
tangible or electronic records that give a law firm the ability to
identify (i) each represented client, (ii) each party in a
litigated, transactional or other matter, and (iii) the general
nature of each matter. Records should provide this
information in a way that is quick and accurate. Searchable
electronic records qualify as records for the purposes of the
conflict Rules.
At the very least, a law firm should maintain a list of current
and former clients, the engagements undertaken for each
client, and a list of adverse parties cross-referenced to the
client and the matter.
The type and organization of the records depends on the
software used to create the records and the search tool used
to check them.
What is a system?
The Rules provide little guidance on the specifics of a conflict-
check system. It must be a system that records and maintains
information in a way that ensures that records are checked
systematically and accurately when a firm is considering a
proposed engagement.
Solo practitioners and small firms (5 lawyers or less) with
centralized files may be able to use a system that involves
using key words to search electronic files along with searching
a master list of clients, matters and adverse parties. For
example, using the File Explorer search function to search files
stored on a law firm centralized server:

And then augmenting that search by searching key words on
the law firm’s master client and matter index list:
Large firms, diverse practice firms, and firms with a large
number of prior engagements may need to install software
systems specifically designed to check for conflicts, such as
conflictcheck.com or a practice management software that
includes conflict-checking.
Multi-member and multi-office firms should consider adopting
supplemental checks through memos or emails circulated
throughout the firm confirming that there is no additional
relevant information about possible conflicts.
Conflicts with Current Clients
A law firm may not oppose a current client in any matter, even
one totally unrelated, unless the law firm satisfies the
disinterested lawyer test and obtains the informed consent of
each client affected by the conflict. Rule 1.7. Whenever two or
more of a law firm’s current clients are involved in the same
litigation or transaction, a potential for conflict exists even if
they are on the same side. Concurrent client conflicts are
special situations that a good conflict-check system should
address.
Corporate Family Conflicts
A corporate family includes affiliates, subordinates, parents,
or sister corporations. When a law firm is considering
representing an entity opposed to a current client’s corporate
family, a concurrent client conflict may exist. As a practical
matter, if a law firm frequently represents corporations that
belong to large corporate families, then the firm’s conflict-
check system should be able to alert the firm to potential
conflicts.
Corporate Constituents
When a law firm represents an entity, then the lawyer for the
entity does not represent any of its constituents or affiliated
organizations. See, Rule 1.7 Comment 34 and Rule 1.13(a).
Nevertheless, when a law firm represents a small or closely
held corporation or when a law firm appears on behalf of
individual officers or employees, but bills the corporate client
for the legal services, an attorney-client relationship may exist
between the law firm and an entity’s constituents. If that
occurs, then the names of the constituents need to be added
to the conflict-check database.

Trade Association Members
A law firm that represents a trade association ordinarily only
represents the association, not its members. However, if a
member provides the law firm with confidential information,
then an attorney-client relationship will arise and the law firm
will be restricted in its ability to oppose the member. As such,
the member name needs to be added to the conflict-check
database.
Conflicts with Former Clients
The Law Firm’s Own Former Clients
According to Rule 1.9(a):
A lawyer who has formerly represented a client in
a matter shall not thereafter represent another
person in the same or a substantially related
matter in which that person’s interests are
materially adverse to the interests of the former
client unless the former client gives informed
consent, confirmed in writing.
Rule 1.9(a) sets forth a certain continuing duty that an
attorney has to clients with respect to conflicts of interest. A
conflict-check system that reviews a database of current and
former clients should be adequate for discovering this
common conflict. Note that the system should also be able to
indicate whether the clients are current or former.
Former Clients of Lateral Hire Attorneys
When a lawyer becomes associated with a firm, he or she
brings potential sources of conflict. See, Rule 1.10(c). When a
law firm hires a lateral, it should include clients and matters
the lateral attorney personally represented at his or her
formal firm and matters about which the lateral attorney
acquired protected information while at the former firm. This
information can be kept in a database (e.g., MS Excel)
searched as part of the conflict-check process or entered into
a conflict-check software system as, for example, a “law firm
connection”:

Some conflict-check advisory guides suggest adding a search
through attorney contacts and emails as part of the conflict-
check as a way of vetting conflicts against attorney
connections.
Conflicts Caused by Temporary, Contract, Of Counsel Attorneys
For the purposes of conflict-checking, the NYSBA advises law
firms to apply the one entity rule and treat these relationships
as if the attorneys are member of the firm. NYSBA Committee
on Professional Ethics Op. 773, January 23, 2004, which
concerns Of Counsel attorneys specifically, advises that if an
attorney acting alone would be disqualified from a particular
representation based on any of the rules enumerated in Rule
1.10(a), then the disqualification is imputed to the law firm.
Other Types of Conflicts
There are other types of conflicts not addressed in this short
summary but that may need to be addressed by a law firm’s
conflict-check system:
 Class actions
 Investments in client ventures
 Membership on a Board of Directors
 Insurance representation
 A law firm’s nonlawyer staff
 Lawyers representing lawyers
 Current client as adverse witness
 Former public servants
Law Firm Expertise
Rule 1.1 requires an attorney to provide “competent
representation to a client.” Where “competent
representation” is defined as “the legal knowledge, skill,
thoroughness and preparation reasonably necessary for the
representation.” Attorneys can take on legal matters for which
they are not competent, but they must associate “with a
lawyer who is competent to handle it.” Rule 1.1(b).
Before taking on a new matter, it is important for the law firm
to have a process in place where it can assess its ability to
comply with Rule 1.1. The rule is not necessarily about special
training or prior experience, but about conducting an “inquiry
into and analysis of the factual and legal elements of the
problem” and “adequate preparation”. See Rule 1.1 Comment
5.
Capacity & Utilization
Capacity is the ability of the law firm to take on a new matter.
Specifically, does the law firm have enough billable hours
available to competently handle the new matter. It is
especially important for solo and small firms to understand
the allocation of attorney hours to billable and unbillable
work. An analysis by LexisNexis indicates that for a solo
practitioner, 40% of his or her time is dedicated to unbillable
tasks. This is equivalent to 20 hours in a 50 hour work week.

Small firms, of 3 to 5 attorneys, spend 24% of their time on
unbillable tasks.
Figure 2:LexisNexis Law Firm Billable Hours Survey Report
Major litigation and complex transactions ordinarily require
more extensive attorney hours than matters of lesser
complexity, and a law firm should review reports from its
timekeeping system that provide an accurate picture of the
law firms current capacity and utilization:
Figure 3: Utilization report from Mavenlink.com
Engagement and Fee Agreements
The engagement letter establishes a professional relationship
with the client and is an effective way of documenting that
you have discussed the client rights and responsibilities, scope
of representation, and fee arrangement. Although clients will
generally defer to the knowledge and skill of their attorney,
the client still has the ultimate authority on decisions
pertaining to legal representation, subject to the limits
imposed by law and the lawyer’s professional obligations
(Rule 1.2(a)), including an obligation by an attorney to comply
with the local customs of courtesy or practice of the bar or a
particular tribunal (Rule 3.3(f)(1)) and avoid behavior that is
offensive, discourteous, inconsiderate or dilatory (Rules
1.1(c)(1) and 1.2(a)).
This rules should be kept in mind when drafting the
engagement letter, along with the logistics of running the law
firm and managing the case, which may impact a client’s
representation. The engagement letter is intended to prevent
misunderstandings and provides written evidence confirming
the existence of the attorney-client relationship.
Everything in the engagement letter should first be discussed
with the client. During your client consultation review the
Statement of Client Responsibilities and Client Rights, stress
the need for the client to provide information that is truthful,
complete, and accurate to the best of his or her knowledge.
Remind the client that he or she is responsible for notifying
the law firm of any changes to personal information or

residence, or of any extended periods of time when the client
will be unavailable. Outline the decisions that will need to be
made and documents that need to be produced. This is also
the time to explain confidentiality and attorney-client
privilege, especially those instances when exceptions to the
rules may be implicated. The NYSBA provides a LEGALEase
pamphlet “You and Your Lawyer” explaining the relationship
between an attorney and client and is a resource to add to
your discussion. A sample copy is available at:
http://www.nysba.org/yourlawyer/. At pack of 50 can be
purchased here:
http://www.nysba.org/store/detail.aspx?id=A4132 .
Emergency Engagement
If a client contacts the firm for a matter that leave insufficient
time for the firm to conduct the standard client intake,
including an engagement letter, use a limited engagement
letter to accept the engagement, but only for the express
purpose of completing the time sensitive duties, e.g., filing
and serving a summons and complaint before statute of
limitations runs. Include in the limited engagement letter the
requirement that the client sign a standard engagement letter
and complete other standard client intake procedures as a
condition of continued representation.
Limiting the Scope of Engagement
The scope of a law firm’s services can be limited by agreement
or by the terms of the engagement. Rule 1.2(c). Limitations
must be adequately disclosed along with the matters that will
be excluded, e.g., appeals. The attorney must also explain the
reasonably foreseeable consequences of the limitation,
including the need to retain separate counsel, delays in the
proceeding, additional expense, etc. The Rules afford a lawyer
and client latitude to limit representation but require that the
limitation be reasonable under the circumstances of the
matter in question.
Joint Representation
In civil matters, two or more clients may wish to be
represented by a single attorney, e.g., organizing a business.
Prior to agreeing to common or joint representation, the
attorney should consult with each client concerning the
implications of the representation, including advantages and
disadvantages and the effect on attorney-client privilege. Prior
to accepting the joint representation, the attorney must
obtain each client’s informed consent, in writing. See Rule 1.7
Comment 29.
Non-Engagement
Sometimes the best way to avoid a malpractice claim is to
decline representation from the start. High-risk clients seem
to share certain characteristics:

Clients who have had multiple attorneys or who have had their
matter rejected by multiple attorneys. Include a question on
your intake form – find out right away whether the potential
client has spoken with other attorneys about the matter.
Clients looking for free legal services
Clients who do not pay or delay paying your retainer. Clients
are responsible for fees associated with pursuing a legal
matter even for contingent fee cases. A client who balks at
paying even a minimum advance fee to cover those expenses
may prove problematic, resulting in months of dispute
resolution and outstanding payments.
Clients with unreasonable expectations or who seek relief that
is not legally feasible.
Cases with extreme time pressure.
Clients who ask you to engage in unethical or illegal behavior.
Clients who need psychological counseling more than legal
counseling.
Perpetual victims. Inquire about past litigation or activity,
including arrests, during initial intake and run your own
inquiries.
Clients suing on principle, vengeance or vindication. Perhaps
more so for domestic relations practices, less so for civil rights
practices.
Clients who have “solved” the legal matter themselves and
“just”” need the attorney to file the documents.
Clients who “could have gone to law school, except….”
Clients who lie or are rude, argumentative, threatening, or
who make you or your staff feel unsafe. Hard to identify at
intake, usually, as clients tend to be on best behavior. But if
you are lucky enough to identify this problematic behavior
early enough, it’s best to not take on the client, if possible.

Clients with bad attitudes about lawyers, judges, courts and
the judicial system in general.
Two or more clients seeking joint representation.
Friends, relatives, parents, siblings, neighbors, your nanny, etc.
Communication and Collaboration
A reminder that Rule 1.4 requires an attorney to promptly
inform a client of (i) any decision or circumstance with respect
to which the client’s informed consent, as defined in Rule
1.0(j), is required, (ii) any information required by court rule or
other law to be communicated to a client; and (iii) material
developments in the matter including settlement or plea
offers.
Rule 1.0(j) is the definition of “informed consent” and it states
that a client provides informed consent after his or her
“lawyer has communicated information adequate for the
person to make an informed decision, and after the lawyer has
adequately explained to the person the material risks of the
proposed course of conduct and reasonably available
alternatives.”
Attorneys are required to consult with clients and keep them
reasonably informed about the status of the matter and
explain a matter so that a client may make informed decisions
regarding representation. Attorneys must promptly comply
with a client’s reasonable requests for information.
List the strategies you are currently using to
manage email, phone calls, and client requests.
Then indicate with a “+” or a “-“ how well the
strategies are working:
e.g., Clients receive status reports each month,
approx. 3 days before the invoice is issued
When an attorney is on vacation, either the he
needs to check his email or the emails are not
answered
+
-

Marketing and Business Development
Also approach marketing with a plan. A Marketing Plan has
three basic components: (1) your market; (2) your marketing
strategy based on that market; and (3) your anticipated sales
as a result of your marketing strategy.
Know Your Market
Who is Your Consumer?
An important source of information on the legal consumer
market is the annual U.S. Consumer Legal Needs Survey
conducted by FindLaw. The survey queries approximately
2,000 consumers age 18 and older who had a legal issue that
they considered somewhat or very important over the prior
year.
When thinking about your own law firm’s market, consider its
total size and its demographics. What are the characteristics
of your target clients and where are they located? What are
their ages, genders, income level, occupations, education, and
other characteristics, e.g., “injured on the job”.
Current demand, market trends, and growth potential and
opportunity are important market considerations. In general,
the legal industry has been characterized as slow or stagnant
growth across the industry for 2015-2016. However, the Citi
Private Bank Law Firm Group and Hildebrandt Consulting 2016
Client Advisory noted that firm with differentiated brands will
see demand for services. The LexisNexis Business of Law Blog
"Beautiful Minds: 41 Legal Industry Predictions for 2016" dated
December 17, 2015, writes that disruption in the legal market is
accelerating as clients demand more transparency in case
management and costs and that client-satisfaction will be key to
long-term growth. Law firms that are high-performing with
compelling strategies and established identities will best weather
the ongoing flat client demand market.
Barriers to entry and growth exist for any business and should be
identified and reviewed each year for the law firm. Common
considerations for law firms are: high marketing costs, client
acceptance and brand recognition, training and skills, staffing. In
addition, any market has risks and these also should be identified
and reviewed each year. Changes in the economy, changes in the
industry, changes in government regulations, and changes in
technology will all impact a law firm. The Marketing Plan should
include a section discussing how the law firm will overcome market
barriers and risks.
Who is Your Competition?
It is important to identify your major competitors and to
understand whether they will compete against you in certain
practice areas, for certain clients, in certain locations, or
across the board. The law firm’s competitive landscape should
be re-considered at least every few years. Use a Competitive
Analysis Table to summarize your competitive landscape.

A Competitive Analysis Table compares your law firm to your two most important competitors. In the Factor column, list key
competitive factors, such as “Practice Area” or “Expertise”. In the My Law Firm column indicate whether this factor is a (“+”) or a
weakness (“-“). Now analyze each competitor and state how you think they compare. In the Important to Customer column estimate
the importance of each Factor on a scale of 1 = critical to 5 = not very important.
Here is an example:
Factor My Law Firm Competitor A Competitor B Importance to Client
Brand - + + 2
Try your own competitive analysis:
Factor My Law Firm Competitor A Competitor B Importance to Client
Brand
Fee Structure
Practice Areas
Expertise
Location
Geographic Range
Advertising
Payment Options
Image

What Should You Charge?
Where a business would think through pricing as a marketing
and competitive factor, a law firm needs to apply the same
type of analysis to its fee structure. Does your fee structure fit
with your market demographics and your competitive
analysis? Does it wit with the nature of your practice areas?
Compare your fee structure with your competitors. Is it
higher, lower, the same? And identify why.
Finally, define your fee policies. Are certain matters always
fixed fee, e.g., wills? Are other matters always contingent fee
and if so, are your fee agreements compliant with any
governing rules? When is an advance payment an advance
payment that needs to be deposited into a trust account and
when is an advance payment a retainer? Is the Letter of
Engagement and Fee Agreement clear about how client funds
will be treated?
What is Your Niche?
A niche is where your law firm fits in the world. It is a factor of
the legal industry, your practice areas, your client base, and
your competitors.
Take a moment and define your niche:
My law firm’s niche is:
Marketing Strategy
Your marketing strategy is a strategy to grow your business
and generate clients based on your niche and your
competitive analysis. For a law firm it involves referrals and
outreach.
Referrals
According to a 2015 FindLaw Survey of legal consumers, about
76% of the surveyed market looked for an attorney from
“offline” sources. That is, they asked other professionals for a
referral, asked friends for a referral, or contacted an attorney
they already knew for a referral. As a result, it is important to
maintain a strong brand and reputation in the community and
to develop and maintain a network of business associates,
current clients and former clients.
Digital Marketing
In 2015, according to FindLaw, the online market for clients
increased from 19% to 28%. Online legal consumers – your
client leads – are socially integrated and want to have access
to an online dialogue of reviews and references about you and
your law firm. Practically speaking, they want that information
to load quickly on their mobile devices and they want access
to real time answers and engaging content.
Attorney referral sites
According to a 2015 FindLaw Survey, 45% of legal consumers
began their attorney search using an online attorney
directory. Avvo.com, which launched in 2007, is reported as

drawing more than 6 million plus legal consumers each
month. Avvo.com provides a searchable attorney profile
database and free Q&A forums for legal consumers. Avvo.com
listed attorneys with claimed profiles are able to participate in
the Q&A forums and write legal guides in exchange for
improved rating and higher listings in organic searches. Clients
and other attorneys can provide reviews of listed attorneys. In
exchange, Avvo.com provides listed attorneys with analytics
about the number of views they are generating. Avvo.com
provides a paid advertising and advanced analytics through its
AvvoPro package.
Linkedin.com is a professional social network with robust SEO
that results in a person’s Linkedin.com profile on the first page
of most search results:
Linkedin.com profiles can also include links to other profiles,
blogs and websites, so it is important for those to be included
in your profile. If keywords are included in your profile, it may
improve your chances of appearing in searches for specific
legal practice areas.
About.me is a Google powered site for personal profiles. The
page can be customized to provide information and you can
add multiple links to other websites such as Linkedin.com,
Twitter, Facebook. The profile can also include tags such as
#educationlaw and keywords. The Visit my website button can
be used to link your law office webpage.
FindLaw is now part of Thomson Reuters. It was started by
two attorneys in 1995 when they compiled a list of online
resources for a group of law librarians in Northern California.
The company reports that it currently has 8 million site visitors
each month and that it has the largest available online lawyer
director.
Attorney’s claim their profiles on FindLaw and then they are
able to make updates to the directory information. Enhanced
profiles, where you can include narrative text about the firm,
practice areas, etc., require a subscription.
Social Media
Social media grows in importance to all consumers, including
legal consumers, year over year. Consumers trust consumer
opinions posted online and are increasingly interested in
robust media content, such as videos, as a way to learn more
about an attorney. It is important to claim and populate a law
firm’s profile on business review sites such as Google My
Business, Yelp, Bing Places for Business, and Google+.

Facebook
Facebook currently has 1.4 users worldwide and more than
900 million visits every day. It is arguably one of the most user
friendly and cost-effective advertising platforms currently
available. Ads can be run for as little as $5 and the company
provides a number of resources and eLearning modules to
help you learn social media marketing and advertising.
Blogs & Email Marketing
There are a number of free blog sites such as Blogger,
WordPress or tumblr. Each blog site has its own culture, so it
is important to read a number of blogs on the site and
understand who is writing and reading at the site so you are
able to post where you will be read by your preferred legal
market.
For best search engine optimization (SEO) results include your
website link in your blog and, in turn, publish the link to your
blog on your Facebook page and embed it on your website.
Focus on writing about practice areas where you have
experience and add content on a regular basis (2 to 3 times a
month). Link out to other blog posts, tools or websites and
write original content for the best SEO.
You can email your blog to subscribers using email marketing
software, such as MailChimp or Constant Contact. This same
email marketing software will also send automatic emails that
you pre-write for subscribers. Analytics are available to you
which will tell you what readers are doing with the content
you send them (clicking, deleting, forwarding, etc.).
Think about blogs as part of your overall marketing strategy
and purpose them for your target market and the actions you
want them to take. Do you want your blog to be about
building your brand? Do you want your blog to drive visitors to
your website? Do you want your blog to inspire your market
to phone you for a consult or an answer to a question?
Website
The Internet has grown so vast that the mere existence of a
website is no longer sufficient to create online visibility.
Website visitors will only get there through either a branded
search where the consumer searches by your name or by
typing in your web address or from a link in another site, or an

organic (a/k/a brand-agnostic) search for a question or
geographic area when your SEO is sufficient to list the website
in the search results.
Companies spend a significant portion of their digital
marketing dollars in improving SEO. But it is important to note
that the 2015 FindLaw Survey indicated that legal consumers
who conducted branded searches – they searched for the law
firm or attorney by name – were twice as likely to contact the
law firm and tended to convert to clients as a rate of 10 to
15%. This is compared to consumers looking for attorneys
with organic searches (“dog bite attorney Schenectady”) who
converted to clients at a rate of six to eight percent.
Attorneys in New York need to ensure that their website
includes a disclaimer, terms of use, privacy policies.
Search Engine Optimization (SEO)
A 2011 study by Slingshot SEO indicated that the number one
position in Google’s search results received 18.2% of all click-
through traffic. Internet users do not, statistically, click or
scroll much past the first two listings. This means that higher
search engine results are critical to increasing website
visibility.
However, it is important to note that search engine results are
not just about the quality of SEO on your website (although
that is important). Rather, it is about the entire online
presence of the law firm and attorneys. The entire presence
contributes to visibility because search engines work by
crawling and building an index and providing search users with
a ranked list of website the engine has determined is most
relevant. Crawling is accomplished through internet links. So if
you include the key word “dog bite lawyer” in your
Linkedin.com profile and include the link to your blog about
“dog bite law” which includes a link to your website which
contains a header with the work “dog bite law”, the relevance
and popularity of your content improves so that when a
person performs an online search “is there a dog bit law?”,
your content appears.
Search engines assume that the more popular a site, page or
document, the more valuable the information. This is the
“ranking factor” of a page. Great content, that is relevant to
your legal market, and that contains the keywords your
market uses to search, will get a big boost in website ranking.
Note that a great source of content for your blog or Facebook
page (besides your RSS newsfeed) is
https://www.google.com/trends/ In addition to providing
information on stories currently trending, users can research
keyword trending by using the “Explore topics” search.
Access https://www.google.com/trends/
What stories are currently trending?

Change the Country setting. What country did you choose?
What stories are currently trending there?
Look at “Trending Searches”. What is the number 1
trending search for the last hour?
Analyzing Data
Analyzing referral sources and lead contact methods will show
you which marketing channels are best returning on your
marketing investment. An investment in marketing should
return clients. Looking at your data will help align branding
and messaging. Comparing problem cases and challenging
clients to intake data may also indicate information gaps and
ongoing client service issues (beware of Avvo.com clients!).
At a minimum, intake forms should include a question that
captures where a client heard about the firm. Additional
analytics are available through your website host:
And by adding Google Analytics code to your website for
additional information on website traffic such as audient
demographics, the mix of new and return users, the browsers
and networks being used to access your site, and the mobile
devices being used to access your site:

Facebook also provides user friendly analytics on your firm’s
page and posts.
Forecasting Clients
Use a sales forecast spreadsheet to project your client intake
month-by-month. Remember the forecast is your best “guess”
based on the assumptions you developed after doing your
market and competitor research above.
Finance and the Practice of Law
Accounting
Accounting is an overview of a business’ financial status. It is
organized on either a cash or accrual basis and it
communicates a business’ financial status through three main
reports: Profit & Loss, Cash Flow, and Balance Statements.
Cash Basis Accounting Accrual Basis Accounting
 Revenues are
recognized when
cash is received
 Expenses are
recognized when
paid
 Revenues are
recognized when
earned
 Expenses are
recognized when
incurred
Profit & Loss (P&L) Statement (a/k/a Income Statement)
The P&L Statement is a summary of the profit and losses
incurred during a particular time period. It shows revenue in,
less expenses incurred. It is the business’ financial health
report card. Most bookkeeping systems (QuickBooks, Zoho
Books, etc.) include a P&L report in the software. But you can
also download a template from SCORE at
https://www.score.org/resource/12-month-profit-and-loss-
projection, and there are number of other resources on the
SCORE site well worth reviewing including a free course on
demand Creating a Profit and Loss Statement at
https://www.score.org/event/creating-profit-and-loss-
statement . At a minimum, review the P&L monthly and at

least quarterly to check if the business is on track to achieve
its goals.
Cash Flow
Cash flow statements show the starting cash and ending cash
for a given period of time. The statement is useful for
assessing a business’ liquidity, the quality of its earnings, and
its solvency. The statement should be reviewed to determine
the key cash drivers for the law firm and how the current
period compares to the previous period.
Balance Statement
A balance statement is a picture of a business’ net worth at a
given time. The first column of the balance statement lists the
assets. The second column lists the liabilities and the owner’s
equity in the business. Assets should equal liabilities, plus the
owner’s equity. The total dollar amount is the same for each
column.
Trust Accounts3
Rule 1.15 in a nutshell states that a lawyer in possession or
funds or property belonging to another must not
misappropriate or commingle the funds or property with his
or her own. The rule captures key concepts summarized, for
the purposes of discussing firm management, as:
3
For the definitive guide to Trust Accounts in New York, see Peter Coffey’s
Attorney Escrow, now in its 4th
edition and available as an eBook from the
NYSBA at: http://www.nysba.org/store/detail.aspx?id=40264E. And, many
 Every New York attorney who handles client funds must
have an Interest on Lawyers Account (IOLA).
 A law firm must keep a client ledger for each client and
must distinguish one client’s money from another’s. See,
Rule 1.15(d)(1)(ii).
 The trust account(s) must comply with the rules4.
 There is no such thing as a “negative balance”. Money into
the account must equal money out. See, Rule 1.15(d)(1)(i).
 Funds are not necessarily available upon deposit. See your
bank’s terms for funds availability and consider adding a
funds availability clause in your fee agreements.
 Attorneys must maintain audit trails and all records and
documents in compliance with Rule 1.15(d).
 The law firm’s accounting system must comply with the
Rules including, paying invoices with trust funds and
providing clients with ledger statements as required.
 Trust accounts must be reconciled every month and the
report’s must be compliant with the rules.
Attorneys can deposit attorney funds for the sole purpose of
paying bank service charges on the account, but the deposits
should be in the amount necessary for the purpose, e.g., fees
for check purchases. See, Rule 1.15(b)(3).
thanks to Peter Coffey for reading and providing comments to the draft of
this text.
4
See, Rule 1.15(b), N.Y. Judiciary Law §497, nysba.org “When Do I Need a
Trust Account/”, and iola.org

New York does not recognize a distinction between retainer
and advance fees. In Attorney Escrow §1.11, Mark Ochs writes,
“New York is in the minority of states that do not consider the
advanced payment of legal fees to be client funds. Therefore,
they need not be deposited into the attorney’s escrow
account and any interest earned on the fund is the property of
the attorney. The attorney is obligated however to promptly
return any portion of the fee that is not earned at the
conclusion of the attorney/client relationship.”
Peter Coffey advises, with the support of a number of other
lecturers on panels he has shared or Chaired, that law firms
have three accounts: a general operating account, an
advanced fee/retainer account, and the IOLA/trust account.
Retainers are then placed into the retainer account and
disbursed as earned. This prevents the funds from being used
for operating expenses and not then being available for to
reimburse the client for any portion not earned, and
addresses the potential of comingling funds in the trust
account. See, New York State Bar Association Ethics Opinions
570 and 816 which can be accessed here:
https://www.nysba.org/CustomTemplates/Content.aspx?id=7
447 and here:
http://www.nysba.org/CustomTemplates/Content.aspx?id=48
98
Personal injury attorneys and others working on contingent
fee basis should put the entire settlement into the escrow
account and then, upon disbursing the client’s share, also
disburse the attorney’s fee. See, Rule 1.15(b)(4) and Mark
Ochs in Attorney Escrow.
In New York, credit card payments cannot be used for trust
accounts, that includes LawPay.com.
A reminder that IOLA accounts are used for deposits which are
small in account or are large but will not be held for any
extended period of time. A good rule of thumb is that if the
interest exceeds $150.00, the funds should not be placed into
an IOLA but into an individual escrow account. The escrow
account must be titled in the attorney’s name as “Attorney X
for Client Y”, has to be in the sole control of the attorney, and
should be associated with the client’s social security number.
See, Judiciary Law §497(4).
Fee Disputes
A number of legal malpractice claims begin as cross-claims
filed in response to an attorney’s claim for unpaid fees. When
applicable, an attorney should resolve fee disputes by
arbitration pursuant to the fee arbitration program
established by the Chief Administrator of the Courts. Rule
1.5(f). Attorneys are encouraged to use the fee arbitration
program even when it is not mandatory. See Rule 1.5
Comment 9. As a best practice, every client should receive an
engagement letter explaining the fee arrangement, a monthly
statement of services rendered, including a detailed time and
expense report, and a monthly ledger report.

The Business of Law Part 1 071916

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