In recent years, left-brain types have had the upper hand while starry-eyed innovators have struggled to get a hearing. Nevertheless, before innovation slips any further down the list of corporate priorities, we need to remind ourselves that we owe everything to innovation.

From What Matters Now: How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation, by Gary Hamel

Did you hear that left-brainers?  [Read:  Just about all lawyers.]  Law firms aren’t known for their willingness to embrace innovation.  But ignore innovation at your peril.   So, what exactly are we talking about when we use the word innovation?  In a law firm, innovation can mean any number of things.  Here are just a few areas that are ripe for innovation in most law firms:

• Re-examining how you deliver your services
• Considering value pricing or alternative fee agreements
• Providing flex-time to employees or allowing them to work virtually
• Expanding your core competencies around business and leadership
• Leveraging cloud-based case management or other services

So why does innovation matter? Innovation matters because if you’re not innovating you’re being commoditized.  Innovation matters because law firms that don’t innovate will lose clients to the firms that do or to online legal service providers.  Innovation matters because law firms that continue to innovate will distinguish themselves from companies that provide legal services online.

But as I mentioned above, innovation can be a real challenge for lawyers and law firms.  If you’re ready to think seriously about innovation for your firm, check out this post from 2006.  (Yes, 2006!!!) And be sure to read the article by Eric Mankin referenced there.  Mankin’s article provides both an excellent analysis of why it’s so hard for law firms to innovate and four keys to making innovation happen in your firm.

1.  Not understanding the power of leveraging technology.

2. Not using case management software.
Nothing will make a bigger impact on your firm’s overall effectiveness and profitability than having and using case management software.  Regardless of your type of practice or the size of your firm, there is case management soft that will work for you.  Do your homework, have a plan (See #7) and find the right case management software for your firm.

If you’d like to try a super-simple, highly functional case management program check out Credenza. Credenza works right within Outlook, and is very easy to use.  Here are some other case management solutions you may want take a look at:

Software:
Amicus Attorney (Amicus Attorney is also releasing a cloud-based version this summer.)
Client Profiles
Needles
Prevail

Cloud-Based:
Advologix
Clio
RocketMatter

3. Not getting the right training – or enough training – for your software.
OK, so you’ve made an investment in your firm and purchased the right software.  Now, make an investment in your people by providing the right training and enough training.   OK, so maybe it’s a myth that we only use 10% of our brains.  But without the right training, I can pretty much guarantee that you and your staff will only use about 10% of your software’s capability.  Invest time and money in training. It will pay off.

4. Not backing up your data properly.
Properly is the operative word here.  You may “think” you’re backing up your data because you have an external drive that runs every night.  But have you ever tried to restore data from your backup system?  Make sure you have a backup system that works and that you know how to restore your data if you have to.  You should also consider using an offsite data backup system like Mozy or Carbonite.

5. Not using two monitors.
This one is really a no-brainer.  If you’re not using two monitors, you don’t know what you’re missing!  – Not to mention that research has shown up to 42% increased productivity when using two monitors.  Get two monitors.  Period.

6.  Using @somethingotherthanyourfirmname.com for your email.
If you’re professional email ends in @aol.com or anything similar, the mistake your making isn’t just a techy mistake, it’s a marketing mistake.  A big one.  It says that you don’t have your own brand.  Or that you don’t care enough about your own brand to manage it well.  Or that you’re not technically savvy enough (See #1) to understand my complex legal matter.

There is no reason for any attorney to have an email address that is not linked to their own domain name. Domain names are inexpensive and easy to obtain. Check out NameCheap. You can use your domain name for your email, even if you don’t have a website.  (But see #10)

7.  Not having a plan for office technology and a partner to help execute the plan.
You’d never go into the courtroom without a plan.  Don’t attempt to upgrade your office technology without a plan.  And unless you’re a legal technology expert, don’t try to create the plan yourself.  Get help!  Contact your state bar association’s practice management office or get help from a company that specializes in legal technology.  Law firms have unique technology needs that many IT professionals just don’t understand.  Check out Affinity Consulting Group; they are technology consultants that work exclusively with law firms.

8. Leaving computers on overnight.
Every single attorney I know is very concerned about protecting their clients’ information.  Many of them are so concerned that they shun the idea of moving to any type of cloud-based case management system.  Yet, I’ll bet that some of those very same attorneys think nothing of leaving their office computers on all the time – with no password protection.  Not a good idea, unless you’re OK with the cleaning staff using your computers to surf the web or download porn and viruses.

9. Insufficient password protection; not keeping track of passwords.
According to PC Magazine, the No. 1 computer password used by business owners is . . . “Password1”  Are the passwords you use for your firm any better?  Do you keep all the passwords for all the programs on all your computers in a safe place?  Are you getting an upset stomach just thinking about this stuff?  Then check out RoboForm Enterprise or LastPass – both very good password managers.  If you don’t want to use a password manager, read these articles on how to create strong passwords from PC Magazine and The New York Times.

10. Not having a website and well-managed online presence.
This is could very well be the biggest technology mistake of all.  No matter how small your practice, your web presence should be big.  And by “big,” I mean you should have a great website, a professional and friendly LinkedIn profile (with a current professional photograph!), and a completed Avvo profile, at the very least.  Your best clients may come from personal referrals, but those referrals will check you out online before they contact you.  Make sure that what they see makes them want to call you, not wonder whether or not they should.

That quote speaks volumes about where the profession is and where it’s headed.  Most lawyers I know, both clients and friends, hate the billable hour.  But they can’t let go of it.  You know the old saying: Better the Devil you know than the Devil you don’t.

The idea of implementing value pricing in your practice can be a scary proposition.  But like so many journeys in life – and, yes, implementing value pricing is a journey – just getting started can be the biggest challenge.  If you’re ready to get started, there are some excellent resources out there.  In my last post, I mentioned the books Winning Alternatives to the Billable Hour: Strategies That Work and Implementing Value Pricing: A Radical Business Model for Professional Firms.  Both are great starting points for your journey. You should also visit The Verasage Institute.  The Institute, founded by Ron Baker, the author of Implementing Value Pricing, is an excellent online resource and a community of thought leaders in the area of value pricing.

And if you’d like to learn from an attorney who has successfully implemented value pricing in his firm, you should check out Mark Chinn’s eBook, Dumping the Billable Hour – One Lawyer’s Experience.  Mark is a Family Law attorney and founder of Chinn & Associates, PLLC, in Jackson, Mississippi. He’s also a Practicing Fellow at the Verasage Institute.  Mark has successfully transitioned from an hourly-billing practice to a practice that utilizes only value pricing.  In Dumping the Billable Hour, Mark shares his experience and provides tools you can use to begin implementing value pricing in your firm.  Although Dumping the Billable Hour is written from a Family Law perspective, its lessons are relevant to anyone wanting to make the transition.  Click here to read more about value pricing at Chinn & Associates.

Have you considered implementing value pricing in your firm?

If you’re billing by the hour and have never considered value pricing or offering your clients alternative fee agreements (AFAs), here’s some research that might get you thinking.  Altman Weil’s study, “2011 Law Firms in Transition,” found that: “Firms that are proactive in their pursuit of non-hourly business were more than twice as likely to report higher profitability on non-hourly projects compared to firms that are reactive.”  Moreover, 95% of the law firms surveyed use AFAs and “75% of respondents believe there will be more non-hourly billing in the future.” Download the full survey here.

Value Pricing Can Improve Your Cash Flow

“Cash flow is the barometer of business health.”
From The Game of Work: How to Enjoy Work as Much as Play, by Charles A Coonradt

“The firm is doing fine. We just have a bit of a cash flow problem right now.” Have you ever said those words or thought them to yourself?  Most business owners have.  Unfortunately, as noted by Charles Coonradt in The Game of Work, “Saying everything is fine except for cash flow is like saying the patient is fine except for a 105-degree temperature.”

Cash flow problems are symptoms of deeper problems.  The problems can range from excessive overhead to over-staffing to ineffective systems.  But all too often cash flow problems stem from too many clients owing too much money.  The dreaded accounts receivable.  Collections. But there is one way to end your collections problems forever.  Value pricing.

In his book, Implementing Value Pricing: A Radical Business Model for Professional Firms, Ron Baker outlines Eight Steps to Implementing Value Pricing.  The book is a must-read for any attorney considering value pricing.  All steps are integral to the process, but Step Five focuses on the creation of a Fixed Price Agreement.  Why is this relevant to cash flow?  Because you control the payment terms of the fixed price agreement.  And the price is paid up front before you begin the work.  In fact, the very definition of value pricing is, “the maximum amount a given customer is willing to pay for a particular service, before the work begins.”

If you want to eliminate “cash flow problems,” consider value pricing.  Here are a couple of firms that are doing it right.

Shepherd Law Group – They use the term “Up-Front Pricing”
Valorem Law Group – Valorem proclaims the billable hour is dead on its home page.  They also have a nifty iPhone app.

If you want to learn more about AFAs and value pricing, check out these books:
Winning Alternatives to the Billable Hour: Strategies That Work
Implementing Value Pricing: A Radical Business Model for Professional Firms

Why Appreciation is So Important
In the book, How Full is Your Bucket?, by Tom Rath and Donald O. Clifton, the authors cite a U.S. Department of Labor Study that found the #1 reason people leave their jobs is because they don’t feel appreciated on a day-to-day basis.  But people who do feel appreciated are more likely to be “engaged.”  An engaged employee: shows up on time (or early), stays late when needed, smiles, shows enthusiasm, is a great ambassador for the firm and recruits other engaged employees.

On the other hand, people who don’t feel appreciated are more likely to be “actively disengaged” from work.  You do not want actively disengaged people working for you.  An actively disengaged employee will not only make your life miserable, he’ll tell others that your firm is a horrible place to work.

Show Your Appreciation
So how do you make sure your employees are engaged and not disengaged?  It’s really simpler than you may think.  Show your genuine appreciation for the work they do.  Not just one or two days a year, but every day.  Say “thank you” for even the little things.  It’s OK – really – and it doesn’t cost you anything.

The Losada Line
Research by psychologist and business consultant, Marcial Losada, and reported in The Happiness Advantage, by Shawn Achor, found that it takes about three positive comments to offset one negative comment.  And the very best, most productive teams have a ratio of about 6 to 1.

Get Specific About the Good Stuff
Have you ever noticed that when you’re giving someone constructive criticism, you’re very specific?  Yet, when you praise someone it’s usually a very general, “Nice job!”  Guess what?  Our brains remember the specific, not the general.  That’s why we can remember a piece of stinging criticism for years, but have trouble remembering a time when we felt truly appreciated.  So get specific with your praise.

Make Appreciation a Daily Habit
If you show your appreciation daily, remember the Losada Line, and get specific with your praise, your employees will show their appreciation by showing up engaged – not disengaged.  It won’t cost you a penny, and you’ll create a happier and much more productive office.  Like the Beatles said: Money can’t buy you love.  And all the money in the world can’t buy an engaged employee.

Click here for a great TED Talk on “The Happy Secret to Better Work,” by Shawn Achor.

While social media networks will never replace good, old face-to-face relationship marketing, they can either support your other marketing efforts or drive a stake right through them.  This point was made painfully clear for me recently when I made a referral to an attorney who’s a good friend of mine.

After I made the referral, I did what everybody does nowadays; I pulled up my friend on Avvo.  There he was – a 25- year attorney, board certified, AV Rated, one of the Top 100 Trial Lawyers in his state – and – to my horror – he had an Avvo rating of 7.5.  Ouch. And right there next to his profile were links to other attorneys who had an Avvo rating of 10.0 – Superb.  (You can block other attorneys from appearing on your profile by upgrading to Avvo Pro for $49.95 a month.  A bit of shrewd, albeit annoying, marketing on Avvo’s part, but $50 bucks well-spent in my opinion. Avvo Pro also lets you customize the way your profile appears.)

Even though I know my friend is an experienced attorney who has represented thousands of clients through some very complex cases, I couldn’t help but wonder if maybe those other attorneys might be as good or even better.  If I was thinking these things when I saw his profile, what were people who didn’t know him thinking?

I’m not saying that Avvo is everything, but I am saying that if you don’t manage it, it can hurt you.

LEAN 5S
Let me suggest a concept called: 5S.  5S is an organizational tool born out of the Toyota production system called: Lean.  What is Lean?

The core idea of Lean is to maximize customer value while minimizing waste. Simply put, Lean means creating more value for customers with fewer resources. A Lean organization understands customer value and focuses its key processes to continuously increase it.
Click here to learn more at Lean.org.

The basic idea behind 5S is that a messy office is full of waste.  Not only the waste you can see, i.e. the mess – but the time wasted in looking for the right file, your phone, eye glasses.  You get the idea.  (Caveat:  Lean tools, like 5S, are designed to work together to create a synergistic whole.  Ideally, they should not be implemented individually, but rather as a part of an entire Lean organization. That being said, 5S is something you can implement today, with the understanding that your goal is to create a more effective and efficient office as a whole.)

The 5S System

Sort: Step one is to gather all your stuff into groups:  Files, letters, sticky notes, pens, legal pads, paper clips, etc.

Straighten: Here’s where my mom’s old saying, “A place for everything and everything in its place,” comes to mind.  Organize your office so that everything has a spot.  For example, your pens are always in a certain spot, your legal pads are in a certain spot, your sticky notes are always in a certain spot.  My guess is you already do this with two items in your office: your inbox and your outbox.  They are in the same spot on your desk that they have always been.  Imagine how frustrating it would be if they moved around and you never knew where they were on a given day.

Shine: Now that you’ve sorted and straightened it’s time to clean things up. Get out the Swiffer and polish and clean your office.  Take the time to do this.  You will feel great when you’re done, and your staff will wonder what’s come over you.  Once you’ve set the example, you can plan a 5S day for the whole office.  Make it a party.  Bring in pizza and make it fun:  The first person to 5S their space and keep it that way for a week, two weeks, a month, gets a gift card to their favorite restaurant!

Standardize: Standardization in a manufacturing setting (i.e. a Toyota plant) is about creating an environment in which, for example, workers don’t waste time looking for tools.  In your office it means developing a consistently organized office – for  you and your staff.

Sustain: Finally, you’ve got to create a system to maintain the order you’ve created.  In other words, you’ve got to make it a habit.  Spend just five minutes at the end of each day making sure everything is where it’s supposed to be.  Do this every day for a few weeks and it will become automatic.  You won’t be able to leave your office until you’ve tidied it up.

Now that we’ve looked at how you can use 5S to clean up your physical space, next time we’ll focus on how to apply 5S to your other desktop . . . your computer and all the information you have to manage in your firm.

A recent study by Altman Weil found that: “Firms that are proactive in their pursuit of non-hourly business were more than twice as likely to report higher profitability on non-hourly projects compared to firms that are reactive.”  Moreover, 95% of the law firms surveyed use AFAs and “75% of respondents believe there will be more non-hourly billing in the future.”
- From 2011 Law Firms in Transition. Download the full survey here.

Check out these books on AFAs and value pricing:
Winning Alternatives to the Billable Hour: Strategies That Work
Implementing Value Pricing: A Radical Business Model for Professional Firms

A couple of months ago, I started using a small dry erase board to capture thoughts.  It worked OK, but was kind of a pain to erase, and my notes would sometimes get smudged.

Then, earlier this week, I got a Brookstone Boogie Board.  I LOVE it!  It is a digital note pad that is a great way to capture thoughts, create “to do” lists, or just doodle.  Very cool.

Check it out for the yourself or the techie in your life.  If you want to do even more with your Boogie Board, check out the Boogie Board Rip.

Happy Holidays!

“A brand is a person’s gut feeling about a product, service or company.”
- Marty Neumeier, author of The Brand Gap and Zag: The #1 Strategy of High-Performance Brands

Marty’s definition gets to the heart of the matter.  Here’s the thing, your brand is not just your logo or your website.  It’s not just your stationary or your firm brochure.

Your brand is what your clients say it is.  Your brand is how you make people feel.

Your brand is EVERYTHING about your firm. Your logo, website, stationary, and firm brochure are part of your brand, but they are just a part.  Your brand is . . . How promptly you return phone calls . . . How tidy your office (yes, YOUR office) is . . . How your receptionist answers the phone . . . How prepared you are for meetings or hearings . . . How you speak to clients . . . Whether your shoes are shined . . . Whether you deliver projects on time.  You get the idea.

Although you can’t say what your brand is, you can influence your brand in everything you do.  You can start by thinking about branding your firm as a three-step process.

1. Know who you are, what you do, and what makes you “the only.”
Before you can influence your brand you have to know what you want to convey.   The first step in building your brand is to get very clear about who you are.  What is your law firm’s mission?  Who are your ideal clients?  How do you help them?  What makes you unique? Or in Marty Neumeier’s words: “What makes you the only?”  If you can’t answer these questions, you cannot build a brand.

2. Spread the word.
Now that you know who you are and what you do and what makes you unique, you’ve got to let others know.  This is where your logo, website, and other marketing materials come in.  All of your marketing materials must have a consistent look and feel.  But spreading the word goes far beyond your marketing materials.  Remember, your brand is EVERYTHING.  Your brand must be conveyed in everything about your firm.  You’ve got to “live” your brand every day.

3. Live it.
Your job in building your brand is to create a brand experience in every aspect of your practice.  Do you return your calls when you say you will?  Does your office create an experience that is consistent with your brand or is it a mess with files all over the place?   When you go to a bar luncheon are your shoes shined?  When a client calls your office, are they greeted warmly or do they feel like they’re just another problem to deal with? If you live your brand, you’ll create a total brand experience, and your clients will spread the word for you.

So, what’s your brand and what are you doing to influence it?  I’d love to know!