♬ It won’t be long yeh, yeh,
It won’t be long yeh, yeh…♬
Music and lyrics by Lennon & McCartney.
This interview is with Paul Hergott of Hergott Law, a solo practitioner in West Kelowna, BC. This interview forms part of the “30 Questions for Busy Lawyers who use Technology” thread on this blog in advance of The Pacific Legal Technology Conference, to be held in Vancouver on Friday, Oct. 2, 2009 at the Vancouver Trade & Convention Center:
1. Could you briefly describe your firm (number of lawyers, staff, areas of practice etc):
We have one lawyer – doing real estate and personal injury. In the personal injury area, we have 4 staff. Conveyancing has 1 staff member.
2. When was your firm established?
In Sept 2007.
3. Where do you practice (one office, multiple offices, virtual offices, regional, national, international)?
Regarding the conveyancing side of the practice, the admin is done in an electronically linked home office. Everything else is done in the main office.
4. What are the demographic backgrounds of the lawyers and staff in your firm?
Most senior staff been at it for 30 years…probably early 40 legal assistant and mid 30’s secretary and receptionist is early 50’s. Wife mid 40’s. I am a very old dog!
5. What prior degrees and/or experience do the lawyers and staff bring to your firm?
Staff has long standing legal experience. I have a business admin degree where I took high level programming (C++ and Pascal), quantitative analysis, and 400 level business admin courses. My wife entered the legal world with a computer programming course and started in the area of real estate conveyancing. She was a programmer of Blue Screen, a word perfect based conveyancing package. 3-4 months ago she took training in HotDocs and uses MS Word and HotDocs. (more…)
♫ It’s just my job five days a week
A rocket man, a rocket man….♫
Lyrics by Bernie Taupin, music and recorded by Reginald Kenneth Dwight, aka Sir Elton Hercules John CBE.
Simon Fodden, writing in Slaw.ca discussed the new Novatel MiFi – which is a cellular modem that does not need to be pushed into, slotted, USB’d or otherwise wired to your laptop to link you to a cellular-hosted internet service. What is the MiFi? It is a router and modem all combined, which allows you to create a portable WiFi cloud that can be shared by up to 5 people. There is *only* one problem with the MiFi – and that is, alike many other technological developments, it is not (yet) available in Canada. It operates in the USA on the Verizon network. The touted benefits of the MiFi is that it is always with you – there is no need to have internet service at home etc…
So what is a Canadian lawyer to do? Seek a typical Canadian compromise – a Roger’s Mobile Hi-Speed Rocket Internet Stick. This little device will allow you to connect to the internet wherever you can find a cellular signal. It connects quickly and easily, the initial configuration is not difficult, it works for PCs as well as Macs and there are corporate data plans that are a bit easier on the pocket compared to the consumer plans (call Rogers and ask to speak to their corporate sales department).
OK, this is a compromise – so you have to connect the Rocket modem to your USB port for it to work (unlike the MiFi which can be inside your computer bag all the time). You can’t automatically share the Rocket Stick’s internet (unless you can master the intracies of sharing an internet connection in Windows or OS X) as you can with the MiFi.
But similar to the MiFi – you can connect and work from virtually anywhere (well, not the Yukon since Rogers doesn’t have any coverage there…or indeed from anywhere else where Rogers doesn’t have service). I have a Rocket Stick and absolutely love it – as I can grab my MacBook and work from almost anywhere and not have to worry about finding a Wi-Fi cloud. Talk about convenient! And I find that the benefit of being able to work here and there when I need to far offsets the $35-40/month that I find the Rocket Stick is costing me in terms of data use, fees and taxes. But I am not sure about this type of service replacing my home internet service – after all, on the Rocket Stick I still have to watch the amount of data being downloaded in order to keep the charges reasonable.
Since I think its going to be a long long time before we get around to finding the MiFi in Canada, the Rocket Stick is about as close as we are likely to get in Canada to carrying the internet around with you.
♫ Thunder and Lightning
I tell you it’s frightening
It’s thunder and lightning
And you’re in control… ♫
Lyrics and music by Chi Coltrane, “Thunder and Lightning”
A funny thing happened on the way to ABA TECHSHOW – perhaps it was the effect of the downswing in the economy – but a real emphasis at this year’s show was how technology can produce real returns for real lawyers.
One of the great themes was the power of Web 2.0 and how it can be levered to reach out to clients, to build dealrooms and reach out to clients in new ways. Another theme was how social networking can be used to produce a great ROI for your marketing spend. Richard Susskind, in his keynote, noted how the web is a disruptive technology. The web can be equally viewed as a threat or it can be embraced as a way for lawyers to craft their own future. He challenged lawyers to exercise leadership and figure out how to break your legal service into discrete parts and send these parts out to contract suppliers to reduce the cost of the overall legal service.
One of the other important trends at the show was the extensive use of Twitter (www.twitter.com) and the continual posting of tweets by attendees.
There was a specific Twitter feed (#TECHSHOW) that allowed any twitterer to post and have their tweet seen by anyone who subscribed to the hash feed. This resulted in a metric of sorts: You could judge the most exciting presentations by the volume of tweets that referred to that session!
Furthermore, the bloggers were busy – aside from looking at attending the social event such as Beer for Bloggers sponsored by Kevin O’Keefe of Lexblog and the ABA Journal – they posted to their blogs during the show. Examples were:
- Sharon Nelson: Ride the Lightning Blog post on MonetaMail.
- Kevin O’Keefe: LexBlog (Real Lawyers have Blogs) interviewed a number of people at ABA TECHSHOW and posted the interviews as podcasts.
- Rex Gradeless: Social Media Law Student blog on All things ABA TECHSHOW – with his overview of the events at ABA TECHSHOW.
- Rick Borstein: Rick’s slides from ABA TECHSHOW are posted on ACROBAT FOR LEGAL PROFESSIONALS blog.
- ABA TECHSHOW: Techshow ran its own blog with great tips and ideas leading up to the show.
- Jim Calloway: Jim’s Law Practice Tips Blog featured the highlights of Richard Susskind’s keynote address.
and many many others.
It highlighted that if you add real content to your blog that provides value to your audience, they will keep coming back! Furthermore, as a lawyer you can promote your value and expertise by blogging and indicating your interest in and awareness of current events and their implications for your clients. After all, aren’t you trying to attract clients by demonstrating your insight into those changes that affect your clients? A blog is an excellent way of doing so. So as a lawyer – if you attend a CLE event – blog about it and the implications of the new developments for your clients. You will show to your clients that you, too, are riding the lightning!
By the way, this blog post was written right at ABA TECHSHOW during the 60 Tips in 60 Minutes presentation by Dan Pinnington, Reid Trautz, Nancy Duhon and Ben Schoor. Great Stuff!~
♫ Let me tell you how it will be,
There’s one for you, nineteen for me,
‘Cos I’m the Taxman,
Yeah, I’m the Taxman.
Should five per cent appear too small,
Be thankful I don’t take it all.
‘Cos I’m the Taxman,
Yeah yeah, I’m the Taxman…♫
Lyrics and music by George Harrison, recorded by The Beatles: “Taxman”.
The Vancouver Sun reported today that Ontario is set to harmonize the PST and GST.
Final details will have to come from the Budget once announced this week, but this could signal that Ontario will join BC in having legal services taxed at both the Federal (GST) and Provincial (PST) levels. At a time when the economy is in a downswing, this cannot be good news for lawyers in Ontario. Furthermore, if Ontario implements this, will the rest of the country be far behind?
While tax news is never good, at least if Ontario makes all professional services taxable, then at least all professionals will be on the same playing field. BC has long suffered under the fact that legal services were taxable Provincially but services by other professionals were not.
This had strange implications: when mediation services were rendered by a lawyer, in some cases they were classified as being taxable, but the same mediation services rendered by a mediator who was not a lawyer were not. There were other similar distortions that placed BC lawyers at a disadvantage – arising under the Interjurisdictional Practice Protocol. Perhaps Ontario lawyers can avoid the strategic disadvantages that have occurred in BC by the uneven application of the provincial taxation rules.
One thing is for certain: It appears that Ontario lawyers cannot avoid the two great certainties in life: dealing with death and dealing with the Taxman.
♫ Every single day
Every word you say
Every game you play
Every night you stay
Ill be watching you…♫
Words and Music by Sting, recorded by The Police.
‘ “This is the time to get rid of the billable hour,” said Evan R. Chesler, presiding partner at Cravath, Swaine & Moore in New York, one of a number of large firms whose most senior lawyers bill more than $800 an hour.’
When the managing partner at Cravath says the billable hour is dead, the paradigm has definitely shifted.
‘Mr. Chesler, who is an advocate of the new billing practices, said that instead of paying for hours worked, more clients are paying Cravath flat fees for handling transactions and success fees for positive outcomes, as well as payments for meeting other benchmarks.’
I have been a long-time advocate of changing the way lawyers bill, for reasons that are connected with improved client satisfaction, increased efficiency and tying the fee closer to the results achieved for the client (output-based measurements) rather than effort (input-based measurements). I have seen firms achieve increased effective hourly rates and increased lawyer and client-satisfaction by adopting fee arrangements that reward the law firm for increased efficiency. By allowing law firms to reap the benefits of investing in technology, knowledge management and efficiencies of scale, both the law firm and the lawyers come out ahead.
However, apparently not everyone sees the shift away from the billable hour in the same light. The NYT continues and states:
‘Greed may also encourage lawyers to change their payment plans. Law firms are running out of hours that they can bill in a year, said Scott F. Turow, best-selling author of legal thrillers and a partner at Sonnenschein Nath & Rosenthal in Chicago.’
With respect to Mr. Turow, perhaps greed works well for book plots, but I find the vast majority of lawyers are conscientious, hard-working, caring and very concerned about the welfare of their clients. After all, I am a lawyer that deals with thousands of inquiries a year from other lawyers who are looking for ways to serve their clients better. I think that not enough discussion has taken place to date on what alternative billing could look like and how firms go about implementing it. Most, if not almost all, of the lawyers out there today have been taught to bill by the billable hour, except for certain files that are billed on a fixed fee, a contingency fee or a success-based fee. If we open up the dialogue then we can come up with creative solutions that meet the needs of the client as well as those of the law firms.
I recently moderated am ABA CLE teleconference presentation by:
Christopher B. Marston, CEO, Exemplar Companies, Inc., Boston, MA, and
Mark Robertson, Robertson & Williams, Inc., Oklahoma City, OK (the co-author of Winning Alternatives to the Billable Hour, 3rd Edition, published by the ABA)
entitled Winning Alternatives to the Billable Hour. This presentation highlighted how legal engagements can be restructured to allow for greater satisfaction, effectiveness and efficiency for both the lawyer and the client.
The best part of adopting these new billing models is being freed from a system where the client is watching every word you say and every night you stay….
♫ We’re in the money, we’re in the money;
We’ve got a lot of what it takes to get along!
We’re in the money, that sky is sunny,
Old Man Depression you are through, you done us wrong…♫
Lyrics by Al Dubin, music by Harry Warren, from the film Gold Diggers of 1933.
The signs are clear. The world is definitely in a recession even if the tsunami has not yet washed over B.C.’s shores. Forestry, high tech, manufacturing – all will be affected as the waves crash through B.C. law firms.
So what can law firms do – now – to prepare for the hard times? Here is a list of steps that you can take: (you can read the rest of the article that was published in the December 2008 issue of BarTalk here.)
♬ But its gonna take money
A whole lotta spending money
Its gonna take plenty of money
To do it right…♬
Words and Music by Rudy Clark, recorded by George Harrison.
The FP Legal Post on Nov.21, 2008 in an article by Julius Melnitzer entitled: “DLA Piper seeks millions in capital from partners” reported that the largest law firm in the USA has asked 275 income partners to contribute up to $150,000 US each (which could top out at $41, 250,000) to bolster the firm’s finances.
The ABA Journal in a similar article on Nov. 19, 2008 by Martha Neil entitled: “DLA Piper asks 275 Non-Equity Partner to Ante Up, Goes to 1-Tier Structure” quoted Crain’s Chicago Business in stating:
“By raising funds from a new crop of equity partners and compensating them with a share of the profits, DLA would eliminate income partner salaries and trim payroll costs and borrowing needs,” the business publication explains. It would also likely put more pressure on the new equity partners to bring in business, and put associates into an “up or out” model that requires them to generate clients or find another job as they become seasoned attorneys, legal recruiters say.”
It seems that by eliminating non-equity partners, the firm ensures that all partners ‘have some skin in the game’. Furthermore, it ensures that the firm does not have to go to banks looking for debt to finance their business. Such a move also ensures that all partners become strongly focused on client and business development.
I rather suspect that this will not be an isolated incident as firms seek to reduce their debt/equity ratio. So long as this infusion of capital is subsequently used to finance operating activities that lead to greater income generation, the entire firm should be better off. However, as we all know, its gonna take a whole lotta spending money to do it right…
♫ You load sixteen tons, what do ya get?
Another day older and deeper in debt..♫
Words and music by Merle Travis, recorded by Tennessee Ernie Ford.
One of San Francisco’s premier grand old law firms voted to dissolve today, according to The San Francisco Chronicle.
It survived wars, earthquakes, the Depression and social changes but was unable to survive the effects of a 3% drop in revenue in 2007. The firm is reported to have had an “unusual” financial structure that may have contributed to its downfall. It was a partnership of professional corporations. It is reported that in order to avoid double taxation, it distributed all of its earnings at years end. This left it financing its current operations by way of a line of credit, at least until cash flows caught up to the debt (known as being ‘out of the bank’ according to Heller Ehrman partner Stephen Ferruolo).
This raises several issues for law firms, particularly as we enter a period of financial instability and recession. Law firms are classically under capitalized but this particular financial structure resulted in the firm using debt to finance, at times, the firm’s operating capital. Structuring your business for tax advantages is fine so long as it doesn’t result in any distortions of the fundamental business foundations of a firm. In this case it appears that the desire to minimize tax overruled prudent financial management and capitalization principles (namely the debt/equity ratio).
A highly-leveraged firm is vulnerable to shocks. In Heller Ehrman’s case the triggering event appears to have been the loss of some large litigation cases that led to a 3% decline in revenues for 2007. As a result, key partners left the firm (the article doesn’t say so but reading between the lines, these departing partners must have been major revenue generating partners who saw their bonuses and/or draws reduced as a consequence). Once these key partners left, an inevitable chain reaction was started which resulted in a diminishing number of equity partners carrying a large debt load. Eventually the firm collapsed under the weight of its debt without the infusion of new equity and new equity partners.
After trying to find a merger partner and failing, the remaining partners must have found the last days to have been crushing – working like crazy only to find they are a day older and still deeply in debt to the bank. The dissolution must have been the only alternative left…
Hat tip to Pete Roberts for drawing this to my attention!
♫ I’ve been taking care of business, it’s all mine
Taking care of business and working overtime…♫
Words and music by: Randy Bachman.
LawPro Magazine (August 2008) has just hit the streets. In this latest issue celebrating the 10th anniversary of PracticePro, the risk management, claims prevention and law practice management initiative for LawPro, the wholly-owned insurance company providing professional liability insurance to the lawyers of the Law Society of Upper Canada, my friend, colleague and director of PracticePro Dan Pinnington took an innovative approach to this issue of LawPro. Along with articles looking at the increasing amount of attempted fraud against lawyers and such, Dan invited your humble scribe to contribute to a collaborative series of articles by such luminaries as Simon Chester, Connie Crosby, Dominic Jaar, Richard Potter QC and Steve Matthews. These articles all dealt with the central question: “What are the 10 Critical Issues facing the Legal Profession.”
This was a wonderful collaboration and I thoroughly enjoyed the opportunity to be a contributor. Of course to see what everyone wrote, you will have to visit the article on the web which can be found here.
I wish to say thanks! to my fellow contributors and I hope we can do this all again…(I rather suspect while we were taking care of business we were all also working overtime…)…
♫ Start a little conversation now, it’s alright, just take five, just take five…♫
Music by Paul Desmond, lyrics by Dave and Iola Brubeck, recorded by the Dave Brubeck Quartet.
I have been a fan of OnPoint Law Corporation’s “Take Five Newsletter” for some time. This free monthly resource summarizes 5 key cases from the British Columbia Court of Appeal in a clean, easy to read email. The latest version (August 2008) dealt with the Robertson v Slater Vecchio case regarding firewalls when lawyers transfer between firms and the implementation of the Law Society’s conflict guidelines in this regard.
Hats off to Sarah Picciotto and the rest of her legal research team at OnPoint Law Corporation! She is at the forefront of lawyers using off-site contract services in a cost-effective manner. You can subscribe to the Take Five newsletter by sending an email to: spicciotto@onpointlaw.com. It’s alright – just take five!