Running a successful law firm can be a lonely job. There are so many plates to keep spinning. You have to figure out how to keep attracting new clients while you manage a team who will deliver great service to the clients you already have. You have to keep up with new regulations from your state bar and you need to keep an eye on the competition. If you rest on your laurels, your law firm may not last in the long term.
I founded the Personal Injury Lawyers Marketing & Management Association (PILMMA) so that I could share what I had learned and, in turn, learn from others.
Members of PILMMA’s Mastermind groups are appreciative of the opportunity to discuss their challenges and industry trends with their peers behind closed doors. They focus on the big picture of what their success should look like and how to achieve it. PILMMA’s Mastermind members know how to delegate out the details of their visions and strategies to ensure they are implemented.
As the President of PILMMA and the moderator of our Mastermind meetings, I hold a privileged position. I hear from all corners of the country what is working for law firms and what isn’t. I hear what concerns law firm owners and how they respond to these challenges.
Social Security Challenges
It should come as no surprise that over the last couple of years, Social Security Disability (SSD) lawyers have become increasingly concerned by a growing number of issues to contend with. Costs are up and revenues are down. Approval rates are down. Competition from advocate companies like Binder & Binder has become fierce. Many SSD lawyers have looked at ways to diversify their practices as a result.
Meanwhile, the big whale that they are all concerned about – Binder & Binder – has not, apparently, put the same effort into its own survival. The Wall Street Journal reported last week that Binder & Binder:
“is preparing for a possible Chapter 11 bankruptcy filing as soon as this coming week, people familiar with the matter said, as it faces roughly $40 million of debt and shrinking demand for its services amid tightening government scrutiny of claims.”
The firm owes $23 million to lenders U.S. Bank and Capital One Bank and another $16 million in unsecured debt to Stellus Capital Management. The Journal also states that:
“In 2010, the firm collected $88 million in fees for its work… making it the nation’s largest Social Security disability advocate that year, by far.”
The failure by the management team at Binder & Binder is inexcusable. They should have had a firm grasp of the firm’s books. No business can run a sustained financial deficit without consequences. Any law practice owner who fails to keep on top of their numbers and ensure their solvency can only be described as irresponsible.
For me, the finances are my top priority. My personal assistant and bookkeeper, Lori, prepares a daily snapshot of my finances each morning, before I even arrive at the office. The printouts are already laid out on my desk when I walk in. I am the only person responsible for ensuring the financial health of my business. So I’m obsessive about the numbers.
Whether it’s key performance indicators like the number of cases opened or settled, or how much you’re spending on marketing and wages, a responsible law firm owner will have an immediate understanding of the reality of their situation.
If there’s a clear trend looming in the industry that will affect my revenues or profitability then I want to have a proactive response and ensure the ongoing success of my law firm, just like our Mastermind members.
There’s a name for ignoring industry trends that are staring you in the face – it’s called “denial.” It seems that PILMMA’s Mastermind members, while running smaller businesses than Binder & Binder, are smarter than its combined management team. Our Mastermind members don’t do denial. It’s not productive.
One Man’s Misery Is Another Man’s Fortune
The Wall Street Journal reports that the Chapter 11 filing “isn’t expected to affect the majority of the firm’s nearly 1,000 employees, many of whom aren’t lawyers, or its 57,000 active cases.” That does not mean it’s “business as usual” at Binder & Binder. The firm is in trouble.
“With locations in 15 states and the District of Columbia, Binder is struggling to break even and may be losing money, one of the people familiar with its pending Chapter 11 filing said. Former employees said the company relies on a large quantity of cases to generate revenue.”
While Binder & Binder is distracted with its Chapter 11 filing, financially solvent firms can seize an opportunity and fill the gap that will inevitably be left as Binder hunkers down. Just like our Mastermind members, make sure that you have a complete grasp of your own numbers and see how Binder & Binder’s misfortune could benefit your law firm in 2015.