RUNNING YOUR PRACTICE - Law Institute of Victoria€¦ · Expenses: • (Staffing, rent and...

RUNNING YOUR PRACTICECHECKLISTS

2 Running your practice checklist

Running your practice checklist 3

1RUNNING YOUR PRACTICE

GROWING YOUR BUSINESS – PRACTICE MERGERSPractice Analysis Checklist

A practice analysis should include the following considerations:

Financial indicators: • Efficiency• Leverage ratio • Billable hours • Level of work in progress• Recovery of work in progress• Gearing level • Write-offs (if any)

Personnel concerns:

• Department efficiency and profitability

• Performance of individual partners, lawyers and support staff

• Strengths and weaknesses of key management staff and their importance to the business

• Staff concerns with the merger

• Staffing requirements, redundancies, loss of staff due to concerns with merger, wage and salary differentials between practices

• Commitments or undertakings that have been given to particular practitioners about partnership (need to be accommodated in any merger)

Premises concerns:

• Location and capacity of offices

• Technology and systems - in particular assessing recent significant expenditure on computer hardware and related technology and noting equipment that needs replacement

Expenses:

• (Staffing, rent and occupation expenses, IT costs, debtors, finance costs)

• How do the expenses compare with industry standards?

• How are they likely to compare to a potential merger partner?

• Where are the opportunities for savings?

• What are the partners’ expectations in relation to income?

• What are the current partners’ attitudes to investment in future growth?



GROWING YOUR BUSINESS – PRACTICE MERGERSKey issues for merger discussions

Client base:

• Detailed analysis of the type and nature of the clients

• Level of work that comes from the clients

• Whether there is a large number of repeat clients who regularly provide ongoing work, or perhaps a large number of individual clients with little or no repeat business

• Whether clients are coming to the practice for all their legal work, or just for particular aspects of their needs

• Where the growth potential within the client base lies

• Whether the client base has been exploited to its full potential, or whether other opportunities remain

• Where the synergies between the two practices lie, in relation to their clients

• Do the respective client bases complement each other?

• Whether conflicts might arise upon amalgamation, and if so, whether they are manageable

• If unmanageable conflicts are likely, what the consequences of having to refer those clients elsewhere will be, and how that is to be handled

• How the clients will be dealt with, and what impact that might have on the workflow of particular people within the office

Staff:

• Numbers of professional and support staff (will retrenchments be necessary?)

• Profiles of management staff

• Retention

• Turnover

• Age profile

• Quality

• Skill-based training levels

• Numbers of partners and senior lawyers

• Leverage (ratio of partners to employees)

• Wages/salaries

Cash flow:

• What are the respective levels of debtors?

• What are the partners’ expectations of the level of partner drawings?

Borrowing levels:

• Will the practice borrow to fund its operations, or is it intended that partners contribute capital?

• What has happened in each of the practices in the past?

• What is proposed for the future?

Profitability:

• What level of profit is acceptable?

• What are the partners’ expectations?


Technology:

• What computer systems are currently used within the practices, and are those systems compatible?

• Will it involve significant additional expenditure to get both practices onto one system?

• If the systems are different, which system is better?

• Which would be adopted in the merged practice?

Image and profile of the practice:

• Objectively, what is the current image of each practice?

• What will be the image of the merged practice, and how will it project that image to the public and its clients?

Marketing:

• What marketing resources are available in each practice and what emphasis does each place on marketing?

• Does either practice use a marketing consultant or a marketing department?

• Will marketing be the role of the partners?

• Will the larger, merged practice need more intensive marketing?

The role of partners:

• Will partners be managers of the practice?

• Will there be a managing partner?

• If either practice currently has a board, how has it worked to date?

• Is there to be a board?

• What is proposed for the future?

Work ethic:

• What are the usual hours of work?

• What are the billing and time expectations?

• Are they compatible?

Premises:

• Will the merged practice be co-located from the outset?

• How does this fit in with current leases and ownership?

The name of the merged practice:

• What will the practice be called? This is a critical issue.

Other relationships:

• What other relationships and alliances currently exist that will need to be incorporated in the merger?



GROWING YOUR BUSINESS – PRACTICE MERGERSMerger Plan

In particular, a merger plan must address governance issues:

• What will the structure of the practice be?

• Will it be a partnership or an incorporated body?

• What voting rights and equity shares will apply to each of the partners?

• What method and process will be used for admitting new partners?

• What are the arrangements for retirement of partners?

• If the practice decides it wants to remove a partner, what process will be used?

• What other governance structures such as committees, boards, and managing partner arrangements need to be put in place?

Other issues to cover in the merger plan include:

• Disclosure of the merger to staff, clients and others

• How deadlocks will be resolved and conflicts of interest addressed

• Financial arrangements, including how existing leasing of premises is to be dealt with

• Funding of the new practice in the first period of operation

• Who will be in charge of the IT department

• Who will be in charge of Human Resources

• Who will be responsible for the financial management

• How marketing and promotion are to be managed

• Floor plan of new offices

• Dealing with and closing old practices (work-in-progress, debtors, write-offs)

• Deed amalgamation.

Insurance Checklist

Take out professional indemnity insurance

Investigate appropriate insurance policies to protect important assets:

• Get comparable policy quotes (costs, discounts, no-claim bonuses)

• Seek written responses to specific questions about coverage

• Ensure correct valuation of assets for coverage

• Include document recovery (e.g. cost of deed replacements)

• Confirm start and end dates of policy

• Confirm claims procedure

• Check whether policy renewal automatically increases asset values


Implement and test a risk management system across the practice:

• Storage of hard copy & electronic files, accounting records & valuable documents

• Duties of employees in case of sudden loss of a key employee

• Sources of possible disruption to work (e.g. computer crash)

• Safety of sensitive information

• Relocation sites if current office is threatened

• Death or retirement of key people who have knowledge of critical information

• HR and occupational health and safety risks related to staff conditions & performance

The Business Victoria website provides information about insurance for small businesses, including types of insurance, using an insurance broker and what to do when things go wrong. [web link www.business.vic.gov.au ]



HUMAN RESOURCESDetailed below is a checklist, though not exhaustive, of HR functions items that should be considered in managing a successful legal practice.

RecruitmentAttracting and retaining good people requires planning and work. To help define your recruitment needs, ask yourself the following questions:

• What is the purpose of this position? Is the job important to the operation of your firm?

• Can you afford to employ someone in this position? Needing to employ someone is not the same as being able to afford to.

• How crucial is this position to the financial well-being of your firm?

• What salary and/or incentives can you afford to offer candidates?

• Is there an existing employee in your firm who has the skills or potential to perform this job? Career advancement is a major issue in small business; overlook capable staff and you run the risk of alienating them or prompting them to leave.

• Does this position need to be full-time? Or can it be done by someone working part-time, on a casual basis, in a job-share arrangement or on a short-term contract?

InterviewsInterview should allow some flexibility and help you get to know the candidate better:

• Allocate an interview room that is private, tidy and free of distractions.

• Avoid confrontational seating arrangements (e.g. across a desk or boardroom table)

• If you have an interview panel, be sure that questions are agreed upon in advance

• Ease into the interview with a couple of simple questions; set out the interview process.

• Go over the role to ensure the candidate shares your understanding of the role

• Talk honestly about the culture and working environment of your practice

• Go through questions systematically but allow for interesting lines of discussion

• Allow the candidate the opportunity to ask questions or lead the discussion

• Thank the candidate for their time and explain the process going forward. Make it clear when they can expect to hear back from you.


Selecting the right person for the job

References

Always check references.

• Verify the information provided by the applicant

• Ask specific questions where you need further clarification

• Only ask job-related information. A person’s age, marital status, whether s/he has children and other personal information is not relevant

• Assure the referee that your conversation will remain confidential; remember that the Privacy Act entitles candidates to access information

• Ask for examples of achievements. Keep the discussion factual

Communicating your decision

When you’ve made your decision, call the successful candidate and provide written confirmation of the offer.

Notify unsuccessful candidates and thank them for their attendance. It’s important to leave a good impression on unsuccessful candidates.

Employment contracts

A written employment contract for every employee - even casuals - ensures a mutual understanding of wages, conditions, rights and obligations.

The employment contract sets out the terms and conditions of employment and is legally binding. A contract should include:

• type of employment (full-time, part-time or casual)

• salary package, including superannuation

• leave entitlements

• hours of work

• any applicable Awards

• probation period

• notice periods for termination and probation

• public holidays

• dress code

You may also wish to include a confidentiality clause to reduce the risk of your employee using information for personal gain, and a non-compete or restraint-of-trade clause to protect the firm if your employee resigns.

Managing staffOnce you have the right people on board, you want to retain them. Managing performance, nurturing professional development and providing personal support is essential to making your practice a desirable place to work.

Performance management

Performance reviews provide an organised approach to monitoring the efficiency of staff and identifying opportunities for further development.

Appraisals (usually an annual or twice-yearly review) may include an interview, a written performance review by both parties or a presentation by the employee. Competencies upon which to measure job performance may include:

• work quality

• technical and professional expertise

• productivity

• initiative

• professional judgment

• client focus, interaction and satisfaction

• values and behaviors in line with practice strategies

• employee interaction (teamwork and communication)

• leadership skills (if applicable)

These should be measured alongside key performance indicators (KPIs), which are set in conjunction with the employee. KPIs could include targets such as billing, attracting clients, completing files and professional development.

Training, Mentoring and Professional developmentProfessional development offers practitioners an opportunity to improve their skills and knowledge and, in turn, add to the expertise of the practice.

All local legal practitioners, regardless of experience, are required to complete 10 Continuing professional development (CPD) units per year (1 April to 31 March), four of which must be completed in the compulsory fields.


Accredited SpecialisationDeveloping expertise in a particular practice area helps a practitioner and the practice to distinguish themselves from their competitors. To qualify as an LIV accredited specialist a solicitor must:

• be an LIV member and hold a current practising certificate

• have at least five years’ post-admission experience in legal practice

• have at least three years’ substantial experience in the area of specialty

• provide references from other lawyers or other professionals that confirm their ability and experience

• successfully complete an assessment program to demonstrate a sound, practical approach to their area of specialty

For further information about the Specialist Accreditation program telephone (03) 9607 9311

MentoringDeveloping and committing to a supportive workplace culture through initiatives such as mentoring provides opportunities for staff to share professional and personal skills and experiences, which contribute to their development.

Mentoring usually involves pairing a senior employee with a junior employee and facilitates ongoing contact to help guide new staff through the early months at a new practice. The primary aims of a mentoring program are to:

• develop high-potential employees

• improve employee productivity and performance

• increase employee understanding of company procedures

• assist with succession planning.

The LIV has in place a Mentoring program available for members. For more information, please telephone (03) 9607 9311

Well-beingWork-life balance policies aim to create a flexible work environment so employees can balance competing demands.

For employees and their families, a good work-life balance encourages increased job satisfaction, less stress, better health, improved family and personal relationships and greater control of competing responsibilities.

For the practice, the provision of work-life balance options increases staff retention prospects, reduces absenteeism and stress-related sick leave, increases morale and motivation, and enhances productivity. It also helps position the practice as an employer of choice, which in turn assists in attracting quality candidates. Work-life balance policies may comprise:

• flexible work hours and arrangements for leave (study leave, career breaks, part-time work and job sharing, working from home)

• training on ways to properly manage time and priorities

• corporate fitness programs such as gym membership, yoga classes, Quit programs

• access to counselling, known commonly as employee assistance programs (EAPs)

• access to qualified locums, who can maintain the practice’s workload when key staff or sole practitioners are on leave.

Vic Lawyers Health is a confidential 24-hour wellbeing service is available for LIV members Telephone 1300 664 744


HR PoliciesHR policies are an established and effective way to establish expected standards of behavior in your practice and ensure that employees are treated in a fair and consistent manner.

It is the responsibility of the managers of the practice to develop and implement its own policies, which should be brought to the attention of new staff during their induction and made easily accessible to all employees. The main HR policy areas include:

• computer usage (Internet and email)

• confidentiality

• equal opportunity

• harassment and discrimination

• occupational health and safety

• privacy

• redundancy and unfair dismissal.

DISCLAIMER The information in this document is intended to be a general guide only. The information is not intended to constitute professional or legal advice, and you should rely on your own inquiries and assessment. The Law Institute of Victoria expressly disclaims any and all liability for any loss or damage arising from reliance upon any information in this document.

COPYRIGHT © Law Institute of Victoria 2016. The Law Institute of Victoria owns the Copyright in this material. Except for any fair dealing exemptions, the information in this document may only be used for the purpose of private study, research, criticism, review or to the extent otherwise permitted under the Copyright Act 1968 (Cth). This document cannot be reproduced without express written permission from the Law Institute of Victoria.

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