MANAGING A MODERN

LAW FIRM
OUTLINE OF LECTURE
 Introduction

Start your own law firm?

Virtual Office?
Figure out how to set up your business – legal
requirements
Determine the various business structures and to
decide which one is right for your law firm
You need to think about costs, practice area, and
gone through all the items on your start-up checklist
Legal requirements to set up legal
firm
See Rules and Rulings of the Bar Council
 Partnership
vs
Sole-Proprietorship
Determine the various business structures and to
decide which one is right for your law firm

See power-point presentation on Partnership

 Essentials in developing a law
firm
 Essential factors in developing a law firm:
 
1. Adequate funding for continual operations
2. Maintaining quality personnel
3. Financial planning for future growth
4. Marketing
5. Building morale and firm culture
6. Observance of professional ethics
7. Risks Management
 1. Adequate funding for continual
operations

• You need capital + assets when setting up your firm

• Capital will be reduced overtime
• Expenses increases as the firm progresses
• You need financial support for continual operations
• Thus, funding is important for survival for the long
run
 Adequate funding for continual
operations (cont.)
• Funding is an issue for small legal practice
• Banks often do not understand the structure of your
contingency law firms.
• Owners of small legal practice might face problems
in obtaining financing loan
• The expenses of marketing your firm to obtain
business and the competitive nature of practice
makes it difficult for a sole practitioner or small law
firm to compete in the market
 Adequate funding for continual
operations (cont.)
• Bank Loan – usually requires applicant to show
good financial standing as evidenced in a bank
account statement
• Personal loan obtain by partners?
• Even if your firm qualifies for a bank loan the
owners will need to personally guarantee the loan
• Matters for consideration for bank loan:
1. Term tenure - 10 or 20 years.
2. Low interest rate
3. What type of loan should you apply for?
 2. Maintaining quality personnel

• Personnel refers to a group of people willing to obey orders

(employees)
• The HR department is responsible for hiring and training and
placing employees and for setting policies for personnel
management
• Seeking assistance from recruitment organisations dedicated
to providing quality staffing and alleviate the difficulty that
you encounter with your personnel requirements.
• Whether your needs are temporary or permanent full-time
staff
 2. Maintaining quality personnel
(cont.)
• You must employ methods to maintain quality and
skilful personnel
• Eg: attractive remuneration +fringe benefits
• Self-development programme etc
 3. Financial planning for future
growth
According to Martin Shenkman in “Planning for
Lawyers”, an important risk to consider is the future
viability of a law firm

Important question is: if there arise situations such as

unfunded retirement or severance agreement
 Financial planning for future
growth (cont.)
Circumstances requiring legal firms to be aware of the need for
Financial planning:

1.Firms do break up, merge or disintegrate.

2.A lawyer, or his or her estate, could incur costs to properly
transition a practice following a death or permanent disability.
For example, legal ethics practices may mandate returning all
client files.
3.Some sole-proprietors and small firms maintain inadequate
malpractice coverage, or cannot obtain adequate coverage
4.Whether there are loans or other debts associated with a
practice and whether there are any personal guarantees
 4. Marketing
• Marketing by Malaysian lawyers must be done within what is
permissible and what are not permissible under the Legal
Profession (Practice and Etiquette) Rules 1978

• Visit several websites of well-known legal firms in Malaysia

and identify whether they have complied with the
advertisement rules under the LPA 1971.
 4. Marketing
• According to Larry Bodine in “The 10 Most Effective Law
Firm Marketing Strategies” (2014), the effective marketing
strategies of law firm are as follows:

Number one: Choose the right infrastructure for your law

firm's online presence.
The second technique is to put high quality content, including
both written words and video on your website. 
Number three: Don't waste any money on marketing that is not
measurable
 Marketing
• Number four: Generate additional files from a current client
rather than from a brand new client
• Number five: Cultivate referral sources. A lot of lawyers get
most of their business from referrals
• Number six: Get active in a trade association, and get on the
board of directors.
• Number seven: Only after you've done all of these things,
then pursue target clients directly without the need to make
any cold calls.
 Marketing
Number eight: Have a written business plan as your “to do list”

Number nine: Devote sufficient time for business development

You can meet somebody for coffee at Starbucks in the morning.
You can meet a client. You can meet a referral source for lunch.

Number ten: Track your results. Make a point of writing down

the people that you want to meet before you go and ask yourself,
"Did this work? Did I get a new file?"
 5. Building morale and firm
culture
• Traci Ray and Anneka Nelson in How Investing in
Firm Morale Improves the Bottom Line (2015)
advise as follows:

• Helping our employees achieve their fullest potential

is our duty to ourselves and our future

• Equipping our people with tools to learn and grow

while encouraging them to push themselves
 5. Building morale and firm culture

Peter Gibbons from Office Space sums it up when he says,

“Human beings were not meant to sit in little cubicles staring at

computer screens all day, filling out useless forms and listening
to eight different bosses drone on about mission statements.”
People need a purpose that extends beyond a paycheck.
Employees want be fulfilled and motivated to give their time,
energy and effort to a firm. If the investment of a little time and
money can accomplish that, and all of the rewards that
accompany it, why hesitate?
 Building morale and firm culture
Common problems relating in the working place:
•Arrogance and selfishness
•‘Politics’ (read jealousy, delicate pride and rivalry etc) between
individuals, teams and departments
•Problems with staff retention. Because this culture is
institutionalized, it can be hard for lawyers to make a choice
between firms if every place feels the same.
•Bad management practices. How often do you see great
lawyers become awful managers? Probably more than you’d
like. Being a good lawyer and being a good manager are two
very different things. Yet time served and quality of lawyering is
still a big factor when it comes to appointing managers in many
law firms.
Issue: Is it time for team building?
 Building morale and firm culture (cont.)
Potential of building morale and firm culture
1)Better knowledge sharing as people share both industry and
non industry content, knowledge and experience with each other.
2)Better skill development would come from things like
mentoring sessions, networking events and business idea
sessions. Plus the hand up activity itself is a development of
social and managerial skills.
3)Better teamwork would come from advancement being tied
to your efforts to help your team.
 Building morale and firm culture (cont.)

4.) Better management practice as those who perform best in

meeting KPI would be the ones advanced into management
positions.
5.) Increased innovation would flow for several reasons. The
content shared to others could spark ideas in new minds.
Deliberately thinking about ways to help others is an act of
innovation in itself. Sitting down with colleagues to discuss ideas
and angles about the legal industry, business practice and
personal career development would see two minds or more
working together 6.) Higher morale and increased staff
retention
 6. Observance of professional
ethics
• The Solicitors’ RemunerationgOrder (SRO),
• “Can you give discounts?”
• problem of “ambulance-chasing” and contingency fees
• Lawyers have standing arrangements with casualty ward
attendants in hospitals These touts will bring work to lawyers,
and these lawyers charge 20%, 30%, or 40% or whatever, and
share the spoils with these people.
• Lawyers attesting to the signatures of borrowers whom she has
never met or seen!
 7. Risk Management
• Traditionally, the word has been defined as uncertainty
concerning the occurence of a loss (Rejda, 2003).
• Risk, as defined by the insurance industry, is the probability
that a loss may or may not occur.
• Risk, in legal practice can be safely defined as the possibility
of a claim for malpractice and ethics complaints against the
attending lawyer or to the legal firm itself. Such complaint
may be as a result of breach of professional duties (for
example, failure to attend Court, failure to comply with time
limit for filing pleadings or failure to take remedial steps to
reinstate a ‘struck out’ application or suit).
 Electronic Office

• Poor management of legal office are usually caused

by the following matters:

1.Bad document management;

2.Bad client relationship management;
3.Lack of standard in daily procedures;
4.Lack of structure inside the firm’s library;
5.Lack of contract management procedures.
 Electronic Office (cont.)
• g
An electronic document management system potentially
includes tangible benefits such as:
•  Reduced paper storage –- removal of paper by converting
paper documents that are stored within the business or in an
archive into an electronic form
•  Improved retrieval time - obtaining paper from storage or
an archive is typically slower than electronic retrieval of
documentation.
•  Saves paper, printer and toner costs - reduced need to print
paper documents as electronic versions are available for use or
reuse.
 Electronic Office (cont.)

• Business process management (BPM) activities can be grouped into six

categories: vision, design, modeling, execution, monitoring, and
optimization.

• There are four critical components of a BPM Suite:  Process Engine – a

robust platform for modeling and executing process-based applications,
including business rules  Business Analytics — enable managers to
identify business issues, trends, and opportunities with reports and
dashboards and react accordingly  Content Management — provides a
system for storing and securing electronic documents, images, and other
files  Collaboration Tools — remove intra- and interdepartmental
communication barriers through discussion forums,
• dynamic workspaces, and message boards
 Electronic Office (cont.)

• BPM also addresses many of the critical IT issues

underpinning these business drivers, including:
•  Managing end-to-end, customer-facing processes
•  Consolidating data and increasing visibility into and access
to associated data and information
•  Increasing the flexibility and functionality of current
infrastructure and data
•  Integrating with existing systems and leveraging emerging
service oriented architecture (SOAs)
•  Establishing a common language for business-IT
alignment
 Ethics for Computer Users

David G. Ries in “SAFEGUARDING

CONFIDENTIAL DATA: Your Ethical and Legal
Obligations” states as follows:

“Taking steps to protect the confidential information in

your computer systems is more than a sound business
decision. As a lawyer, you have ethical and legal
obligations to exercise the vigilance needed to protect
client data. Are you clear on what those obligations
are?”
 Ethics for Computer Users
Confidential data in computer and information systems
faces greater security threats today than ever before—
and the dangers to lawyers and their firms are very real.
 Ethics for Computer Users
In a March 20, 2010, an article titled “Law Firms Are
Lucrative Targets of Cyberscams,” the San Francisco
Chronicle discussed attacks on firms, including
intrusions into a law firm network to steal lawsuit-
related information.
It noted that:
Security experts said criminals gain access into law firms’
networks using highly tailored schemes to trick attorneys into
downloading customized malware into their computers. It is not
uncommon for them to remain undetected for long periods of
time and come and go as they please, ..”
 Ethics for Computer Users (cont.)

Laws and Regulations Covering Personal Information

likely to apply to lawyers who possess any specified personal

information about their employees, clients, clients’ employees or
customers, opposing parties and their employees, or even
witnesses.
 Ethics for Computer Users (cont.)

Paralegal fined for taking client information

By Michael Cross, September 2014

Employees who take information about clients with them when

they move jobs are committing a criminal offence, the
information commissioner has warned solicitors after a paralegal
was fined £300 yesterday. 
James Pickles, 29, who previously worked at Jordans Solicitors
in Dewsbury, Yorkshire, was prosecuted for illegally taking
information about more than 100 people before leaving for a
rival firm in April 2013.
 Ethics for Computer Users (cont.)

The information was contained in six emails sent by Pickles in

the weeks before he left Jordans.
Bradford and Keighley Magistrates’ Court heard that Pickles had
hoped to use the information, which included workload lists, file
notes and template documents, in his new role.    He was
prosecuted under section 55 of the Data Protection Act, fined
£300, ordered to pay a £30 victim surcharge and £438.63
prosecution costs.

•https://www.lawgazette.co.uk/law/paralegal-fined-for-taking-
client-information/5042989.article