Fall 2009 issue of Horizons

Raise Your Expectations CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

What should law firms be doing now to build that competitive advantage into the future? Here are a few suggestions to consider: 1. Be looking at mergers or joint ventures with other law firms. The time seems right to inquire about a complementary firm that, when combined with your firm, may have the ability to better compete either geographically or by specialty or industry. 2. Increase recruiting efforts now. Although that seems counterintuitive, the supply of good lawyers available has never been stronger, particularly if the firm is willing to subsidize relocation. Even smaller firms that may seldom consider someone from out of town may want to think twice about an attorney with special expertise to help grow the practice down the road. Maintain a vibrant internship program — they may be the best hires next year. 3. As was discussed with physicians, expanding marketing efforts while times are tough should pay off later. Being active in the community, meeting with other professionals, sponsoring activities, and offering to speak on current topics of interest are just a few examples. Visibility is the key. Making the best use of everyone’s non-billable time now will reap benefits into the future. No matter what your professional services business is, physicians and lawyers as discussed, other professionals such as architects and engineers, investment advisors, insurance and advertising professionals, or the various types of consultants, the economy has clearly impacted business in 2009. But do not lose sight of what will lead to a competitive advantage in the future. A little planning and some spending now will go a long way toward prosperity when the economy recovers.

relationships formed now may lead to an ultimate buyout when values increase or increase cash flow as the economy slowly works its way back to prosperity. 4. Physicians need to begin monitoring and reporting quality outcomes. Currently, the Center for Medicare Services has started the Physician Quality Reporting Initiative program, whereby physicians voluntarily report clinical outcome data to CMS. As an incentive, participating physicians get an extra 1 percent reimbursement based on charges submitted. In the future, given that most of the health care reform proposals include provisions to reimburse health care providers on a “pay for performance” methodology, providers will be required to submit quality data to CMS in order to determine reimbursement. In addition, in an effort to promote “consumerism” in health care, the quality data will be made available to the public. As a result, providers with higher quality data (i.e., better clinical outcomes) will have a competitive advantage. Law firms also have seen a decrease in revenue. Like physician practices, it is mostly from decreased workloads as opposed to a reduction in rates. The reasons for the decline are also, in concept, similar to physicians. They include consumers spending less discretionary dollars, seeking to do more themselves or putting off what they feel can wait until economic conditions improve. In addition, most law firms are transactional based. With less overall activity, transactions are down whether they are mergers and acquisitions, patent applications or estate planning updates. So what are law firms doing? As expected, cost controls are front and center. Reductions in salaries, deferrals of job offers and reductions in staff have been well publicized, particularly with the large firms. All law firms are watching their costs, cutting back on out-of-town CLE and expensive partner meetings. Law Firms

Questions? Contact:

Ken L. Rubin, CPA Partner-in-Charge Professional Services Group 314.290.3417 ken.rubin@rubinbrown.com

48 u fall 2009 issue