A series of articles emphasizing practical
knowledge you can't find in practice guides
and interviews with experts who share
their techniques for effective and efficient
case management
  How To Do It: Articles, Interviews
& Practice Tips

Articles emphasizing practical knowledge you
can't find in practice guides

  People Who Made A Difference
Profiles of people who changed workers’ compensation law.

  White Papers

  Letters to the Editors

  Meet the Editors
• Warren Schneider
• Marjory Harris


In this series, Michael G. McDonald, Esq.
of the McDonald Law Corporation offers
practical advice to WC lawyers and adjustors.


As the son of an attorney, I recall listening to my father’s stories of law, his colleagues, his firm, the courts and the profession. He told stories about trials, discovery and evidence which piqued my interest in the study of law. None of his stories concerned the business of law. In fact, he told stories about many of his peers retiring from the practice once the insurance companies began the computerized auditing of bills in spite of excellent results at trial. We hear the same stories today.

The profession of law requires business planning and the ability to carry out the plan. It is my experience that lawyers are typically not the greatest business minds. As lawyers, we may know the law, negotiate deals and make money for our firms and our clients. We do not typically empathize with our employees’ concerns about our firms. California law mandates set rules by which we must abide. The employees are not viewed as an asset, but rather a cost.

However, what happens to the money our firms make and how do we keep our business afloat in difficult economic times?

Many young people have not experienced the economic decline we currently have. During economic downturns small businesses need to look for opportunities to compete against competitors and adapt to the situation. Typically, a larger competitor may be unable to adapt quickly and expect to perform in a “business as usual” manner.

The Small Business Administration provides many ideas to compete in difficult economic times. Many books have been written outlining plans and providing suggestions for survival. As a lawyer engaged in the profession of law, it is imperative to look at and assess our plan to succeed, not just survive.

Make a Profit to Stay in Business

Business Rule 101 states that you cannot remain in business unless you make a profit. What is your profit goal? Ten percent? 35 percent? 50 percent? Create your goal and benchmark your progress.

How do you make a profit? The easy answer is to increase your income and/or decrease your expenses.

First, it is important to maintain a strong cash flow and remain as liquid as possible. Cash flow allows us to pay bills without going into debt by attempting to obtain credit.

Second, become more efficient, and take cost-effective actions. Be lean, but be careful not to damage your money-makers (billers).

Third, look for opportunities in shifting market conditions to increase your business. What can you offer a potential client that another cannot? Be aggressive and market your ideas and company.

Income Opportunities

Market your firm and prove you are not part of the status quo. Seek out new business by contacting current or past clients. The holiday season is a good opportunity to do this. Show the potential clients what you have to offer and/or attempt to increase your work with them. Keep in mind that attorneys and claims adjusters are like mushrooms. They appear at a location for a while, disappear and re-appear another time. Keep on good terms with the adjusters and try to follow where they go. Personal contact is a way of developing a client base.

Are your firm’s rates competitive? Are you under pricing or overpricing your services which lead to a decrease in income? Are there other options for billing a client? What are the client’s needs and wants? If you are an applicant attorney, what is your hourly rate for depositions, vocational rehabilitation, etc.? Do you have the experience to raise your rates? What will the insurance company do in response to your rate?

Expense Reduction

Monitor and improve your cash flow by creating regular cash flow reports. Know where your money is going and how much is going to each vendor. Look at the essential bills and determine whether there are bills which can be reduced or eliminated. For instance, look at your insurance coverage. Use a broker and shop around for better deals. You will be surprised how much money you may save by looking at different carriers. Then determine whether the insurance should be paid over time (to keep your cash reserves) or paid all at once (to eliminate an expense over several months).

Telephone costs, overnight charges, copy charges may be billed to clients depending on the contract. Review your contract and determine what costs can be billed to clients.

Taxable office equipment is another item for review. Does the city or county tax your office equipment? If so, do you even have that equipment any longer? If not, run an annual inventory and determine whether you are being taxed for items no longer in existence.

Fight unemployment claims if they are not legitimate. The EDD will “charge back” your account if there are no claims charges on your account.

Reduce non-essential expenses to become leaner. What is “non-essential”? Will the expense increase profit? If not, it may be “non-essential.” If you eliminate an expense, how will that elimination affect your staff? How about the effect it will have on your billers? Some expenses indirectly create a comfortable environment from which your billers will give you more hours or work.

Keep an eye on your Accounts Receivables. Simply put, reduce your AR aging by calling clients to pay their bills. The likelihood of payment after 90 days decreases significantly. Keep on top of the AR!

Build up your capital reserves by stretching out debt. What does that mean? If you have a long-term lease, re-negotiate it. If you have an inventory of automobiles, is it more cost-effective to offer a car allowance? Target your long-term debt and think of ways to reduce the money charges.

Employee Involvement

Involve your employees in the methods and implementation of the cost-saving methods. This may be easier said than done. However, our employees are the cogs which make the business run and make us money. Give them an opportunity to assist in the implementation and the methods to reduce costs. They may have good ideas. Most employees understand that cost-saving methods are just that, cost-saving. The methods are not the first step to closing the office. Rather, they are designed to allow for growth in the future.


These thoughts should be used to create a comfortable office climate, not a climate of fear, slash and burn. Respect your employees. They are people who have concerns for their jobs. Cross-train your employees and make them more useful to the firm. Give them an opportunity to voice their concerns in private. Make them part of the solution to make the firm get through this current economy in order to thrive.

Michael G. McDonald is the founder of McDonald Law Corporation in Concord, California and a Certified Specialist in Workers' Compensation Law, State Bar
of California. He is a Director for the California Workers' Compensation Defense Attorneys Association.

For more information, click here.

Michael G. McDonald, Esq.

McDonald Law Corporation
1800 Sutter Street, Suite 430
Concord, CA 94520-2563
Voice: (925) 363-4380
Fax: (925) 363-4352
Other locations: Sacramento, San Jose and Fresno


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The Defense Perspective:
Surviving the Business of Law in
the Current Economy
By Michael G. McDonald, Esq.