Our topic this week again focuses “tips” regarding the area of “administration.” “Administration” is the second of the five parts that make up every business in the world. Previously, we talked extensively about the importance of “clients” or “customers.” Now that we are turning to the area of “administration,” it is important to remember our discussion of “administration” centers on the following quote: “Be careful what you pray for, you may just get it!”

Imagine this scenario: you have decided to set up your own practice, and you are now out scouring for clients. Before long you find you are so successful in getting clients you are having trouble keeping everything straight. Thus arises the need for “administration.”

“Administration” is an area that is greatly overlooked in law firms. “Administration” is the totality of systems and checks and balances that organize your law office and allow you to handle the legal business you have been entrusted in an efficient, professional and economic matter. In fact, there is probably a direct correlation between the amount of organization, or the lack thereof, and the true, efficient, professional, and economic way in which a piece of legal business is handled. The less organization, the less efficient, professional and economic. The more organization, the more efficient, professional, and economic result will be attained for the client.

Okay, let’s not go to extremes in terms of being overly organized, but at least organized enough to handle the legal matter properly. Remember my statement: “law firm nirvana is when those who are not anal become as anal as those who are anal!”

One of the very best ways to stay organized is to have an efficient and effective filing system. This week’s “tip” deals with client files and how maintaining client files in an organized fashion will get both your client, you, and your firm better legal results and better economic results.

We are not going to talk about electronic filing systems at this stage, because paperless file systems have not yet been, in my opinion, perfected to the point where they can replace the “good old fashioned” paper file. I am familiar with at least one firm that is allegedly totally electronic, and their staff tells me they can never find anything, especially when they need it. It is like Murphy’s law, “Murphy says, anything that can go wrong, will! O’Toole says, usually at the worst possible time!” O’Connor’s observation, is that Murphy and O’Toole are both optimists.” There is nothing like knowing exactly where to go to find something in your file, in particular, when you need it, now!

One of the reasons I’m such a fanatic about file administration came from an experience I had with a senior lawyer I worked with early in my career. His filing system was what I call the “touch-everything-method of filing.” What this means is in order to find something in any file he was handling, you literally had to touch every piece of paper in the file until you found what it was you were looking for. His method of filing was to put each piece of paper in the file, more or less, into the file jacket as he was working on the file. I suppose the “method in his madness” was this would more or less put everything in the file in some type of chronological order, at least chronologically on how he was actually touching the pieces of paper, whether or not they were in kind of date order. This lawyer practiced for some 30 years or so, and so I suppose the comment could be made, “if it ain’t broke, don’t fix it!” On the other hand, it always seemed to me this was such an inefficient way of dealing with your files and seemed to portray to those around him, in particular, his clients, that he was not a very organized lawyer. Unfortunately, I believe this also diminished his reputation with regard to potential clients being comfortable enough to entrust serious legal matters to him. It was from this experience that my own analness evolved.

Early on in my practice in the early ‘70’s, I found if I was going to handle many matters, keeping my files maintained in an organized manner made me much more efficient and articulate. I believe this organization translated to my own sense of knowing what I was talking about when I needed to talk about it and projected an image to the lawyers I dealt with on the other sides of matters that I was competent. It also projected to my clients I was capable of handling their legal matter in an efficient, professional and economic manner.

What every good filing system needs

A good filing system starts with what we are going to call the client matter jacket. There are multiple different ways to do client files, but I have always found simply starting each client file with a manila folder has made a lot of sense. The files graduate when more paper is added to what are called “red ropers.” These “red ropers” are simply expandable files that allow you to put more paper into the file than you can fit into the basic manila folder. Eventually, the expandable files can expand into “BANKERS BOX® storage boxes.” BANKERS BOX® storage boxes are simply cardboard boxes that can be folded open and will take either letter or legal size manila folders and backboards so you can open up an extensive filing system. I have handled cases that have had in excess of 50 BANKERS BOX® storage boxes of documents, and frankly, I have never found any better system for keeping track of all the information.

The client’s original manila folder always stays with the client and becomes the first part of the expandable file, as well as the first part of the BANKERS BOX® storage boxes. Thus, you always have the basic information with regard to the client that came from the “New Matter Index Set” we talked about last week. Remember the first piece of paper in the “New Matter Index Set” is pre-glued so the basic client information can be put right inside the manila envelope when the client’s file is opened. The client’s file can be named by ripping off the tab that has the client’s name and the client’s matter right on it. Also remember we always open all of our client’s files with our client’s last name first, then our client’s first name, and then the next designation is either a verses another individual’s last name which indicates a plaintiff’s matter or with a semicolon and another person’s name and after that a verses indicating a defense matter. This is basic, but important in order to remember which side you are on. If the matter is a non-litigation matter, it is opened with the client’s name and usually a hyphen and after that a designation such as general business, real estate, tax or some other similar designation.

Every single client’s file is started with a manila folder. Every single client’s file has the same stick-on tab that designates who the file belongs to. Every single file has the same card glued inside the manila folder indicating basic client information from the “New Matter Index Set.” In addition, every single file has standard manila backboards with “ACCO fasteners” two-hole punched into the backboard to set up a basic filing system. Long ago, we discarded the majority of the locks for the ACCO fasteners because we found it to be a monumental waste of time to put the locks on every time you put something in the file. It is much simpler to simply bend the tabs of the ACCO fastener to the outside instead of the inside and that has seemed to lock the papers in position until they need to be straightened up and a new piece of paper needs to be added to the backboard. “ACCO fasteners” can be found in any stationary store and are simply a u-shaped piece of metal that fits through a double hole punch put into a backboard or a piece of paper and then can be folded over multiple times without breaking. If enough pieces of paper get onto a backboard where a new backboard as a second backboard needs to be opened, for example “Correspondence #2,” we will then use a lock on the ACCO fastener in order to keep that file in tact and not let anyone put anymore papers on it. In addition, the top sheet is usually a plain piece of paper that says this is backboard number 1 and backboard number 2 is being utilized with regard to ongoing filing. We always use manila backboards because they are stiff enough and strong enough to operate as the platform to apply the ACCO fasteners in order to set up a basic filing system for every file.

Every client’s file is opened with a “Correspondence” backboard and a “Notes, Facts and Memorandums” backboard. If it is a litigation matter, a “Pleadings” backboard is included. Additional backboards can very easily be added to the client’s file and the typical backboards would be “Documents,” “Financials,” and any other necessary backboards. If the file lends itself to an additional organizational system, we most often would either use a chronological by date system or what we call an “Alpha” file system. Whenever we open up additional folders in the client file we always use either right, left or center cut manila folders and label the folders either by date followed by a description of what is in the folder or alphabetically by the most basic term that would apply to what is being put in the folder. A typical date entry would be “October 24, 2003-Agreement - Franchise - Company X with Company Z.” A typical entry on an Alpha file would be “Agreement - Franchise - Company X with Company Z - 10/24/03.” You can quickly tell which way is the fastest way to organize the materials and whether or not the sequencing of dates is important with regard to the legal matter you are handling.

The last thing we do with regard to our filing is to use the “LIFO” filing system. “LIFO” stands for Last In, First Out. The beauty in this type of a filing system is you always can count on the latest correspondence being on the top of the correspondence backboard, the latest information on the notes, facts, memorandums backboard being the latest information you dealt with regarding the file.

I think you can readily see if you keep your files in such an organized fashion, and your staff continually updates the file with information received, you can be confident when you pick up a client’s file you will immediately be able to find out where that client’s matter is at, what was done on the file, no matter who was working on it. I have never named this file system, but if I were to do so, I think I would call it, “Don’t Touch Anything More Than You Have To” filing system. Lawyers who want to become successful stay busy. Lawyers who are successful are busy. You should try to waste as little time as possible trying to bring yourself “up to speed” with where a client’s matter is in order to project competence to those you deal with. An organized file system allows you to do this most readily.

There are lots of things we do with client’s files besides simply creating them and organizing them, but that is the subject matter for additional articles. We will be talking about how we keep track of demands and offers of settlement in cases. We will also discuss how client files are handled in a central file system, how files are closed, and how files are retained before we are finished with this area of “administration.”

You will remember we talked about building a successful practice one organized block at a time in the firm’s foundation. Having a consistent organized filing system is certainly one of the major building blocks upon which the structure of your practice and your firm needs to be built. Review what you do now with regard to client files, and if it is not satisfactory, get organized, now! Set up a system that is utilized every single time a client matter is opened and maintained in a standard way, and you will find you have lots more time available to creatively problem solve for your clients instead of searching for files. Once you’ve found the file, it will be easier to search for what it is you are looking for to bring you up-to-date on where the client’s matter presently stands. Again, and not to repeat it too often, I hope:

“When the space is ordered, you are free to live creatively.” — James Michener.

Next week we are going to talk about the use of separate billing files that go with every client matter and how those files are set up to correspond with the client’s main file in each matter. We are going to talk about the organization of such files, the maintenance of such files and why those files are kept separately from the client’s main file. We are also going to talk about what other information can go into these client billing files besides the monthly bills. I think you will find our beginning discussions on the importance of billing and maintaining billing files to be very helpful.

As I’m discussing all of this with you, I’m reminded of a phrase I have heard over and over that I think is really very true in the practice of law. That phrase is “the harder I work, the luckier I get!” Ironically, a take off on that quote seems to lend itself to this particular area of “administration” in dealing with files, and I would coin the phrase regarding this as follows: “the more organized I get, the happier and more efficient I am!”

Talk to you next week!

Jim Wirken is a civil trial attorney and the Chairman of the Board of The Wirken Law Group in Kansas City.