|
1.
How can my firm determine how much exposure our firm has
to outstanding hard disbursements?
2. Our firm has recently increased our
Intellectual Property group significantly. This has
dramatically raised the amount of hard disbursements paid out by the
firm. Is this a good time to implement
DMA?
3. How many clients have selected this type of
Solution?
Questions Related to Your
Clients:
4. Is this
approach fair to clients?
5. Our firm simply forwards the
larger disbursement bills to the client, requesting that he/she
pay the vendor directly. For others, we simply hold
payment to the vendor until the client pays the Firm. Why
is the DMA Solution a better answer?
Questions Related to the Bar
Associations:
6.
The ABA Ethics Guidelines prohibit law firms
from making money on anything but providing a legal
service. How does the DMA Solution handle this
issue?
7.
You say the DMA Solution has been endorsed by the Boston Bar
Association as a Best Business Practice?
Questions Related
to the DMA software:
8.
You say that the Disbursement
Manager™ software is an add-on to the
Thomson Elite Financial System?
9. What
standard reports come with the Disbursement Manager
system?
Questions Related
to DMA's History:
10.
What's the background behind the DMA Solution?
11.
What was the name of the Boston law firm where Marlyn installed this
concept, and what kind of reaction did their clients have to this
idea?
Answers:
1. How
can my firm determine how much exposure our firm has to
outstanding hard disbursements?
DMA has created a spreadsheet that you can
download, and then use to estimate your firm's hard
disbursement totals. Click on this link to download the
spreadsheet: Excel Spreadsheet: Hard Disbursement Calculation
Table
2. Our firm has recently increased
our Intellectual Property group significantly. This has
dramatically raised the amount of hard disbursements paid out by the
firm. Is this a good time
to implement DMA?
Absolutely. IP work uses the highest amounts of
hard disbursements, and can have a major impact on firm cash
flows. This presents a solid justification for changing your
hard disbursement policies. This link takes you to a sample letter to send to your
clients, explaining the reasons why an increased IP practice is a
"Trigger Event" that has caused your firm to look more closely at
your Hard Disbursement policies: Client
Letter: Trigger Event
3. How many clients have selected
this type
of solution?
Disbursement
Manager™ operates under a patented
method licensed from PTFM, which has used this method successfully
in several law firms for a number of years. Collectively these
firms have thousands of clients, including dozens of Fortune 500
corporations, who have chosen to fund their out-of-pocket costs with
this type of solution. Our CEO, Marilyn Chenault
Minot, managed one of these law firms, and has direct
experience with the concept and the client reaction, which has
been very positive. 
The first firm to adopt this concept took a
risk - would clients react negatively and leave the firm for
another law firm that continued to provide free loans? That
firm found that this fear was unwarranted - their clients understood
that the cost of money was a very real expense that should
legitimately be passed along to the client whose legal matter
created those costs. Photocopy costs are not absorbed by
the firm and passed along to all clients in higher billing
rates. Why should other client-related costs be
absorbed?
In truth, the first law firm that charged a
client 25 cents for a photocopy was very brave indeed! They
risked the loss of their clients. However, the firm's
management finally understood that the cost of providing free copies
was too great to ignore any longer. In addition, they
understood that raising billing rates to pay for that cost was
unfair to their clients who did not use large amounts of
photocopies. Undoubtedly, the first firm to place a "copy
charge" form next to their copiers and ask their lawyers to write
down the client numbers, matter numbers and number of copies made
risked raising the ire of their partners and clients. The
standard comment would have been: "We are charging hundreds of
dollars per hour for our legal work. The clients will be
outraged if we tack on a few dollars more for making copies!
They will go to that other firm across the street, which isn't
charging for copies. We will lose all our best
clients!"
This is the same concern we hear today when
partners first hear about the DMA Solution: "Our clients will
be outraged, and leave the firm!" However, it did not happen
with copy costs, and it has not happened with hard disbursement
carrying costs either. Virtually all law firms now have
expensive automated systems to capture and allocate copy
charges accurately to the appropriate clients. As for hard
disbursement costs, those law firms that have already adopted
this Solution have found that their clients do not
object. The number of firms using this type of
Solution is continuing to grow. Eventually, we expect that all
firms with copy chargeback systems will use this patented Solution
to equitably allocate the cost of carrying hard disbursement
advances. It is just a matter of time and
experience.
4. Is this
approach fair to clients?
DMA's unique approach is substantially fairer to
clients than the present systems in use nationwide. The
present practice of considering the carrying costs of paying hard
disbursements as part of the firm's overhead is unfair and
inequitable for the clients. Why? Because all clients
are paying higher billing rates to offset the firm's cost of
carrying free loans every day. However, not all clients
use high levels of hard disbursements, and not all clients take 90 to 120 days to pay
their bills.
In short, the
current practice of absorbing these carrying costs is penalizing the
firm's best clients, and benefiting some of the worst clients.
The client who pays his/her legal bills every month and who uses
little or no hard disbursement advances in their legal matters, is
literally subsidizing the slow-paying clients and those whose
matters require large amounts of out-of-pocket costs.
Adapting the
DMA Solution allocates these costs where they belong - to the client
whose legal representation requires high amounts of out-of-pocket
costs and/or those clients who are chronic slow-payers.
Those clients drive up the firm's costs, and they should be
billed for those costs.
5. Our firm simply forwards the
larger disbursement bills to the client, requesting that he/she pay
the vendor directly. For others, we simply hold payment to the
vendor until the client pays the firm. Why is the DMA Solution a
better answer?
Here are links
to a pair of sample letters to send to your clients, explaining the
reasons why DMA is a win-win for the Client, the Firm and the
vendor:
Client Letter: Direct
Pay Option Client
Letter: Hold Vendor Payment
Option
6. The ABA Ethics Guidelines prohibit law
firms from making money on anything but providing a legal
service. How does the DMA Solution handle this
issue?
The DMA Solution is completely within the
ABA's Ethics Guidelines. Specifically, the Solution uses a
dedicated "Disbursement Line of Credit" at the firm's bank to fund
all hard disbursement costs that are handled though the
system. The Disbursement
Manager™ software allows the firm to set
the interest rate at exactly the rate charged by the bank, and
pre-bill interest charges for a set amount of days - typically the
firm's average period of Accounts Receivables outstanding. The
client - who elects to use this optional service - is billed for the
principle amount of the hard disbursement itself, plus this pre-set
amount of interest in advance. 
Once the client
pays the invoice, including preset interest and audit fees, the
Disbursement
Manager™ software automatically
recalculates the number of days each hard disbursement was actually
outstanding - between the date the firm's Accounts Payable
system cut a check to pay the disbursement, and the date the
client's payment was received within the Accounts Receivable
system. The Disbursement
Manager™ software then determines the
amount of underpayment or overpayment, and issues the proper charge
or credit that will appear on the client's next invoice. There
is full reconciliation on each hard disbursement entry, and the
transactions are automatically handled by the Disbursement
Manager™ software.
Finally, the software
will issue data to transfer the reimbursement payment directly to
the bank's Disbursement Line of Credit. This
automatic transfer will repay the line of credit and accurate
interest. The law firm is not receiving any interest - the
firm's bank receives the interest for the use of the Disbursement
Line-of-Credit. The law firm is simply passing on the
exact amount of interest charged on each individual hard
disbursement. The DMA Solution completely complies with the
American Bar Association's Ethics Requirements.
7. You say the DMA Solution has been
endorsed by the Boston Bar Association as a Best Business
Practice?
Yes - The President of the Boston Bar Association gave
the Bar's formal endorsement of DMA in March 2004. Endorsement
Letter: Boston Bar Association
Letter
8. You say that the Disbursement
Manager™ software is an add-on to the
Thomson Elite Financial System?
Yes - the DMA Disbursement
Manager™ software links directly to the
Accounts Receivable Manager and the Accounts Payable Manager in the
Thomson Elite Financial System. It will be available for other
financial systems as well. Once installation and setup is
complete, the Disbursement
Manager™ operates behind the
scenes and requires little, if any, interaction with your
financial/accounting staff.
Wilson Technology Associates, Inc. wrote the DMA Disbursement
Manager™ software. Wilson
has been one of the premier developers of customized software
for the Thomson Elite Financial System. Thomson Elite has
since purchased Wilson, and Thomson Elite will maintain the DMA
software. Chris Poole, President and CEO of Thomson Elite, has
provided a letter outlining the exclusive relationship between
Thomson Elite and DMA. Relationship Letter: Thomson Elite
Letter
9. What standard reports come with the Disbursement
Manager system?
The
Disbursement
Manager™ software includes eight
standard reports. Click on the report name
to see a sample:
- Realization
Report
- Carry Cost Report
- Evergreen Retainer Report
- Realization Detail Report
- Orphaned Entries Report
- Cash Reconciliation Report
- Client Reconciliation Report
- Aging
Report
10. What's the background behind the DMA
Solution?
More than six years ago,
Marilyn Chenault Minot successfully installed and used this concept
at the Boston law firm she managed, Wold Greenfield, using a
patented methodology created by PTFM. This solution has
been successfully in use at that firm ever since and has been widely
accepted by their clients.
After leaving the
firm, Marilyn founded DMA to provide the DMA solution to
large law firms nationwide who have the same problem: how
to manage hard disbursement payments and carrying costs in an
ethical and equitable manner. DMA's Disbursement
Manager™ product is specifically designed to meet the needs of large
law firms - firms with multiple offices, hundreds of lawyers and
international practices. The Disbursement
Manager™ Solution is an
add-on for
the Thomson Elite Financial System, and will work with any financial
software. DMA is able to address the unique issues of law
firms of all sizes. Marilyn also successfully
negotiated a cross-marketing and licensing agreement with
PTFM in order to license their patented
methodology. Press Release: DMA and PTFM Announce Marketing and Licensing
Agreement
11. What was the
name of the Boston law firm where Marlyn installed this concept, and
what kind of reaction did their clients have to this
idea?
The firm was Wolf Greenfield in Boston
and their Managing Partner at the time, Steve Henry, has graciously
written a letter for DMA regarding his experience. We also
have transcribed a speech that Steve Henry made with Marilyn at the
Law Firm CFO Institute. Here are the
links:
Steve Henry
Endorsement
Steve Henry CFO
Institute Comments
| 
