April 19, 2005
Cost Cutting Isn't The Answer
I am in San Francisco attending the ALA annual conference (Association of Legal Administrators). This is the best ALA since Boston. Attendance is between 1700 an 1800.
An administrator just told me that their managing partner had put a moratorium on all non-fee earner travel. They canceled the rented flowers and stopped all subscriptions and association memberships for non-attorneys.
Come on - what do they think that accomplishes other than a negative image of management and the law firm. Do they take pleasure in treating everyone else as second class citizens? That is so shortsighted, and yet it is fairly common. But it is just a lot of sound and fury accomplishing nothing. For all practical purposes, a law firm’s operating expenses are made up of compensation and rent. Cutting cost by reducing the quality of the environment and denying the administrative staff will not make a material difference except on the attitude of the people the partners depend on to keep the wheels of their enterprise well oiled. In short, this managing partner is biting himself in the you know what.
Cost cutting campaigns will not turn around a law firm in trouble. If you want to increase profitability, you need to concentrate on increasing revenue rather than focusing attention on reducing expenses. You should pursue opportunities to increase chargeable hours, to increase billing rates and to improve realization. Eliminating prerequisites, reducing personnel, holding back on salary increases, and reducing administrative staff is likely to cause more harm than gain.
Excellent managers focus on opportunities rather than problems. Pursue the right opportunities and most problems take care of themselves. Granted, there are problems that need to be solved. But they are distractions from the main objective of capitalizing on opportunities. So, choose your problems wisely and get them behind you quickly so you can focus on what you are being paid to do- identify opportunities and pursue them.
I had an experience early in my adulthood that drove this concept home in a way I will never forget. I was still at Price Waterhouse and had been married for a couple of years. I was talking to my father-in-law. He was working in his garden one early summer day. As he always did, he was wearing a suit and tie. He was a classic old-time southern gentleman and successful businessman with snow white hair. The suit and tie had become his uniform for all occasions. He was, also, one of those people who never got dirty. While not particularly careful at the dinner table, nothing ever spilled or splattered on him - sauces, gravy, soup, wine, ketchup, etc. It was as if he was Tefloned from head to foot, and that was before Teflon had been invented. I was telling him how difficult it was to live on a budget. He thought for awhile and then replied by saying, "Yes I know. I tried that for a while. Then I decided that I would just earn more than I spent."
That is what I have done ever since. That is what your firm should be doing!
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Filed under Management by Tom Collins