May 21, 2007
Too Busy to Increase Law Firm Performance
The answer to increased performance is to step back from the daily wars of the law practice and ask, “How can we do this smarter? How can we tie our revenue and fortunes to something more than just the partner’s billable time?” Leverage in terms of fee earners, technology, knowledge management, relationships and, yes, pricing strategies is an important part of the right answer. As for fee earner leverage, its impact on per-partner earnings is well known and understood. So, it is surprising that 75 percent of midrange law firms are not successfully implementing the strategy.
The chart shown below is one of many included in the 55-page Juris, Inc. Law Firm Economic Survey published last year. The survey reflected the financial performance of midrange-sized U.S. law firms for the year 2005. Survey results confirmed the important role that leverage plays in determining law firm partner earnings. The first quartile, the top performing 25 percent of law firms, earned more than twice the per-partner income of the next highest group.
The same survey indicated that associates in half of the surveyed firms worked less than 1400 hours. Even among the top performing 50% of firms, the average billed hours for associates ranged from 1550 to 1600. The majority of midrange law firms are both under leveraged and underutilizing the associates that they do have. The only way out of that income-limiting box is invest in improved scheduling and delegation with respect to existing non-partner resources. Partners need to give up some short term income shifting their individual effort from “billable work” to business development, recruiting, mentoring and professional development.
That is apparently a hard call for the majority of midrange firms to make. I’m reminded of a cartoon I saw years ago. A Gatling gun salesman was standing at the entrance to a medieval tent as the guard, complete with armor and spear, was saying, “I’m sorry, but the general says he is too busy fighting the war to meet with you.”
Work on this year’s annual Economic Survey is currently underway. Click here to participate and to automatically receive the results and analysis without charge.
Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income contact Juris National Sales Center at 877/377-374, e-mail info@juris.com or go to www.Juris.com.
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Filed under Leverage by Tom Collins
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