February 6, 2008
Firm Profitability - Best Industry Practices
Sat in on Thomson West's presentation on Firm Profitability. The attendance was relatively light, which from the perspective of someone who writes a blog on financial management was disappointing. It was later in the day so it may have been a bad time to talk money.
The panelists discussed the importance of leverage to profitability, except one noted that clients demand the most skilled to run the trials which typically fall to the equity shareholders.
They talked about the use of client satisfaction surveys as a way to ensure clients were happy with their work.
When it came to how they determined profitability, the discussion immediately went to cost allocation. There were some interesting ways the panelists allocated costs to timekeepers in their firms, but it came down to allocating the direct and indirect costs and determining a cost per hour from which to compare to the timekeeper rate. One panelist went into detail, explaining the 150 line items tracked per timekeeper to determine costs. Another panelist didn't track timekeeper cost at all (part of a smaller firm) but rather determined profitability on a matter-by-matter basis.
The panelists also talked about FTE analysis - (full time equivalency) - One uses historical average to project into future, another tracked in two ways: if the timekeeper was only there for part of the year, they credited for length of service. For part timers, they allocated for the entire year since the office, secretary and liability insurance among other costs remain throughout the year even though when the part timer isn't there.
I sat in for about 30 minutes, which was longer than the other ones today, but I couldn't sit any longer. I am not a big fan of the panel discussion for a CLE track. It isn't focused enough and goes in many directions, sometimes leaving the audience confused (could have just been me - it is hard for me to sit still too long).
No surprises in this discussion - except I would have focused more on the metrics to increase profitability - which they might have done in another format.
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Filed under LegalTech 2008 by Brian J. Ritchey
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