Both Larry Bodine and David Maister have written about the firm of Levenfeld Perlstein PC and its creative chairman Bryan Schwartz. I haven’t met Mr. Schwartz, but if you are looking for someone who has modified their compensation approach away from an emphasis on individual production to one designed to promote team work, I would give Bryan Schwartz a call.
While morepartnerincome stresses the importance of balanced financial management, we have also emphasized the importance of law firm culture. I define that as a common set of beliefs. It comes from the partners getting together and agreeing on the things they believe in. Then they must communicate those beliefs to the entire team and they must do it repeatedly and often. It goes without saying that the partners have to walk the walk as well as talk the talk.
Let me use Bryan Schwartz’s own words. “…and most importantly, firm leaders must create a culture that energizes the lawyers and gives them a reason to stay with the firm. It makes a big difference in profitability. An inspired group of people can make a lot more money than people who are trying to bill a lot of hours." ….. "Our lawyers are the most competitive people, but it’s a culture where everybody helps the other person, they don't compete against each other."
Back to the compensation issue: David Maister reported on a communication he had from Schwartz describing some of the discussions at the firm’s recent retreat. Maister had apparently spoken earlier at the same event. Schwartz wrote, “We talked about compensation and our subjective plan. You set that up beautifully. We spent 10 minutes on that - a miracle for a law firm. I believe people are realizing that in the absence of subjectivity, which we currently employ, we become a mercenary firm, which we do not desire to emulate.”
I could not say it better and it is worth repeating:” …in the absence of subjectivity…. we become a mercenary firm”.
I encourage you to read or reread my earlier post How to Fix Your Compensation Plan.
Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
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Filed under Firm Culture by Tom Collins
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If you don’t keep up with the other side of the pond, you may be unaware of the growing movement to offer career alternatives other than partnership—or, as an additional step, lengthening the time required to become a partner.
The November 20 issues of The Lawyer.com reported that London-based Berwin Leighton Paisner (BLP) will now offer 'Associate Director' positions as an alternative to partnership. BLP has 600 attorneys and 170 partners. According to the The Lawyer.com, the new associate directors will be tied to the firm's profitability but without a direct share in the equity. BLP emphasizes that associate directors, while continuing their role as lawyers, assume a management role in one or more of the following areas: operational, client relationship, people development, know-how and training, or financial management.
I’m not crazy about the title ‘Associate Director;’ it feels a little too British for me. But I have to say that once we have taken the step to identify the law firm as a legal service business, the partnership model begins to look outdated and cumbersome. It limits growth, impedes survivability, and imposes a high price for success on those who must admit new members to the top.
While the U.S. is not ready to separate law firm ownership from those in the profession, law firms would do well to find a way to separate career success from the rights and obligations of ownership.
Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
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Filed under HR by Tom Collins
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For a blog site dedicated to ideas and techniques for the financial management of the law firm, a surprising number of my posts talk about marketing and sales (rainmaking, if you prefer). I do so for good reason. The surest way to increase partner income is by adding new profitable clients and matters.
There is always a lot of talk about what makes a good rainmaker. The July/August 2006 Harvard Business Review is a special issue dealing with sales. It includes a reported conversation with G. Clotaire Rapaille, a noted psychologist and anthropologist. Rapaille makes an observation that may surprise you. According to Rapaille, it is not the attorneys’ sales successes that drive them, but the value placed on the struggle.
If you follow Rapaille’s advice, you would celebrate the struggles of your rainmakers rather than their successes. His advice is to hold “meetings where you give a [rainmaker] the gold medal for rejection. It may sound ludicrous, but this is the way to get fire in the belly of your [rainmakers].” The point is, reward pursuit, not the just the “kills” of hunt. Celebrate the hunters to motivate those that have not yet joined in the hunting. By showing that you understand how hard it is, by celebrating the efforts including those that failed, you invite others to try. You can motivate existing rainmakers and encourage others to become rainmakers by creating a culture where it is not a failure to come home empty-handed if you hunted well.
Rapaille’s insight is well worth your consideration. The reluctant attorney may avoid rainmaking activities because of a perceived stigma associated with lack of success. Celebrating the effort fosters perseverance and, in the end, achieves greater results.
Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.
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Filed under Management, Marketing by Tom Collins
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Two days ago I noted that the BTI Consulting Group is predicting double-digit 2006 growth in spending for the fast growing areas of class action defense, product liability, general litigation, regulatory, IP litigation and securities. Now the National Law Journal has weighed in with another good indication that it is a good time for law firms and their partners.
Firms are increasing hourly rate according to the Journal’s survey—most at both the partner and associate level. The Journal’s December 12, 2005, article reporting survey results flies in the face of general media stories reporting pricing pressures. MorePartnerIncome.com’s observation is that pricing pressures from insurance and major corporations are real related to commodity services. Those pressures may play a role in the size of the general rise in rates that are applied to more value-oriented services.
Taken as a whole, law firms that are paying attention to efficiency and financial management are doing well.
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The statistics for mid-sized firms place the time managing partners actually spend on management at around 36%. Half of their time is spent on billable engagements. The managing partner chose law, not financial management, for his or her career. If there is one single thing that has the best probability of propelling a firm to the top tier in partner income and wealth accumulation, it is the addition of an effective professional business manager (CFO) to replace the part-time management model.
The right financial technology brings to the firm business intelligence and the information to measure performance, along with the tools to, also, improve performance. It takes professional management to get the most out of that information and those tools to keep the firm on track with, or above, the benchmarks for leverage, rates, utilization and realization.
Run the numbers in your own head. Part-time partner managers can shift most of that time back to producing revenue. Add to that just a small portion of the potential for improving income and it will look like a no-brainer. I call it “no cost management”. It is not only free, it increases per partner income.
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Filed under Law Firm Bus Model by Tom Collins
When I first picked up John G. Iezzi’s book, Results-Oriented Financial Management, with its Excel budget examples, sample chart of accounts, and sample reports, my initial reaction was I would rather be at the dentist. In fact, I did put it away. And while it wasn’t the dentist, I pulled it out of my briefcase during a long visit to my doctor.
I was wrong about the book. The material is well written and has a down-to-earth quality that can only be written by someone who has been there. It is a practical how-to and how-not-to guide that belongs on the desk of every partner involved in management. The book is available through the abanet.org.
Iezzi doesn’t mess around. In chapter one, he lays out the unique management issues for law firms in their various life phases. He covers the issues involved in the formation and early life of the firm — a period of time he calls the “Planning Phase”. Then he moves to the issues dominating the growth or maturing period and wraps up with an important discussion of the issues that may eventually lead to a trouble phase.
Understanding the financial and managerial issues during these phases can save partners a lot of pain. Knowing how to deal with those issues can be the difference between survival of the firm and its dissolution. He even deals with the hot potato issue of terminating an owner partner. He does it all in the first chapter.
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Law Firm Business Management, Getting It Right
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