We will soon start accepting submissions for the 2008 Law Firm Economic Survey.  This is our 3rd year to conduct the survey and in two short years we have created the largest survey of its kind focused on the mid-sized law firm.  Our survey serves several purposes, including but not limited to:

• Providing a measure of annual performance for mid-sized law firms based on per-partner income;
• Validating the core profit drivers that affect per-partner income;
• Providing expert analysis and content for managers to help increase per-partner income.

This year we are adding a focus on client development activities.  In our 2007 survey, 25% of managing partners responded that marketing and business development activities were their firm's best ways to achieve higher profitability.  In the 2008 survey we are asking managing partners what marketing and business development activities they utilize and how effective each are.

We are also asking questions regarding rate as it pertains to practice area.  I have had more questions regarding what firms charge for specific industries than any other finance-related question.  Attorneys want to know whether they are charging the appropriate market rate for their specific industry.  Since each industry can be pretty specific, we have chosen some broad practice areas that we hope will give firm leaders some insight into pricing. 

We are also hoping to do more regional breakdowns by rate, utilization, margin, leverage, etc.; another area in which we receive many requests.  Of course, the main focus of the survey will remain the law firm business model and the key profit drivers that affect per-partner income.

The survey will be broken down into two main parts:  the first part requires financial data and will take some time to assemble since there will be questions regarding 2007 year end numbers (such as standard blended rate by equity partners, non-equity partners and associates, and paralegals).  We will be conducting this part by telephone to help respondents with any questions.  We hope this will also reduce the possibility of invalid responses.  There have been several instances of firms having their responses disqualified due to inaccurate numbers after we were unsuccessful in our attempts to contact them to correct the responses.  We believe the best time to validate responses is at the time of submission and hope the telephonic interview process will help in this regard.

The second part will be for managing partners/shareholders/directors/etc.  Because this part doesn't require financial data (and thus shouldn't require assistance to complete accurately), it will be offered as an online questionnaire to encourage participation by managing partners.

The survey is geared to mid-sized firms.  For us, that means firms from 5 to 100 fee earners (which includes partners, associates, paralegals and others who bill clients for their work).  Although we hope to broaden the scope of the survey in the future, this year we are only accepting submissions from firms in the United States.

All respondents who complete the survey will receive a complimentary copy of our 2007 Law Firm Economic Survey and 50% off the price of the 2008 Survey.  The price has not changed and is still $495, so the value for participating is approximately $750.  The cost of the survey at $495 is among the lowest (if not the lowest) in the industry.  Further, firms who also complete the Managing Partner section of the survey will be offered a summary benchmark comparison of their firm against other respondents.  The benchmarking comparison is valued at over $1,200. 

Due to the time it takes to compile the data and prepare the survey for release (which we hope will be mid-summer), we are only accepting submissions for a two month period and may stop accepting submissions at any time after we reach our target of 375 respondents.  If you would like to participate in the 2008 Law Firm Economic Survey, please email me by clicking here and fill out the email request.

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Last week I had the pleasure of speaking to a group of more than 50 managing partners and their administrators on the subject of law firm economics. The event was the annual managing partner luncheon held by the Middle Tennessee Chapter of the ALA. The timing was appropriate because the current Juris Law Firm Economic Survey is now open for participation. Survey materials have been mailed to over 2500 midrange-size law firms throughout the U.S. Law firms can also participate by going to http://www.jurisinsight.com/2006survey. Links to the survey are also available on www.Juris.com and www.morepartnerincome.com.

The Juris economic survey, one of the largest in the legal community, is unique in that it targets midrange-sized law firms, particularly those with 10 to 150 attorneys. The 2005 survey disclosed that partners in the top 25 percent earn twice the income of the next quartile and more than seven times the per-partner income of the lowest 25 percent. We expect this year’s survey to provide fresh insight into the economic state of these law firms and to shed more light on the behavioral differences that distinguish one law firm from another when it comes to the income the partners enjoy.The survey now open for participation covers financial results for the year 2006 as well as the outlook for 2007. Firms that participate in the survey receive the published results and accompanying analysis without charge. Other firms will be able to purchase the survey online from a number of sources including Juris.com and morepartnerincome.com.

The 2005 survey identified ten observations about midrange firms that influence law firm performance and partner income:

Partners bill more than associates

Less than optimal associate utilization impairs partner income

Realization is not a key differentiator for partner income

Top performing firms excel across all key performance indicators

Firm size (i.e. larger) is not a ticket to higher partner income

The negative impact or sensitivity to partner income of underperformance on key profit drivers is extremely significant

Top performing firms spend more

All firms can increase income through faster billing and collecting

Mid-sized firms do not invest in strategic planning and have an opportunity to improve performance by doing so

Law firms believe that they will continue to have pricing power

The 2005 survey results drove home a clear message. The top performing 25 percent of law firms, those whose partners earned twice as much as the next best performing group, paid attention to the numbers. They planned; they set goals; they measured performance; and they held people accountable.

I still have a few copies of the 2005 survey report. While the numbers are now getting stale, the suggestions and recommendations contained in the 55-page publication are still valid and valuable. Send me an e-mail at morepartnerincome@juris.com and, while supplies last, I will send you a complimentary copy of the 2005 report along with a hard copy of the 2006 survey forms. Complete the 2006 forms. Mail or fax them to Juris, Inc. or input your results online by going to http://www.jurisinsight.com/2006survey. Don’t miss this important and valuable opportunity to compare your law firm’s metrics with your peers and to gain new insights that can increase your firm’s per-partner income.

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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IOMA, the Institute of Management & Administration, publishes a yearly edition of its Guide to Best Management Practices for Law Firm Leaders.  

 

I was scanning through the collections of white papers comprising the 2006 guide and found particularly interesting a paper titled “Bank Guidelines to Boost Your Firm’s Credit Rating”.  If banking relationships are important to you, this six-page paper reporting on the views of Citibank’s Jeffrey Grossman and Joseph Mendola may justify the $439 cost of the Guide.  Another source you might consider is Ed Poll’s $29.00 paperback titled The Successful Lawyer—Banker Relationship.

 

Citibank Private Bank Law Firm Group is an important player in the legal market, and thus, their views are important.  It was their views on the effect of culture and management that I thought added something new to the issue of law firm credit worthiness.

 

According to the IOMA publication, Joseph Mendola believes that partner departures have little to do with dissatisfaction with compensation. “The main reason [for their departure] is that they felt their firm has no appropriate plan, mission statement, or goals for the business”. 

 

Considering the large number of firms served by Citibank, Mendola’s insight carries a lot of credibility.  We know the importance of culture and planning on the financial performance of a law firm. Now Mendola has made the connection to the cohesiveness of the firm.  Where does culture come from? In morepartnerincome’s view, a culture grows out of partner conscientious and becomes stronger through constant communication, measurement, and accountability. The partners must first agree on three things:

 

            What they want to be—their vision          

            Their core set of beliefs that guide conduct

            The main things success depends on—strategies

 

Another interesting bit of insight is that, from this banker’s perspective, an autocratic management is more decisive—decisions are made more quickly.  As you might expect, they consider management stability a plus.

 

Their implied preference for the autocratic leader points out the fact that democratic styles tend to run counter to the emergence of the law firm as a business where all of its resources are aligned as a team in pursuit of common objectives.  Banks can understand that.  They can’t put their arms around an organization where all of its pieces are operating largely independently, each chasing its own star.

 

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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Did you know that there is an organization devoted to selling law firm services?  Not marketing, mind you, but sales—one-on-one business development…rainmaking!

 

LSSO, Legal Sales and Service Organization, was formed in 2003.  You can become a member for $595 with annual dues thereafter of $495. Members gain access to LSSO resources for legal professionals who recognize that business and client development skills must be cultivated to successfully sell legal services and retain clients.  Its RainDance Conferences boast a stellar faculty of sales and services experts with the experience and insight to help attendees develop competitive, effective sales and service strategies and tactics.  You can register for the June 12-14 conference being held at the Four Seasons Resort and Club in Dallas, Texas by going to the organization’s web site.

 

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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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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David Maister’s article Why (Most) Training is Useless deserves your attention. The article is a culmination to date of his thoughts on the subject. His observations have been evolving through a series of blog posts and prior writings which he references in the post introducing the above article.

Maister is particularly addressing the role of training in achieving “change,” especially cultural or strategic changes. As usual, his insight stings but hits its mark. Training is not the right tool to implement change. Done right for the right reason, it can alleviate the negative consequences associated with even positive changes. Training accomplishes little or nothing on its own, however!

As Maister points out:

“Bringing about change is immensely difficult. It requires that managers address questions in four key areas:

• Systems: Does the company actually monitor, encourage, and reward this (new) behavior?
• Attitude: Do people want to do this? Do they buy in to its importance?
• Knowledge: Do they know how to do it?
• Skills: Are they any good at implementing and executing what they know?”

This is Maister’s “Right Approach”:

“The correct process in thinking about training would be to sit top management down and ask: “What are people not doing that we want them to be doing? And do we really know why they aren’t doing them?”

Then it will be necessary to figure out a complete sequence of actions to address each of these questions:

• What behaviors by top management need to change to convince people that the new behaviors are really required, not just encouraged? If the behavior is going to be optional, then so should the training be.
• What measurements need to change?
• What has to happen before the training sessions occur in order to bring about the change?
• What has to be in place the very day they finish?

A full change program would include, at least, an examination of the following:

1. Scorecards (new, permanent measures of performance being trained)

2. Coaching (continuous monitoring and follow-up on the new metrics)

3. Tools (to help implement the training, in place before the training)

4. Training

5. Rewards and/or recognition for achievement

Why (Most) Training is Useless is much more than a recital of best practices for training. It deals with the things one has to have in place to be successful…period. Maister is particularly addressing issues involved in “big” strategic and cultural changes. But change is a constant in business, and the fundamentals for managing change are the same—only the scale of management efforts differs with the magnitude of the change.

One of the cornerstones for morepartnerincome.com is the belief that business, like life, involves constant change. It is a journey, and the role of the law firm’s leadership is to get its entire organization moving in the same direction—something I call I-65 North. To successfully navigate change and achieve its benefits, one must first understand it. The chart below shows what change tends to look like:

Change results in a downward spike in performance. It takes time and “KASH” before the change curve turns upward and the new targeted level of performance is achieved. KASH stands for new Knowledge which, when combined with the right Attitude, results in new Skills, which, through use, become Habit. It is at the point when use becomes habit that the change curve finally reflects the achievement of the targeted higher performance level.

Management’s job is to take action to reduce the size of the downward spike and to provide the conditions for the curve to turn upward sooner rather than later. Start with the right way to implement change - incrementally. The smaller the change, the shallower the downward spike.

Second, use the following tools:

1. Form a Change Group. People resist change that they don’t understand or change that is “done to them.” By forming change groups to help prepare and plan for the change, you give people the opportunity to buy into it. That makes the change, and the plan for making it successful, their own. This also helps supply the key ingredient of successful change—attitude.

2. Make sure all those affected have the needed new knowledge. Don’t skimp on training. Let the change group participate in determining the training plan and in disseminating the needed new information throughout the firm as needed.

3. Measure and recognize (ceremonialism) early achievements and people accomplishments.

4. Give the areas affected by the change extra management attention until the desired improvement has been achieved. Increased attention alone has a positive (though short term) impact on performance, thus flattening the downward spike of the change curve.

5. Give change a chance. Remember, it takes time for new skills to become habit.

If there is an essential element, it is the “A” in KASH. Without the right attitude, the objective of change cannot be achieved. As Jim Collins has written and David Maister would surely agree, “First get the right people on the bus.”

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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I have in my hands Paula Black’s The Little Black Book on Law Firm Branding and Positioning. An associate who received a complimentary copy passed it on to me. It is simple and effective—113 pages with each page little more than a sentence or two providing insightful suggestions for branding the law firm.

 

Page 113 concludes with the following message: “Your brand is the essence of your firm’s personality. The synthesis of clients’ perceptions about your firm. Your implicit promise to your clients. The power behind all your marketing efforts. Establish a clear, consistent, unmistakable brand image for your firm—and deliver on the promise it implies.”

 

Paula reminds us that excellence is not enough. This little book is beautifully done. It belongs on your bookshelf or desk for the insight that it imparts. Go to http://www.paulablack.com for more information about Paula Black & Associates and to inquire about the availability of Paula’s Little Black Book.

 

PS:    I originally published the above information about the Little Black Book on December 24, 2005, as a postscript to my holiday message to readers of morepartnerincome.com. It got a little lost among the holiday activities and by being at the end of the long narrative that preceded it. Given the book’s value, I decided it deserved its own post.

 

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Beth Keno, who heads up the Professional Services area of Juris, Inc., sent me this insight which can have a big impact:

Most firms have a goal for the number of billable hours each timekeeper in their firm should achieve, but do they have a number of professional development hours? Is this a line item on your budget? If not, why?

Professional development should be viewed as an investment for the firm and a personal investment by the employee. More firms are finding that to attract top talent, they need to provide opportunities for professional development as well as growth opportunities within the firm. If your firm is not investing in building the skills and knowledge base of your staff, then you are missing out on a competitive edge.

In the recent 2005 survey of Law Firm Managing Partners, the top two major challenges facing firms today are “competition for business and competition for talent.” A firm willing to invest in itself and its staff reaps the rewards many-fold.

Ask yourself this – if your marketing message and firm message included “We invest in our people so they can provide you with the best business and legal advice," would that give you a competitive edge? Absolutely it would.

Beth is on target. It is also worth noting that continuing professional development has another benefit. Your team picks up new knowledge (information, trends and new twists). That new knowledge gives the firm a reason to contact existing clients to share that information. That action is likely to generate new business or, at a minimum, solidify the existing client relation.

Continuing professional development investments increase the long-term value of the firm’s talent and can also have an immediate payback—provided you have in place tactics for capitalizing on new knowledge to generate more business and more per-partner income.

 

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The question is, “Do you subscribe and read publications for corporate counsels?"  Periodicals like Corporate Counsel, Corporate Legal Times and Metropolitan Corporate Counsel can tell you what your clients and potential clients are thinking about and what they are looking for in a legal service provider.

The information in periodicals aimed at General Counsels and their team can give you a competitive edge by providing insight into strategies that major corporations are pursuing to control cost. They tell you what traits attract the legal service consumers and what turns them off. They tell you the shared weakness in-house counsels see among your competition. Weakness you can exploit to your competitive advantage.

Publications aimed at private law firms contain articles about trends already impacting law firms. Publications aimed at in-house counsels contain articles about trends and strategies that will impact you and your competitors down the road. Reading what your customers and prospects are reading gives you a competitive edge.  Likewise, it pays to read the trade publications for the industry of important clients or prospects so that you know the legal and business issues that are important to CEOs.

Knowing yourself is important and knowing your customers is a must for client growth and retention.

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