Filed under Pricing, Subscriber Content by Tom Collins
Key Performance Indicator (KPI) Tracking for the Law FirmFiled under Law Firm Bus Model, Subscriber Content by Tom Collins
Collection Realization in the Law FirmFiled under Law Firm Bus Model, Subscriber Content by Tom Collins
If you are stepping into a law firm leadership position, your success will depend on how well you match your approach and style to your particular firm’s environment and people. Those who selected you did so because they know you can do the job. The question is, “Can you do the job successfully in this environment with these people?” One leadership style doesn’t fit all. In fact, a recent study by Harvard and GE confirmed that negative things can happen due to a mismatch in style when a company hires a successful CEO away from another company.
It all comes down to what Clayton Christensen, Matt Marx, and Howard H. Stevenson call the Agreement Matrix and where your team fits in relation to the four quatrains of the matrix:
When a consensus on objectives exists, the organization needs someone out front leading the charge. The key here is pushing activity—“Just do it!”
On the other hand, when no consensus exists, various factions within a law firm are often pulling in very different (sometimes opposite) directions. It takes power, command, and enforcement to realign the organization behind common objectives. This is the classic call for a leader who can say and back up the statement: “I don’t care if you agree or not, get on board, get out, or suffer the consequences.”
When a consensus exists on both objective and the strategy for achieving it, management’s job is to reinforce the vision through the organization’s culture—folklore, rituals, tradition, planning, etc.
On the other hand, when there is agreement on the objective but weak or little consensus on how to achieve that goal, leadership has to focus on training, standard procedures, measurement and rewards.
Environments are seldom black and white. There are degrees of style and approach. There are different issues and different segments within a law firm that must each be met with appropriate leadership style but you get the gist—one style doesn’t fit all. Your success will depend on how well you adjust to fit the environment and its people.
You can read more about “The Tools of Cooperation and Change” in the October 2006 issue of Harvard Business Review, where the authors noted: “One of the rarest managerial skills is the ability to understand which tools will work in a given situation—and not to waste energy or risk credibility using tools that won’t.” You can purchase a reprint of “The Tools of Cooperation and Change” for a small charge by going to Harvard Business Online.
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.
Filed under Management by Tom Collins
People, not numbers, determine the success or failure of a law firm. Performance is created by empowered people or limited by the effectiveness of the firm’s strategies and tactics (formal or informal) and the efficiency of the firm’s practices.
That being said, make no mistake, successful law firm leaders pay attention to the numbers. Intuitively, successful leaders understand that measurement improves performance. They plan, set goals, measure performance, and hold people accountable. Partners in the firms that do those things earn, on average, two to seven times the income of those who don’t.
Numbers allow managing partners to express the firm’s targeted performance. Numbers enable the partners to compare the firm’s performance to its own targets or to the performance of other similar law firms. Financial metrics (numbers) are the outcome of the firm’s people—the degree by which they are “doing the right things in pursuit of the firm’s goals and doing those things in the right way.” Put into a simplified model, numbers help answer “what if” questions by letting the firm’s partners test the impact of various scenarios:
How will an addition in the number of associates alter the bottom line?
How will an increase in the firm’s fees affect distributable partner income?
How will an increase in realization effect partner distributions?
Listed below are seven metrics that influence law firm performance:
Productivity or Utilization
Effective (Blended) Rate
Margin
Days of unbilled fees (work in process)
Days of billed fees outstanding (accounts receivable)
Each of the seven metrics should be religiously measured and reported. Current performance should be compared to prior periods to determine if the firm's financial performance is improving, holding its own, or declining. The numbers should be compared to the firm’s targets to determine if it is achieving its objectives. They should be compared to benchmarks of similar firms. Doing so will most likely indicate areas that deserve attention and that represent lost opportunities.
While measurement alone will improve performance, combine measurement with goals and plans to achieve those objectives and the whole ball game will change. Planning, goal setting, measuring, and accountability go hand in hand with increased management and teamwork. The resulting culture in such law firms sets those firms and their performance completely apart from law firms who are not similarly engaged.
If you need help computing any of the seven basic metrics, refer to the previous posts linked below:
Measuring Law Firm Collection Realization
Measuring Law Firm Work-in-Process Days
Measuring Law Firm Accounts Receivable Days Outstanding
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
Filed under Law Firm Bus Model by Tom Collins
Recently I participated with a number of managing partners in a roundtable discussion of issues they are dealing with. An issue shared by most attendees dealt with write downs of billable time by the billing attorney before the bill even gets out the door of the law firm. The national consulting firm Altman Weil, Inc. referred to such write downs as “Invisible Expenses” because, in many firms, they go unaccounted for.
One attendee indicated that last year his firm initiated a policy that the managing partner had to approve any write down above a certain amount. As the attending partner explained, “There is always an explanation—since I’m not the responsible attorney, how can I second guess that billing attorney?”
Approval mechanisms seldom work. But there is something that will. Require any write down to have a Reason Code and then track and report those reasons and the amount of the write down. Don’t create many codes—just a few. For example:
We blew it
Associate took too long
Planned associate development activity
Exceeded client expectation
Relationship building
Measurement always improves performance. By tracking and reporting write offs, reason patterns are disclosed. Why does one billing attorney write down bills for “exceeding client expectations” at a significantly higher rate than other attorneys? Why do we make adjustments repeatedly for the same clients? Why are multiple billing attorneys writing down the hours of the same associate because that associate took too long?
You can’t second-guess individual decisions by responsible attorneys, but you can identify patterns, and that will lead to an improvement in billing realization.
PS: You can always add a code or two to center in on problem areas. For example, if you have a high volume of “associate took too long” write offs, you might temporarily expand that code into several that better explain why they took too long. Once the area is in control, remove the excess codes. Too many codes can hide the trees in the forest.
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.
Filed under Management by Tom Collins
We know that measurement alone improves performance. But combine measurement with goals and plans to achieve those goals and the whole ball game changes. Planning, goal setting, measuring, and accountability go hand in hand with increased management and teamwork. The resulting culture in such law firms sets those firms and their performance completely apart from those firms who are not similarly engaged.
Yet only about one-fourth of midsized firms report that planning is a key component to their mode of operation. Why should you be one of those? Per-partner income for those firms is twice that of the next best performing 25 percent of firms and seven times that of the lowest performing 25 percent.
What do you need to do to become part of that top performing group?
Doing the above will require adequate management and foster a team culture.
The above per-partner income information comes from the recently published Juris Law Firm Economic Survey of midsized U.S. law firms. For more information or to purchase the publication, go to Juris Survey.
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.
Filed under Management, Planning by Tom Collins
Without the right environment, the attorneys currently in your law firm can become the lateral hires of the firm next door.
The same working environment that fosters retention of a firm’s legal professionals is also the one that attracts lateral candidates. The main reason laterals move among law firms is because they are disappointed with their own self-development. That bit of knowledge can make your firm an effective competitor for top legal talent.
The working attorney’s role is not enough to retain talented legal professionals. The attorney needs to feel that the firm is investing in his/her preparation to become a well-rounded member of the firm’s leadership. It is more than professional development; it should not be limited to their expanding legal knowledge and experience. It should include learning the business side of the law firm—it is the assimilation process taking an individual from newcomer status to that of an insider/part of the team. It is the conversion process from “just being on the bus” to driving the bus.
How does a firm create such an environment? You start by making professional development a main event for the firm with a holistic approach. Like anything worth doing, it takes planning, organization, delegation, goal setting, measurement and personal accountability if it is to work.
Start by developing a model development track, a checklist or plan for associates based on yearly benchmarks. Those tracks become an extraordinary recruiting tool for the firm.
The standard development tracks should, however, be individualized as needed for each member of the team. Assign responsibility to make sure that each member of the team has the time and opportunity to complete each year’s development track. Put systems in place to measure progress and identify deviations in time to take corrective action.
In addition to continuing legal education, development tracks should include training in leadership skills, relationship development, communications and presentation skills, sales and marketing, and technology. Over the first five years, development tracks should involve the legal professional in all aspects of law firm operations—dealing face to face with clients, taking responsibility as the primary contact for selected clients, participating in business development activities, building their own book of business, functioning as the supervising attorney, handling billing and collection responsibilities, performing new client intakes, participating in decision-making committees, reviewing financial reports (including productivity, work in process and fees receivables), performing management functions related to those reports, gaining an understanding of the financial aspects of a law firm, etc.
A small but increasing number of firms are hiring external coaches to work with their developing associates. Other firms pair associates with partner coaches and mentors. Where the internal approach is used, the compensation and evaluation of responsible partners should include an element related to the completed development activity and progress of their assigned associates.
Legal professionals who are actively growing from year to year both professionally and as law firm businessmen and women are far more likely to become the new generation of leaders in your law firm rather than someone else’s new lateral hire. Development means operating a “finishing school” that will enable a relatively young associate to become a well-rounded professional member of the firm’s leadership.
Filed under HR by Tom Collins
Law Firm Marketing: Individual Attorney Planning FormFiled under Marketing, Planning, Subscriber Content by Tom Collins
Effective management requires measurement.
Filed under Management, Planning by Tom Collins
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