It’s common wisdom that voluntary turnover is a bad thing for law firms and should be avoided. But what if it can’t be avoided? Suppose that, like forest fires, turnover is a natural part of the environment necessary to clean out underbrush and give the strongest saplings the room and sunlight to grow. Does it, [...]
I had occasion to be on a panel with several other consultants and some managing partners recently. One of the consultants said, “As you all know, every law firm loses money on associates during their first three years of practice.” The panel (me included) smiled and nodded acknowledgment of this commonly accepted belief: all young associates cost more than they produce in revenue.
The economy is making a lot of firms nervous about the future of their traditional practice areas. So, it’s not surprising that firms want to look at “emerging” practices – areas where they might be able to establish a position of strength before competitors are even aware that the practice exists. But new niche practices [...]
The recession provides an excellent opportunity for law firms to achieve strategic objectives through a series of small mergers that are effectively acquisitions. Increasingly, smaller firms with less than 50 lawyers see “being acquired” as the best means of surviving the economic downturn. For larger firms, picking up lawyers in small groups enhances the likelihood [...]
A great deal has been written about why associates, and even young partners, have a different set of aspirations and values than previous generations. It is further suggested that law firms must adapt themselves to these generational shifts if they want to successfully recruit and retain lawyers and staff. But suppose that the issues we [...]
For many law firm partnerships, the default solution in dealing with underproductive partners is to fire them. Presumably, the reason firms immediately choose the “nuclear option” is not because it is particularly attractive. Rather, they simply don’t have the confidence that any other option will work. This is unfortunate because they pass up a potentially [...]
From time to time I call managing partners that I know – some are clients, some are just acquaintances. Typically I ask them how things are going. Those who are most enthusiastically happy seems to have a common response: “We finally did something about our underproductive partners.” Indeed, if there was a theme that characterized [...]
For some law firms the decision to take action on the problem of underproductive partners is less difficult than figuring out exactly which partners fall into the category of underproductive. The problem is that even though law firm leaders know underproductive partners when they see them, they are insecure in taking action without some more [...]
Every law firm has a different name for their problem partners — “performance challenged,” “retired without telling anyone,” “revenue impaired.” Whatever they are called, partners who are performing below (often way below) firm standards are at the top of the managing partner’s “to do” list in just about every large law firm in the world. [...]
It makes sense that law firms would design their services, pricing and support services around the needs of their largest and most profitable clients. Unfortunately, most law firms don’t. In almost every firm, 20 percent of the clients make up 80 percent or more of the revenues and profits. In some firms it is as [...]
As law firms attempt to drive greater profitability, it is common for partners to talk about firing unprofitable clients. But few firms have the ability to distinguish the comparative profitability of clients and even fewer have the discipline to take action. The truth is that a law firm’s client base goes a long way to [...]
I was participating in a law firm marketing conference in Sydney, Australia recently. I heard speaker after speaker emphasize the importance of firms creating a strong brand so that clients have a greater association with the law firm than any individual lawyer. Now, isn’t that the dumbest thing you ever heard? This goes back to [...]
Everyone seems to be real excited about knowledge management. But when it comes down to putting a program together, it is not a technology issue – it comes down to dollars and cents. Almost every strategic plan we are involved with these days makes some mention of the management of knowledge capital. It’s the hot [...]
On the first day of the first class of my first year in graduate school, the professor began his lecture by writing on the blackboard, “Cash in must exceed cash out.” Everything else, he claimed, was the “how to” mechanics of accomplishing that. Margin for law firms is, of course, a bit of a squirrelly [...]
Nearsightedness Law firms can be incredibly short-term oriented. In the U.S. we can, in part, blame the tax code which causes firms to view everything on a cash in / cash out basis. But that can’t be the whole problem, because law firms in Canada and Europe tend to be just as short sighted and [...]
Law firms are faced with extreme price pressure for any form of work that is deemed by clients to be routine or a commodity. The answer for most firms has been to either get out of the practice area or live with drastically decreased margins. Outsourcing and off-shoring has become routine operating tactics for manufacturing [...]
With all of the reporting capabilities of sophisticated time and billing systems, it is easy to lose sight of the most basic rule of law firm economics: cash in must exceed cash out. To that end, one of the most valuable assets any business can have is a cash cow. Yet, we find that many [...]
A big problem in the pricing of legal services is “sticker shock.” This occurs when a client, particularly when the client is a non-lawyer, is confronted with the reality of what legal services cost. Lawyers often equate sticker shock to price sensitivity. In fact, they are entirely different issues. The difficulty is that most clients [...]
When a law firm becomes dominant in its marketplace, there is only one place for it to go – down. Often, firms find that retaining their position as king of the hill is as hard as getting there was in the first place. Most firms find that the old Mel Brooks line is true – [...]
It is quite common at law firm retreats to have a panel of clients discussing their views on law firms. Often, a partner in the audience will ask a panelist, “What is the most important issue to you in selecting outside counsel?” I’m sure that the person asking the question is expecting to hear that [...]
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