For the past couple of years there has been a lot of speculation about the impact of the UK’s Legal Services Act (known as “the Clementi Reforms”) on private practice law firms in the U.S. Yesterday, Jacoby & Meyers filed suit in New York, New Jersey and Connecticut challenging bar regulations prohibiting non-lawyers from owning [...]
Law firm leaders and the legal media frequently talk about the size. But, unlike the way most businesses address size (annual revenue), law firms seem to define size as the number of lawyers practicing at a firm. Managing partners talking about growth, are typically referring to adding lawyers to reach “critical mass” and when there [...]
The classic definition of a merger in the corporate world is where two companies become one. And this definition has long carried over to the legal world where mergers were viewed in the bright line context of all or nothing – when two law firms get together it is either a merger or it is [...]
The growing emphasis on alternative billing options will cause a lot of law firms to reconsider how they price and bill their services. While lawyers will have to learn some new skills to function in a fixed fee environment, the real challenge will be for the Compensation Committees that have to figure out new criteria [...]
The push back that law firms are receiving from lawyers in attempting to implement the use of alternative fees has come as a surprise to many managing partners and practice group chairs. But this is a change that impacts on almost every aspect of the way lawyers practice law and the culture of their law [...]
If there is a key to alternative billing, it is not in the technical aspects of estimating costs or managing work process. The real challenge is developing a trust relationship between lawyers and their clients that permits a change in the basis on which legal services are purchased. However, the only way to create the [...]
One of the interesting features of managing large professional partnerships in the United States is that, apart from the tax code, there are no standards for financial reporting. This flexibility can be a powerful tool for law firm managing partners and I suspect 2009 was a banner year for the careful management of financial statistics [...]
A lot has been written about the huge paradigm shifts that will result from the recession. I’m not sure that all the changes will actually stick–which doesn’t mean they aren’t good things anyway.
Over the past couple of decades, the strength of US law firms and the growth of legal markets have been measured by the size of transactional practices. From this viewpoint, litigation, at least among law firms listed in the AmLaw 100 and 200, is an important but supportive practice to the M&A and securities engines [...]
The natural reaction of most lawyers is to deal with an economic downturn in the same way they would handle a hurricane — hunker down, don’t take any unnecessary chances and try to survive until it is over. Given the risk adversity of most law firms, avoiding action may indeed be the best plan for [...]
Most law firms have a limited number of options to improve their profitability. They can ask their lawyers to work harder —which in many firms is a function of having the work to do, as well as a culture that inspires and rewards hard work. Another alternative is to cut costs but, for most law [...]
As the global economy moves toward an eventual recovery, there will be some huge opportunities for law firms, as well as some minefields. How firms deal with these issues may determine their short and long term success. There are all sorts of possible scenarios but the five issues discussed below certainly appear to be the [...]
The silver lining for law firms in the recession may just turn out to be alternative pricing. For years, sophisticated managing partners have realized that changing the basis for pricing legal services could enhance profits more than any other available action. The only problem was that neither their lawyers nor their clients were willing to [...]
A primary long-term strategy for a lot of U.S. law firms is the establishment and growth of an office in the U.K. or continental Europe. But such global aspirations are becoming much more expensive and risky as the value of the U.S. dollar falls against the British pound and the euro. For firms looking to [...]
The biggest factor in most law firms’ success is the quality of their client base. In large measure this is because different clients have differing volumes of work, complexity of legal needs and price sensitivity. Appropriately, therefore, many law firms’ strategic plans are built, at least in part, around improving their client base. Unfortunately, there [...]
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.
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 [...]
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