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 offices [...]
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 measure [...]
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 they’re [...]
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 don’t [...]
For law firms, one of the first signs of an economic down turn is a slow down in the volume of new engagements. When this occurs, the natural reaction of firms’ management is to crank up marketing activities and push partners to devote more effort to business development. Unfortunately, the skills and techniques that lawyers [...]
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 [...]
Back to top