Why Aren’t Associates More Profitable?

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.

Can We Make Knowledge Management Work?

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 […]

Margin Differences

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 […]

New Life for Commodity Legal Services

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 […]

Milking the Cash Cow

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 […]

Fighting Sticker Shock

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 […]

Marketing in a Recession

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 […]

Taking Advantage of a Recession

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 […]