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Setting the next year’s billing rates follows a simple formula at most firms: last year’s rate plus a common percentage increase across all lawyer cohorts. A more disaggregated approach is needed. Specifically, firms should set higher percentage increases for senior lawyers and lower increases for junior lawyers. Why? Because, over the next 10 years, hours leverage (i.e., the number of associate hours per partner hour) at elite law firms will decline as more of the lower value-added work is handled not by junior lawyers but by enhanced technologies, in-house counsel, and alternative service providers. To maintain profitability, the margin that was earned on the displaced junior lawyer time has to be recouped through higher margins on senior lawyer time. Failure to increase senior billing rates differentially, and thus to rebalance the source of margin from junior to senior lawyer time, will result in a calamitous decline in profitability. It can be avoided if firms start now to gradually change their billing rate structures.
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How to Create a Law Firm Culture That Supports ‘The Hustle’
By Randi Rosenblatt
Whether they practice at global firms consisting of thousands of lawyers or decide to hang a shingle and put their name on the door, lawyers chose a path requiring continuous, never-ending hustle. Not only do they need to master the practice of law, they need to master the art of driving revenue.
Despite Pandemic, Profits At Am Law 100 Firms Leapt to New Heights
By Brenda Sapino Jeffreys
The past year posed new and unusual challenges for U.S. law firms, rattled by economic uncertainty, remote work, stay-home orders and social distancing. Despite the turmoil, profits at the Am Law 100 leapt to new heights.
How Do Business Development Efforts In High-Performing Law Firms Differ?
By Meghan Frank
As firms and their clients continue to navigate ongoing business challenges in 2021, BD and marketing professionals first need to understand how mature their efforts are in specific areas. Then, they can look at what the successful firms are doing differently, so they can position themselves to join those ranks.
Law Firms Need to Look At Partnership Behaviors to Manage Profitability
By Hugh A. Simons
In the decade ahead, the mechanism for offsetting the effects of external market forces on profitability will shift from changing partnership composition to transforming a partnership’s behavioral norms, centering on how partners behave toward each other and help each other become the best possible version of their professional selves.
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