Though traditionally considered laggards when adopting new technology, law firms have recently started to explore new tricks to fortify performance across their organizations. While this evolution is critical to a firm's survival, it's important that firm administrators understand that substantive improvements are only possible through multi-directional change.
Will law firms' financial results for 2017 fall short of 2016? Legal industry results through the first nine months of 2017 suggest that's a real possibility.
It is widely recognized that Big Law has surplus partner capacity. What is less well recognized is just how massive this surplus has become, how unevenly it is spread across firms in different profitability cohorts, and what it portends for when the next downturn hits.
For the most part, law firms continue to structure themselves in a traditional operating and employment models with a dedicated workforce of talent arranged in an organizational hierarchy. In today's Gig Economy, this will unlikely hold.
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 -- firms should set higher percentage increases for senior lawyers and lower increases for junior lawyers.
In a market where clients are struggling to deliver more legal services for less cost (the challenge), RichardSusskind says a law firm may be tempted to undercut its competition on price in hopes of winning more work. But is it actually happening?
The Case for Value Billing
Alternative fee arrangements (AFAs) are about value, a benefit legal departments are increasingly pressured to bring to their companies. When hiring an outside lawyer, clients are not looking for "hours," and they certainly are not looking for tenths of hours. They seek value.
Matter profitability matters. Yet most firms struggle to measure it in a manner that is accurate, focused on the levers partners control, and inclines partners to take action. Using margin per-partner-hour (MPH) to measure profitability delivers on these objectives.
Economics tells us an industry that experiences a drop in aggregate demand, adds production capacity, and increases the market overlap among competitors will suffer price erosion and profitability decline. Law firms fit this profile. Yet, in talking with law firm partners, you don't get the sense that any such "disruption" is happening. Perhaps economics has bypassed law?
This article explores whether or not it makes sense to organize your law firm as a professional benefit corporation and/or B Corp to help you attract the growing number of clients seeking a law firm aligned with their social and environmental values.
