Bruce Callow a CPA and partner in the Seattle, WA accounting firm of Clothier & Head talks about the “dashboard.” His comments were made to the Financial Core Group of the Law Practice Management Section of the American Bar Association. His comments identify the new “dashboard” concept of having important financial metrics for a law firm displayed in an easy to understand format. Bruce discussed the most meaningful law firm financial measurements and how to show them to law firm management.
Facts:
1. In 2000, 60% of associates left their firms within 5 years.
2. In 2005, 80% of associates left their firms within 5 years.
3. Every time an associate leaves, it can cost a firm from $200,000 to $500,000!
4. "De-equitization" is no longer unusual; in fact, at least one firm has paid millions of dollars in penalties for firing partners — the EEOC called it age discrimination against employees.
5. Today, many firms are terminating relationships with their attorneys, and corresponding staff.
One could argue that law firms are businesses and merely reacting to the vagaries of today’s economy. While that is true, it seems that we are stuck on the horns of a dilemma. Rather than terminating lawyers in one area while at the same time seeking other lawyers (laterals and others) for different practice areas, it seems far more prudent to teach new skills to the lawyers you now employ. This would save the firm money and, perhaps more important, it would enhance the morale of the law firm … Also, how about preserving the client relationships that the departing lawyers have enjoyed while with the firm?
Something is wrong with this picture … and until law firm management "gets it," there will continue to be turmoil in the legal community.
A recent 9th U.S. Circuit Court of Appeal allows the government to search, seize and download laptop data at border crossings despite the Fourth Amendment! Suspicion is not required. A warrant is not required. No protection is available for the individual under this ruling. Just one more liberty removed.
The panel suggested that travelers should no longer expect privacy!
Rules of professional conduct require confidentiality. ABA Model Rule 6.1 provides that "A lawyer shall not reveal information relating to the representation of a client … " Thus, a lawyer should not have any information on the laptop about clients’ matters. If that’s true, then can a lawyer travel across the border with a laptop? Arguably not!
Larry Bodine suggests that our economic doldrums may be over, that thee are signs of recovery. I wonder if Larry talked with former Senator Phil Gramm of Texas?
Marketers have frequently complained that marketers are not given a “seat at the table” of law firm management. The Legal Marketing Association, in Strategies: The Journal of Legal Marketing, recently expressed the organization’s new definition of marketing: “Marketing is the activity, set of institutions and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners and society at large.”
That’s a pretty broad statement, yet lacks simplicity and directness. This may be one reason why the seat at the table is still denied to many who claim the title “marketer.” (more…)
"Business is a team sport," says Ann Livermore, head of one of Hewlett-Packard’s business units. But, she says that this sentiment is not common, even among other business executives. They seem to be more focused on their personal agenda rather than on the well-being of the company.
Does this sound familiar? Is this why law firms, no matter how large, act as though they are hotels for sole practitioners? Is this why even large law firm lawyers talk about "their clients" rather than talking about "firm clients"?
If you can keep your eye on the "team," does your firm have a strategic plan? Is your firm planning proactively for its future, or are you merely reacting to the marketplace and your existing clients?
British CEO pay rose 287% in the last decade; private sector workers’ pay rose only 47% in the same period. Workers’ contributions are measured; CEO contributions often are questionable and substantial severance packages are given even when corporate stock prices and earnings have decreased. Under these circumstances, It’s hard to ask ordinary workers (who generally live paycheck to paycheck) to take cuts in compensation. (See June 30 article in USA Today.)
The U.S. corporate figures are similar, only bigger.
Now look at AmLaw 100. Are the numbers different? Not by much … When partners are earning in excess of $1,000,000, some in excess of $5,000,000, how can you complain about associates seeking $160,000? Because the firm will feel compelled to raise its rates to clients? Because some clients will resist? And the C-Executives complaining are earning how much? How many millions?
Sorry, but in this circle, there is little sympathy for the corporate client with those numbers who complains … This corporate client has options: Why not engage regional law firms with equal skills and lower rates? Is it necessary for large firm partners to earn such large sums in order to be at the table with CEOs as a colleague, not as a vendor, or can their expertise be sufficient to earn them the seat at the table?
Interesting difference, though, between law firms and corporate clients. The corporation pays a high severance package while the law firm does not. Another difference is that the corporate executive is able to negotiate the very attractive severance package before entering his/her employment and the lawyer generally is not.
One day, I’ll create a listing of the differences between the C-executive and the lawyer. I think this would be very enlightening for us. But, that’s for another day.
Alan Weiss, The Million Dollar Consultant® asked the following questions: “What do you do when you have a great deal of work and still more requests? In other words, what do you do with an embarrassment of riches to ensure that you retain as much business as possible?” (more…)
The intake process of the first session between attorney and client is critical for collection purposes. One could prognosticate collection success by understanding the effectiveness and completeness of the lawyer’s intake session with the client.
Interestingly, Wall Street Journal wrote an article about Countrywide and the source of its problems. The headline mentions the underwriting process being inadequate with many clues being overlooked and ignored. Hence, the credit crisis.
A recently released report from the Eversheds international law firm discusses some conclusions for the future of the legal profession. One of the elements not really addressed in my reading of the release was the disconnect between lawyers and their clients in large corporate enterprises. Why should this be the case? Why should lawyers and the folks they represent be far apart in their thinking about the profession and how it is being conducted?
There is no simple conclusion. But one element may very well be that clients (General Counsel) feel pressure down from their CEOs and Boards of Directors. They need to be more price and cost sensitive. Partners in larger law firms, on the other hand, want larger compensation packages for themselves in order to be seen as peers of the CEOs who are earning far more than in the past; lawyers do not want to be seen as vendors, but as peers … and frequently compensation is a factor in this perspective. Of course, it’s hard to be a peer with a CEO whose average compensation went from 4:1 to 17 and even 34:1 between him/her and the average employee working for him. And it’s a bit disingenuous for that executive to say that lawyers’ fees are too high. Even in companies whose stock is falling, or whose profits are falling, it is rare to see the CEO offering to reduce his/her compensation.
Here are some of the key findings of the research report and my thoughts related thereto:
