Toby Brown, Steven Campbell, Tim Corcoran

Profitability in Law Firms: Insight and Analysis

• Broschiertes Buch

Produktbeschreibung

Profit. What a simple term. To determine it, all one needs to do is take revenue and subtract costs and there you go: profit. From there itâ s easy to determine a percentage and margin. So whatâ s so hard about law firm profitability?

Produktdetails

• Verlag: Globe Law and Business Ltd
• Seitenzahl: 211
• Erscheinungstermin: 2. April 2024
• Englisch
• Abmessung: 234mm x 154mm x 23mm
• Gewicht: 452g
• ISBN-13: 9781787429970
• ISBN-10: 1787429970
• Artikelnr.: 69677406

Autorenporträt

By Toby Brown; Steven Campbell; Tim Corcoran; Mark Santiago; John McCarthy; Shaun Jardine; Richard Brzakala; Stuart Dodds; Phil Nixon; Wayne Hassay; Madhav Srinivasan; Richard Martin; Jack Kingston; Michelle Peters and Mitch Spradlin

Inhaltsangabe

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . ix
About the authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . xv
Chapter 1: The law firm profit primer . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 1
By Toby Brown, CEO, DV8 Legal Strategies
Let's get started . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 2
Moving right along . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 4
Putting it all together . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 8
Core challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 9
Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 10
Chapter 2: KPIs for aligning strategy to enhanced client value and partner
profitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
By Steven Campbell, consultant, Acumen KPI
Avoiding unintended consequences . . . . . . . . . . . . . . . . . . . . .
. . . . . . 12
Don't confuse margin (net income) and profits per equity partner (PPEP) . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Dashboards should focus on areas of greatest impact . . . . . . . . . . 14
Vision drives strategy – strategy drives effective KPIs . . . . . . . . . .
. 17
Example law firm mission, values, and vision . . . . . . . . . . . . . . .
. . . . 17
Non-financial KPIs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 18
New tools to help measure and prioritize strategic action . . . . . . . 20
Effective KPIs should inspire action . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 21
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . 22
Chapter 3: Applying battlefield lessons during peace time – learnings from
the COVID-19 pandemic . . . . . . . . . . . . . . . . . . . . . . . . . .
25
By Tim Corcoran, BringinTim
The standard playbook . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 26
The onset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . 31
Lessons learned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 32
The long view . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 45
Chapter 4: Linking partner and associate compensation to the achievement of
a firm's strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47
By J. Mark Santiago, managing partner, SB2 Consultants
Vision and strategy development . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 47
How did we get here? . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 49
Compensating the rain dancers . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 51
Contribution roles . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 52
Individual partner goal setting . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 54
Assessment and evaluation . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 54
Communicating pay decisions . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 55
The partnership compensation system . . . . . . . . . . . . . . . . . . . .
. . . . 55
Closing the loop . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 56
Chapter 5: Pricing approaches and firm profitability . . . . . . . . . . .
. . . . . . 59
By Shaun Jardine, founder, Big Yellow Penguin
Business development, clients, and positioning strategy . . . . . . . . 63
Understanding clients . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 67
Create a pricing strategy and vision . . . . . . . . . . . . . . . . . . .
. . . . . . . . 69
Lead the change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 76
Chapter 6: The roadmap to £1,000,000 extra profit in three years . . . . .
79
By John McCarthy, profit coach, Summit Business
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 79
The P.R.O.F.I.T. system . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 79
The nine-step roadmap . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 80
Implementing the P.R.O.F.I.T. system . . . . . . . . . . . . . . . . . . .
. . . . . . . 83
The business blueprint . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 84
Not following the business blueprint . . . . . . . . . . . . . . . . . . .
. . . . . . . . 85
Following the business blueprint . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . 86
How poor cash flow almost sank a law firm . . . . . . . . . . . . . . . . .
. . . 89
The five cash flow levers . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 90
The five cash flow levers being implemented . . . . . . . . . . . . . . . .
. . . 93
Profitability and efficiency first, marketing second . . . . . . . . . . .
. . . 94
Profit exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 97
Implementing the profit maximizer . . . . . . . . . . . . . . . . . . . . .
. . . . . . 99
Don't do what many other law firms do . . . . . . . . . . . . . . . . . . .
. . . . 99
Focusing on effectiveness . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 100
Putting this into practice . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 100
Closing thoughts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 101
Chapter 7: How a sound matter pricing strategy canelevate law firm
profitability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . 103
By Jack Kingston, account manager, BigHand
Bringing in the best matters for your firm . . . . . . . . . . . . . . . .
. . . . . . 104
Differing approaches for payment of legal services . . . . . . . . . . . .
. 105
Chapter 8: Questioning the value of law firm rack rates . . . . . . . . . .
. . . . 111
By Richard Brzakala, senior director, Global External Legal Services
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 111
Why RRB discounts are so attractive to CLDs . . . . . . . . . . . . . . . .
. . . 112
The credibility of cost savings based on RRB data . . . . . . . . . . . . .
. 113
The utilization of supplementary fees . . . . . . . . . . . . . . . . . . .
. . . . . . . 114
Zero negotiation strategy . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 114
What are CLDs looking for? . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . 115
Law firm reliance on pricing specialists and business intelligence tools .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
What CLDs want to see from firms utilizing a RRB strategy . . . . . . 118
The importance and value of transparency . . . . . . . . . . . . . . . . .
. . . 120
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . 123
Chapter 9: The next frontier in pricing strategy – capturing value from
legal technology . . . . . . . . . . . . . . . . . . . . . . . . . . . .
125
By Stuart Dodds, principal, Positive Pricing
Making sense of the legal technology landscape . . . . . . . . . . . . . .
. 126
The partner's perspective . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 128
The client's perspective . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 129
The pricing professional's perspective . . . . . . . . . . . . . . . . . .
. . . . . . . 130
Pricing approaches adopted to date . . . . . . . . . . . . . . . . . . . .
. . . . . . . 134
Key considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . 135
What we can learn from the early adopters . . . . . . . . . . . . . . . . .
. . . 136
Chapter 10: Harvey Specter – the ghost of a law firm reality yet to come .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 139
By Phil Nixon, senior sales executive, Elite Technology
What is available and how will this impact legal services? . . . . . . .
141
Will you take the blue pill, or the red pill? . . . . . . . . . . . . . . .
. . . . . . . . 143
Building the foundations for technological success . . . . . . . . . . . .
. 143
Can technology actually help us become more profitable? . . . . . . 144
Improving profitability and WIP to cash with technology available today . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Improving profitability and WIP to cash with one eye on the future . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
148
A technology roadmap – getting your house in order . . . . . . . . . . .
150
Chapter 11: AI and what it means for law firm profitability . . . . . . . .
. . . 155
By Wayne Hassay, managing partner, Maguire Schneider Hassay
The ethics objection . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 156
The fear of change . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 157
The risks and emerging power of AI . . . . . . . . . . . . . . . . . . . .
. . . . . . . 158
Making a smarter, more profitable, law firm . . . . . . . . . . . . . . . .
. . . . 161
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . 163
Chapter 12: Sustaining success along the profitability journey . . . . . .
. . 165
By Madhav Srinivasan, CFO, Proskauer, and Mitch Spradlin, pricing director,
Hunton Andrews Kurth
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . 165
Positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . 166
Goal setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . 167
Matter management . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . 168
Matter lifecycle . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 169
Resourcing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . 170
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 172
Chapter 13: The seven profit zones formula for higher profits – without
working more hours . . . . . . . . . . . . . . . . . . . . . . . . 175
By Michelle Peters, former practicing solicitor and founder, The Business
Instructor
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . 175
A different approach – the seven profit zones formula for profitable growth
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
Getting practical – how to increase each profit zone . . . . . . . . . . .
. 182
Beyond ten percent increases – doubling your profits without doubling your
clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 191
How long does it take to double your profits? . . . . . . . . . . . . . . .
. . . 193
The implementation paradox – information vs action . . . . . . . . . . 194
Getting started . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 195
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . 196
Chapter 14: The human cost of boosting profitability . . . . . . . . . . .
. . . . . 197
By Richard Martin, principal consultant, Byrne Dean and CEO of the Mindful
Business Charter
Mental health in the legal profession . . . . . . . . . . . . . . . . . . .
. . . . . . . 197
A couple of caveats before we start . . . . . . . . . . . . . . . . . . . .
. . . . . . . . 199
Why lawyers become lawyers . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . 199
Where's the balance? . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 202
How profit is increased and the impact of that . . . . . . . . . . . . . .
. . . 203
Doing more work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . 204
Reducing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . 205
Charging more or differently for work done and improved financial
management . . . . . . . . . . . . . . . . . . . . . . . . . 206
A different approach . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . 207
About Globe Law and Business . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 211