Profitability in Law Firms

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 can elevate 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 profitability197
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