The legal services industry is changing and, for most law firms, the greatest challenge is to remain competitive and profitable. This Special Report presents practical strategies to help law firms protect and sustain their profitability as shifting client expectations, advanced technology and global influences alter the status quo.
Authors Norman Clark and Lisa Walker Johnson demonstrate that although the traditional factors influencing profitability remain valid, new strategies must be adapted in order to meet new financial realities. Key topics include:
•Changes in the legal services industry
•Pricing, productivity and cost management
•Staff compensation
This report highlights what sustainable profitability really means and how it can be achieved in any law firm.
สารบัญ
Seismic shifts in the legal services industry
1. Introduction 7
2. Will the law firm of the future be a computer? 7
3. A diagnostic approach 11
The six classic drivers
1. Introduction 13
2. Old questions turned upside down 13
3. Diagnostic tools in a change-ready professional culture 20
Pricing – classic driver #1
1. A thought experiment: £10 per hour 21
2. Are your fees low enough to be competitive and high enough to be profitable? 22
3. Low pricing: an unsustainable strategy 23
4. Are your fees high enough? 25
5. Value, not price 27
6. An agenda for a value conversation 29
7. Escaping the squeeze 32
Productivity – classic driver #2
1. A thought experiment: the 80-hour day 33
2. Are you working too hard? 33
3. Is the billable hour obsolete? 34
4. What is the magic number? 36
5. Variation in productivity 38
6. The over-productive partner 39
7. Moving beyond the billable hour 43
8. Disruptive productivity 44
Realisation – classic driver #3
1. A thought experiment: collecting every penny 47
2. Leaving money in the street 47
3. Realisation as a diagnostic indicator 53
4. Better profits through better realisation 55
Cost management – classic driver #4
1. A thought experiment: operating a law firm for £50 per hour 57
2. Cost management in context 58
3. The temptation to slash costs 59
4. Pitfall number 1: not knowing what it costs to produce a legal service 60
5. Pitfall number 2: over-investment in multiple offices 63
6. Pitfall number 3: not keeping up with the technology 65
7. Pitfall number 4: ignoring partner performance issues 65
8. Pitfall number 5: slashing costs without managing risks 66
Staff compensation – classic driver #5
1. A thought experiment: associate compensation in 2030? 69
2. Are associates becoming inherently unprofitable? 69
3. Looking through the wrong end of the telescope 71
4. It’s not about the money 72
5. Improving associate profitability now 73
6. Money into the bottomless pit 75
Leverage – classic driver #6
1. A thought experiment: 40-to-1 leverage? 77
2. Finding the fulcrum 78
3. Technology, workflow leverage and the future of the law firm 82
Being the change
1. Introduction 83
2. Change-challenged or change-ready? 84
3. Paradigm shifts in the legal services industry 95
4. Is your law firm trudging silently towards oblivion? 99
5. Playing a poor hand well 100
Notes 101
About the authors 103
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