In today's weak economy, most lawyers feel as though they are
losing control over many of the factors that influence
profitability. Clients are wielding newfound power over pricing and
staffing decisions, not to mention slowing down payments. New
clients are harder and harder to come by as competition among law
firms has increased. And despite modest improvements in busyness in
late 2010, most law firm partners find they are still less busy
than they would like to be or need to be.
Yet even in a recession, there are concrete strategies to improve
productivity levels and profitability that are available to almost
all lawyers. By changing the approach to the backlog and the pace
at which assignments are worked, it is possible to be more
efficient and more profitable without selling additional work to
new clients.
Pace determines volume
How busy a lawyer is during any period is a measure of how many
assignments are worked on in a given period of time. Weekly time
reports, monthly profit and loss statements, and annual earnings
records are all tied to accounting periods with specific start and
end dates.
Partners can effectively increase their productivity by
accelerating the pace and tempo of the practice, i.e., pulling some
amount of billable work across those accounting boundaries from the
future into the present. In essence, the partner commits to doing a
little of next week's work this week, a little of next month's work
this month, and eventually a little of next year's work this
year.
The pace at which a lawyer works the assignments in the backlog is
both fluid and elastic. Everyone has experienced proof of this by
recording more billable time than normal the week before a
vacation. Why? Some of the work needs to be done soon, and so it is
completed before leaving.
The same result would follow if the average lawyer were told that
in two weeks, they would be staffed on the biggest case of their
career. Billable time would spike between now and then as the
lawyer worked through the backlog to "clear the decks" for the
upcoming plum engagement.
The elasticity of the pace of the practice also works in reverse.
If a lawyer is preparing for a trial in two weeks and the case
suddenly settles, there may no longer be enough work to keep the
lawyer feeling busy. The typical response is to slow down the work
that remains and ration it out carefully over a longer period until
a stronger backlog builds again.
Individual lawyers have significant control over the pace of the
practice and how quickly they address their personal backlog of
assignments.
The backlog is an asset
The backlog of assignments is the largest asset in a law firm
that eludes centralized management. Effective law firm managers
carefully watch accounts receivable and unbilled time. However, in
most firms, the value of an assignment is not captured until the
work is recorded on a timesheet. Drawing on this unmanaged asset
can boost earnings in any economic cycle.
A lawyer taps this asset every day. By doing legal work, the value
of the completed task moves from the backlog into unbilled time. To
increase profits, the lawyer needs to speed up the pace of the
work. This does not mean putting in more time at the office or more
time on an assignment than it deserves.
Instead, it means raising the billable yield on the existing
workday by completing more tasks and checking off more items on the
to-do list. By increasing the throughput of completed assignments,
the lawyer can increase the pace at which he or she manages their
own backlog.
The Psychological trap
Most professionals fall into an insidious psychological trap
during recessionary times. Lawyers are prone to hoard work in their
backlog when they are worried about not having enough work to do.
They instinctively slow down the work they have in order to make
sure they have something productive to do tomorrow or next
week.
This is exactly the wrong strategy. It slows down the pace of the
practice even more, which makes the lawyer even more nervous about
having enough to do, and the cycle reinforces itself. The lawyer
may be spending a full day in the office, but his or her
productivity may fall significantly as many small slots of
potentially productive time become lost or wasted. The result is
that profitability falls more than it otherwise would have.
Strategies to increase the pace
There are several concrete strategies a lawyer or a law firm can
employ to increase the pace of the practice and draw on the backlog
of work:
- Recognize the psychological trap. The first step is simply to
be aware of the natural tendency to slow down work when it appears
that there is not enough to do. Consciously recognizing this
tendency is the first step in countering the drag it exerts on the
economics of the practice.
- Accelerate internal and external deadlines. It is important for
a lawyer to accelerate internal and external deadlines for both him
or herself and his or her team. This could be as simple as setting
a goal of finishing this week's billable work on Thursday, and
starting next week's billable work on Friday.
- Approach tasks based on time to completion. A savvy lawyer
should avoid thinking about when a document is acceptably due back
to the client, opposing counsel or the court. Instead, he or she
should focus on how long the project should take to complete. If an
assignment should take two days to complete, but is not due for 10
days, the lawyer should consider finishing it in two days, and then
move on to something else. He or she should not let the assignment
drag out over 10 days by completing it in a series of smaller, less
efficient blocks of time.
- Proactively manage associates and support staff. It is good to
know how busy the associates and support staff were last week, but
it is much better to know how busy the associates and support staff
will be next week. Studying productivity reports for a completed
time period is a type of archeology: the reports offer data, but
there is no way to change the number of hours recorded in the past.
By contrast, a good manager monitors the projected levels of
busyness for the coming week or month. Where appropriate, a lawyer
should get everyone on the team together on Monday mornings to go
over assignments for the coming week. This helps ensure everyone is
productively engaged by identifying pockets of availability before
they occur.
- Maintain healthy levels of delegation, if possible. When senior
lawyers are concerned about not having enough work to stay busy,
they are apt to hoard work - to keep billable assignments for
themselves and delegate less to associates, paralegals or support
staff. Maintaining the pace of delegation is critical to keeping up
the pace of the practice. In addition, a senior lawyer has a better
shot than does an underutilized junior associate or paralegal at
finding other uses for his or her time that the firm will consider
productive.
The goal in this process is an incremental change in the way
lawyers are spending their time. After all, if a lawyer can manage
to pull just two hours of next week's billable work into this week,
the effect over a 50-week year, will net an additional 100 hours of
recorded time that can be billed and collected. What professional
in any practice can look back on the past few weeks and not find a
couple of non-billable hours that could have been used more
productively?
Additional benefits
There are also ancillary benefits to accelerating the pace of
the practice. First, it leads to efficiency. There is truth in the
proverb that the most efficient way to get something done is to
assign it to a person who is too busy to do it. Attacking
assignments in large, contiguous blocks of time rather than letting
that work drag out over days leads to a more concentrated and
efficient process. This should produce fewer billing write-offs and
therefore, higher profitability.
Second, increasing the pace of the practice also leads to better
client service. By accelerating deadlines when possible, the lawyer
reduces his or her own response time. Although some matters involve
intentional delays or rationed fees per month, most matters produce
happier clients with faster turnaround time. Additionally, this
technique will often lead to more work from the same client as the
next phase of the current project or the next new assignment can
start that much sooner.
Third, increasing the pace also produces important benefits that
are less tangible, but no less real. Most lawyers are happier when
they are busy (up to a point). Especially in a recession, conscious
efforts to keep the pace of the practice high improve lawyer morale
and can improve the mood of the entire office.
Finally, maintaining a brisk tempo in the practice improves the
lawyer's ability to work on big new assignments in the future. Most
lawyers habituate to a certain level of busyness and build their
daily routine around it. A lawyer who formerly recorded 40 hours a
week can quickly grow accustomed to recording 30 hours a week
during a slow period. When the practice picks up again and 40 hours
a week is required, the lawyer used to a slower pace may struggle
to get back to his former productivity level, and is much less
likely to exceed it.
A real but unfounded fear
The main question we get from our clients is what happens if a
lawyer really does accelerate the pace of the practice and
completely works off the entire backlog of assignments. In other
words, what should a lawyer do if he or she comes up dry?
First, this is not so likely to happen as one may think. Most
lawyers find their backlog of assignments is bigger than they
originally thought and not so easy to work off completely. In
addition, most legal work is iterative: a draft completed earlier
triggers a response received earlier. Most lawyers find that new
work becomes available through the combined effects of increased
client satisfaction, the perception of increased efficiency, and
heightened market exposure (from getting more work done).
However, improving the pace of the practice would be a very good
idea even if the lawyer completely worked off the backlog and had
no further billable assignments. By accelerating the billable
assignments and working them in larger, denser chunks of hours,
less time throughout the period would be dissipated in small,
inefficient increments. One full day with no billable work would
surely have more value for marketing or continuing education than
the cumulative value of all of the six- and 10-minute increments of
non-billable time during the span of the work week. Increasing the
pace of the billable work has the benefit of aggregating this
non-billable time into larger, more productive blocks.
Take, for example, a lawyer with 30 hours of billable work to
complete in the week. The natural tendency would be to spread the
work out relatively evenly over a five-day work week, resulting in
small blocks of non-billable time each day. A lawyer consciously
accelerating his pace would work those 30 hours in the first four
days of the week. If no new assignments arose from new or existing
clients, that lawyer would find himself with a full day on Friday
for productive non-billable activities.
It is much easier to undertake firm marketing activities or
develop expertise in an emerging practice area with a large block
of time instead of smaller blocks scattered throughout the week.
The lawyer could go have coffee with his largest clients, write an
article, update the firm's marketing materials, attend a seminar,
network, etc.
This earnings improvement strategy applies to almost all lawyers,
regardless of the size of their firm or their practice. It is as
applicable to a solo practitioner as it is to an individual lawyer
within a much larger firm. This strategy also works in almost all
fee structures. Lawyers working under alternative fee arrangements
typically have at least as much to gain from accelerating the pace
of the practice as do lawyers working on straight hourly
rates.
Most importantly, this strategy works. Large law firms and
practice groups that have embraced this philosophy have experienced
significant improvements - often in the range of 5 percent to 10
percent - in the level of busyness and the volume of billable work
recorded. In other words, working faster is working smarter and is
more profitable.