As A Law Firm Administrator, Increase Your Value to Your Firm In A Stagnant Economy

There is little doubt that the economic climate is having an effect here in Southern California. The current special issue of the publication, Of Counsel, (Volume 10, No. 9 dated April 1991) is an in-depth review of the 500 largest law firms in the country showing what is currently happening to specific areas of legal practice in various geographical parts of the USA. I recommend that you read this issue and utilize the lessons wherever applicable.

Each of you has a unique opportunity to provide creative leadership to your firm, especially during the critical months ahead. Here are some specific suggestions for your consideration, based upon my 15 years of combined experiences both as an administrator for two large Southern California law firms and as a consultant to more than 100 law firms throughout the country including almost 70 in Southern California:

1. Work with your firm management to define and prioritize the long-term and short-term issues facing your firm, so that the limited available resources (people, money and facilities) can be applied logically and strategically;

2. Develop a written plan with your firm management incorporating your detailed recommendations with estimates of "bottom line" results for each recommendation;

3. "Sell" the truism to your management that "it is easier and more cost effective to earn an additional dollar of new revenue that it is to slash a dollar from operating expenses." Then, be prepared to make several specific recommendations for increasing gross revenues;

4. Be very sure that you have complete knowledge and control of the operating expense budget before you make the suggestion as outlined in item 3 above. There are only two major items in a law firm expense budget (salaries and rent) with only salaries being a controllable item, once the lease terms have been signed. Every other item must be closely examined line-by-line, so that your recommendations for increasing gross revenues will not fall on "deaf ears";

5. Analyze every aspect of your firm's business development program no matter how disorganized or ineffective it may appear to be currently. You must be totally familiar with what is now being done to generate new business, both from current clients through effective "cross-selling" and for developing new clients or even diversifying into completely new areas of practice;

6. Review new matter reports to identify the source(s) of new business and to spotlight the firm "rainmakers." Meet with each one of the key business developers in your firm to learn what they do, so that their success can be transferred to others. Remember - marketing is a skill that can be learned, but you must have a teacher who has experience and the willingness to share that talent effectively;

7. Analyze productivity reports to determine how closely each timekeeper (partner, associate, paralegal, etc.) is meeting the billable hour goal(s). In addition, monitor collections monthly (to measure the effectiveness of hours worked vs hours collected). You may discover (a) that people are simply not working very hard or (b) that too much time is being written off before billing or (c) that you have a cash flow problem due to poor collection procedures. It is your job to know what is happening and to solve the problem(s);

8. Review the use of all non-billable time for each timekeeper, especially partners. If you do not record non-billable time, then I urge you to begin doing it immediately (limit the categories to: management; business development; pro bono; personal development/training; and personal). Regular and detailed analysis of each non-billable time category for each timekeeper will provide you with the information for recommending alternative use of time to increase productivity. In all too many firms, significant numbers of hours are lost/misused on unnecessary non-billable activities which can be converted to billable client time;

9. Present recommendations only after you have gathered all the factual data and prepared specific action steps to be considered along with the anticipated impact upon firm profitability. Transfer your analysis to charts and graphs for your presentation to management, since "a picture is always worth a thousand words." Most lawyers, especially litigators, enjoy the challenge of arguing with your facts and conclusions. The use of charts and graphs can usually help to defuse this anticipated reaction.

Summary

In the current economic environment, you have a tremendous and unique opportunity to make a significant positive impact in your firm. You may say (and even believe) that your authority and responsibilities are limited, and that you have very little influence upon the major decisions made in your firm. My response to that analysis is that you need to broaden your thinking and expand your role. Every firm will recognize the positive contribution of key members of their staff, if those recommendations are well documented and presented in a non-threatening manner.

Remember - set mutually acceptable goals and specific objectives with your management team each year, so that you will have common reference points during your annual performance evaluation. Your compensation is based upon producing measurable results. You have a tremendous "trump card" to play when you can provide management with specific, tangible, measurable results compared to previously determined, mutually acceptable goals and objectives.

Review the suggestions that have been presented in this article to see how one or more can be used at your firm. My goal is to provide you with a reminder list, since you should already be doing most of the tasks that I have suggested in previous paragraphs.

The legal profession may well be at one of those rare watershed times in history when the excesses of the past must now be corrected. As the senior non-lawyer in your firm, you stand in a unique place to provide positive administrative leadership and to expand your value to your firm. Act with assertiveness and do not lose this opportunity.