Sustainable Profitability in a Disrupted Legal Market
Norman K Clark, Lisa M Walker Johnson
Published: 2019
Pages: 103
eBook: 9781787422681
This special report presents practical strategies for law firms to protect and sustain their financial performance and profitability as changing client expectations, advanced technology, and global competitive forces are fundamentally changing the legal services industry.
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.
Table of Contents
| Cover | Cover | |
|---|---|---|
| Title Page | 1 | |
| Copyright Page | 2 | |
| Table of Contents | 3 | |
| Seismic shifts in the legal services industry | 7 | |
| 1. Introduction | 7 | |
| 2. Will the law firm of the future be a computer? | 7 | |
| 3. A diagnostic approach | 11 | |
| The six classic drivers | 13 | |
| 1. Introduction | 13 | |
| 2. Old questions turned upside down | 13 | |
| 3. Diagnostic tools in a change-ready professional culture | 20 | |
| Pricing – classic driver | 21 | |
| 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 | 33 | |
| 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 overproductive partner | 39 | |
| 7. Moving beyond the billable hour | 43 | |
| 8. Disruptive productivity | 44 | |
| Realisation – classic driver | 47 | |
| 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 | 57 | |
| 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: overinvestment 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 | 69 | |
| 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 | 77 | |
| 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 | 83 | |
| 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 |
Norman K Clark
Founding principal, Walker Clark LLC
[email protected]
https://www.linkedin.com/in/norman-clark-a934857/
Norman K Clark is the managing principal of the international legal management consultancy Walker Clark LLC, which he helped to found in 2002. His consulting practice specialises in issues of strategic planning and implementation, law firm profitability, governance and quality assurance.
His 45-year career as a lawyer includes experience as a trial lawyer, trial judge, law professor and senior manager of the delivery of legal services on a global scale. He has been a full-time business adviser to the legal profession for the past 23 years, having advised clients in law firms and corporate and government law departments in more than 60 countries on five continents.
Norman holds a BSc, a JD and an LLM. He is a retired member of the Pennsylvania Bar, a past chair of the International Bar Association Law Firm Management Committee, and a co-chair of the American Bar Association Cross-Border Practice Management Committee.
Lisa M Walker Johnson
Founding principal, Walker Clark LLC
[email protected]
https://www.linkedin.com/in/lisa-walker-johnson-3a031145/
Lisa Walker Johnson’s professional background is as a counselling psychologist, with more than 30 years’ experience in senior levels of business management and consulting to corporations and law firms worldwide.
As a psychologist with deep experience in law firm management issues, Lisa helps law firms to manage sensitive and frequently difficult change management issues, such as the integration and retention of lateral partners, leadership transitions between generations of partners, cultural due diligence during mergers, and the implementation of strategic change in the disruptive business environments confronting the legal services industry. Lisa has published extensively in these areas and frequently speaks about them at major international conferences for legal professionals.