Make More Rain : management, benchmarking

New Contributors For More Partner Income

Admin — Thu, 20 Mar 2008 07:11:15 GMT

In the coming weeks, there will be some new contributors added to the blog. I met with several members of the Redwood Analytics team in Virginia today and am happy to announce that their expertise will be added to More Partner Income.

Redwood Analytics is a new acquisition to LexisNexis. They focus on benchmarking and business intelligence tools for law firms. They also have a staff of consultants who work with law firms to measure performance as well as provide granular analysis on both matter and attorney metrics.

The addition of Redwood's expertise to the blog will provide unique insight gained from experience in working with law firms in the large law segment that demand high levels of analysis related to the business aspects of their practice.

Redwood also hosts a Think Tank, made up of law firm leaders. From Redwood's website:

[Redwood's Think Tank] is comprised of forward thinking industry leaders assembled to study and formulate cogent solutions to significant law firm management issues. Individuals are invited to join the Think Tank based on their demonstrated ability both to think strategically and to take action to promote change.

For more information on Redwood Analytics and the products and services they provide, please visit www.redwoodanalytics.com.

We have begun taking submissions for the 2008 Law Firm Economic Survey. If your firm is interested in participating, please contact Brian by clicking here.

Management ABCs: The Hawthorne Effect

Admin — Tue, 18 Mar 2008 07:00:10 GMT

A method of increasing performance is based on the Hawthorne Effect. Although several of the experiments have been downplayed by social psychologists, the effect that attention has to performance is as true today as it was when recorded at the Hawthorne Plant in the 1920's.

Basically, when attention is given to the performance of an employee, the employee's performance increases. Simply put, measurement improves performance. If you set goals for your timekeepers and don't measure them against the goals, the incentive to succeed is left to trusting individuals to meet their goals.

How well suited is your firm for a loss of a client such as Bear Stearns (or, perhaps, Lehman Brothers)? Gerry Riskin wrote in January to make your firm recession-proof. Some of the factors listed in recession-proofing the firm:

Ramp up frequency of financial reporting (monitor the firm's key finanacial metrics);
Make hard decisions humanely and fast (monitor under-performing timekeepers);
Manage internal expectations (monitor expectations to keep staff motivated and avoid "business as usual");

Each of the above requires attention. Trust alone that the individual timekeepers will respond to economic crises is a recipe for disaster. A better management model is the Hawthorne Effect. Everyone needs to be accountable for results. Let the effect of attention to performance help the firm during difficult times.

The effect of measuring performance brings other benefits. Beyond improving results, keeping attention on profit drivers has the added benefit of opening opportunities - even in bad economic times. As Riskin notes, [w]hile strategy may be more challenging during recessions, if you grasp the nettle, opportunities will arise to enhance your client mix and your talent base.

We have begun taking submissions towards the 2008 Law Firm Economic Survey. If your firm is interested in participating or if you would like more information, please contact Brian by clicking here.

2008 Law Firm Economic Survey

Admin — Tue, 11 Mar 2008 07:00:32 GMT

We will soon start accepting submissions for the 2008 Law Firm Economic Survey. This is our 3rd year to conduct the survey and in two short years we have created the largest survey of its kind focused on the mid-sized law firm. Our survey serves several purposes, including but not limited to:

Providing a measure of annual performance for mid-sized law firms based on per-partner income;
Validating the core profit drivers that affect per-partner income;
Providing expert analysis and content for managers to help increase per-partner income.

This year we are adding a focus on client development activities. In our 2007 survey, 25% of managing partners responded that marketing and business development activities were their firm's best ways to achieve higher profitability. In the 2008 survey we are asking managing partners what marketing and business development activities they utilize and how effective each are.

We are also asking questions regarding rate as it pertains to practice area. I have had more questions regarding what firms charge for specific industries than any other finance-related question. Attorneys want to know whether they are charging the appropriate market rate for their specific industry. Since each industry can be pretty specific, we have chosen some broad practice areas that we hope will give firm leaders some insight into pricing.

We are also hoping to do more regional breakdowns by rate, utilization, margin, leverage, etc.; another area in which we receive many requests. Of course, the main focus of the survey will remain the law firm business model and the key profit drivers that affect per-partner income.

The survey will be broken down into two main parts: the first part requires financial data and will take some time to assemble since there will be questions regarding 2007 year end numbers (such as standard blended rate by equity partners, non-equity partners and associates, and paralegals). We will be conducting this part by telephone to help respondents with any questions. We hope this will also reduce the possibility of invalid responses. There have been several instances of firms having their responses disqualified due to inaccurate numbers after we were unsuccessful in our attempts to contact them to correct the responses. We believe the best time to validate responses is at the time of submission and hope the telephonic interview process will help in this regard.

The second part will be for managing partners/shareholders/directors/etc. Because this part doesn't require financial data (and thus shouldn't require assistance to complete accurately), it will be offered as an online questionnaire to encourage participation by managing partners.

The survey is geared to mid-sized firms. For us, that means firms from 5 to 100 fee earners (which includes partners, associates, paralegals and others who bill clients for their work). Although we hope to broaden the scope of the survey in the future, this year we are only accepting submissions from firms in the United States.

All respondents who complete the survey will receive a complimentary copy of our 2007 Law Firm Economic Survey and 50% off the price of the 2008 Survey. The price has not changed and is still $495, so the value for participating is approximately $750. The cost of the survey at $495 is among the lowest (if not the lowest) in the industry. Further, firms who also complete the Managing Partner section of the survey will be offered a summary benchmark comparison of their firm against other respondents. The benchmarking comparison is valued at over $1,200.

Due to the time it takes to compile the data and prepare the survey for release (which we hope will be mid-summer), we are only accepting submissions for a two month period and may stop accepting submissions at any time after we reach our target of 375 respondents. If you would like to participate in the 2008 Law Firm Economic Survey, please email me by clicking here and fill out the email request.

Measuring Law Firm Profitability

Admin — Thu, 14 Feb 2008 08:00:00 GMT

One way to get an idea of your firm's financial health is to report on the firm's profitability. There are many ways to calculate profitability depending on what you are looking to track. In this example, we are taking into consideration the value of fee earners against their cost. The value of an attorney, for the purposes of this post, is the billed rate per hour.

You determine attorney cost per hour by taking the salary of the attorney, the cost of their dedicated resource(s), the cost of their work space, the cost of equipment used, and other incidental costs (not billable to the client) incurred by the fee earner. This can be sticky for some firms where principals may not be agreeable to apportionment of cost. In cases like this or where the firm is more evenly apportioned in staff and office use, a less accurate but easier calculation would be to add up all the general ledger cost accounts (excluding fee earners' payroll), divide by the number of fee earners, then add salary. It is better to do the work and determine actual cost.

Once arriving at a cost per fee earner, reduce to a cost per hour (by dividing cost per fee earner by worked hours billed per year) and then you can use this to subtract from the attorney's billed rate to get the profitability rate. This is excellent indicator of the value of your billable rates and by extension the attorneys charging these rates.

With profitability reports like the one above that is part of Juris' Active Information product, you can determine how much value (in terms of dollars) you are getting for every billable hour worked by the fee earner. You can set margin per fee earner and track the profitability rate against the target margin as well. Efficiency is an important key to higher profits. A report such as this in a historical context helps you track efficiency of the fee earner.

To take it one step further: you can use, for analysis purposes, the collected rate to compare to the cost per attorney. You shouldn't make this analysis until the invoice has been zeroed out (either by payment or adjustment), so this is not really a good indicator of current profitability. But it can be helpful in a profitability analysis of a given client or fee earner. Again, tools like Juris' Active Information can track collected rate and thus make calculating all the formulas above automatic.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

Could Your Law Firm Do Better?

Admin — Wed, 25 Jul 2007 17:47:00 GMT

How do you know if your law firm could be doing better? Christian Stadler, writing in the July–August 2007 Harvard Business Review answered that question this way:

“Benchmarking is the obvious answer, but not by comparing poor companies with good ones. The way to get at this problem is to compare good companies with even better ones.”

Stadler’s comment is a reminder of the important role benchmarking plays in driving law firm performance and is insightful commentary on how benchmarks should be used. If you depend on surveys for benchmarks, don’t overlook emerging continuous benchmarking service alternatives. The new tools from the likes of Juris and Redwood Analytics promise to replace stale survey information with a continuous flow of automatically collected “current” operating metrics.

Morepartnerincome.com is sponsored by Juris®. For information about Juris products and services for increasing law firm performance and partner income contact Juris National Sales Center:

877/377-3740, e-mail info@juris.com or go to www.Juris.com.

More Reasons to Participate in Law Firm Economic Survey

Admin — Thu, 21 Jun 2007 17:09:44 GMT

June 30, 2007 is the cutoff date for the Juris Law Firm Economic Survey. You don’t want to miss the opportunity to participate in this annual survey. The survey report and analysis you will receive for free as a participant will shed light on just why partners in the top performing 25 percent of law firms earned twice as much as the next best performing group. The accompanying analysis and recommendations will provide you with specific steps you can take as a firm to improve financial performance.

As if that were not enough, consider that Juris, Inc. has also increased the purse for the winning participating firm by $5,000 in a drawing to be held on June 30. In addition, to encourage last minute procrastinators, Juris, Inc. has agreed to give law firms using Juris software who submit a completed survey between now and June 30 a one-time $50.00 credit against their monthly software maintenance and support plan. And since you receive a free copy of the Survey report, you save the $495 publication cost.

The Juris Economic Survey, one of the largest in the legal community, is unique in that it targets midrange-sized law firms, particularly those with 10 to 150 attorneys. What you will learn from the survey will, in all likelihood, help you increase partner income. To increase your income per partner, ask your administrator or accounting staff to start on the Survey today. Participating is easy—even easier for Juris law firms since Juris, Inc. will provide you with a downloadable report to collect requested survey information.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income contact Juris National Sales Center: 877/377-3740, e-mail info@juris.com or go to www.Juris.com.

Law Firms Benefit From Competitive Intelligence

Admin — Fri, 15 Jun 2007 17:00:00 GMT

Janet Ellen Raasch asks and answers the question “What do the top firms have in common?” Her answer is competitive intelligence or CI.

Her article in Law Practice Today highlights some of the ways competitive intelligence is being used by “big law” to make better decisions. She notes the movement made by large firms to dedicate resources to the collection and analysis of competitive information.

Midrange law firms don’t have the luxury of a dedicated CI staff. They have had to rely on personal awareness of their marketplace and on 18- to 24-month old survey data. Those surveys are important sources of information, which is why Juris, Inc. conducts an Annual Law Firm Economic Survey specifically targeted at the midrange level—firms ranging in size from 10 to 150 attorneys. The survey, covering law firm performance for 2006 and the outlook for 2007, is currently underway. By participating in the Juris Law Firm Economic Survey, you can receive a free copy of the completed survey and its accompanying analysis and recommendations.

While surveys are important, Juris, Inc. has taken one giant step forward with its recent introduction of an online benchmarking service. The service is called Juris Insight and participation is currently limited to law firms that use Juris software for their financial system. Information is extracted automatically, eliminating the need to fill out survey forms. Participating firms will be able to compare their own financial metrics, prices, and other operational information with that of their peer group. Since information is present in a comparative format, it is immediately useful and insightful. The big payoff is that information is timely—current versus stale survey data.

Many of the examples in Raasch’s article might be better described as business and market intelligence. But one thing is for sure. Law firm leaders today have to look outside of the firm for information to guide their decisions and that includes understanding what the competition is doing. Until recently, surveys have been the only tool for systematically collecting that intelligence information. New online benchmarking services are changing that, providing easy access to timely information about what is happening in their marketplace. Redwood Analytics and Thomson West are addressing this area for large firms and through its Juris Insight service, Juris, Inc. , now does so for midrange law firms.

New Web-Based Benchmarking Service for Law Firms

Admin — Thu, 08 Feb 2007 19:14:25 GMT

JurisÂ® Insight, a ground breaking peer group benchmarking services is now open for business. The new web-based service from Juris, Inc. went live the first week of February 2007.

Juris Insight will give participating firms relevant competitive intelligence and other tools to help the firm set and achieve its goals. Measurement improves performance. But setting goals and measuring performance with an internal focus alone is not enough to drive partner income to the optimal level. The most effective measurement systems must include comparisons with peers and competitors to set the right goals that, if met, will ensure the firm performs at the highest level.

Law firms spend hundreds of dollars purchasing outdated surveys each year. They incur even greater cost through invested staff time responding to survey requests and then manipulating and analyzing the survey results against the firmâ€™s own metrics. Juris Insight eliminates that investment in staff time by extracting information automatically from the firm's Juris system and by providing comparative results in a format that is in synch with how the firm tracks its own performance.

Stephen Collins, President and CEO of Juris, Inc., explained: â€œAthletes always carefully study and measure the performance of competitors so they can adapt their training to win. They know that when you have a target, the odds of winning go up dramatically and goals are more achievable. With Juris Insight service, law firms will know exactly how their firmâ€™s key performance metrics compare to peers.â€

Juris Insight benefits include:

Automated survey preparation and submission
Relevant and comparable benchmarks designed around the law firm business model
Peer group selection control for meaningful comparisons
Customizable views and metrics
Current information on an ongoing basis
Goal setting models to increase partner income
Confidentiality and security

You can learn more about new benchmarking technology by reading the following prior posts:

Law Firm Benchmarking Comes of Age

CitiGroup Private Bank Benchmarking Involvement

Benchmarking Services for Midsized Law Firms

Benchmarking Services by Redwood Analytics

The Importance & Power of Legal Surveys

Morepartnerincome.com is sponsored by Juris, Inc. For information about JurisÂ® products and services for increasing law firm performance and partner income, go to www.Juris.com.

Benchmarking Services for Midsized Law Firms

Admin — Fri, 06 Oct 2006 17:55:00 GMT

Competitive intelligence and specifically peer group benchmarking has been growing in importance as law firms increasingly adopt traditional business practices. This post is one of several summarizing information garnered from the September 2006 Benchmarking Symposium held in Nashville, Tennessee.

Juris, Inc. recently joined the ranks of Redwood Analytics and Thomson West in offering automated peer group benchmarking. What sets Juris apart is that its service is targeted at midsized firms—those below the largest 200 law firms. Until now only BigLaw has had the insight one gains from meaningful peer group competitive intelligence. Not any more! Juris has changed that.

Juris, Inc. referenced the company’s recent Law Firm Economic Survey in noting that firms that set goals, measured performance, and held people accountable dramatically outperformed others. The disparity in per-partner income between the top performing 25 percent of midsized U.S. law firms and the rest of the pack is eye-opening. Partners in the top 25 percent earn twice the income of the next quartile and more than seven times the per-partner income of the lowest 25 percent.

Intuitively, managing partners understand. For years they have purchased every law firm survey they could get their hands on. Unfortunately, the surveys were always at least one year outdated. Most firms could never find survey segmentations that represented a perfect peer group for comparisons.

Automated benchmarking services change everything for the law firm. Live benchmarking and shared information among anonymous peers will identify areas of competitive advantage as well as areas for improvement—from billing rates to collection days. Just as record keeping in sports has changed the quality of the game, live peer group benchmarking will change the practice of law for the better.

Juris Insight is the first live benchmarking system created solely for the benefit of midsized law firms. Unlike traditional surveys, Insight provides information that is as up to date as your most recent monthly reports. Using state-of-the-art data extraction technology, Insight directly pulls standardized information from your database, encrypts it and sends it via highly secure Web services to the Juris data center – of course, all names and other identifying information are purged from the system – where it is aggregated into our data warehouse. The information is then presented via a customizable Web site called JurisInsight.com.

Today, law firm managing partners and executives invest significantly in the purchase of year-old surveys, and then invest their time and staff time in comparative analysis against imperfectly matched segmentations. They do this in an effort to collect competitive intelligence as a guide for improving the law firm’s own performance. Automated benchmarking eliminates manual compiling of information, replaces year old information with a continuous flow of business and competitive intelligence information.

Juris Insight service is currently available only for law firms using Juris business software but Juris, Inc. expects to eventually expand its offering to all law firms in the future.

Previous posting covering other presentations during the symposium include the following:

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

U.K. E-Billing Trend Signals U.S. Movement

Admin — Thu, 05 Oct 2006 17:29:32 GMT

There is an interesting story coming out of the U.K. It often happens that things on that side of the pond find their way here without a long delay.

It seems that the Royal Bank of Scotland and ABN Amro are about to take e-billing to the next level—requiring law firms to provide them, as clients, with a continuous stream of hourly and expense activity. They want to “monitor” their matters and the staffing in “real time”, according to an article titled E-billing: thrilling or chilling? on The Lawyer.com.

Will we see a similar movement in that direction in the U.S. among the corporate consumers of legal services? Yes, but expect it to come with a heavy budgeting requirement imposed on the law firm. To the corporate clients, uncertainty is even more important than reducing legal cost. They want to know the estimated cost and benefit through the conclusion of the matter or case, not just a running tally of cost incurred to date.

For more on the trends in e-billing, see my prior post Corporate Clients to Demand More Electronic Incorporation. In that post I noted that the movement toward continuous information exchange demands is likely to parallel the implementation of the new LEDES XML standard by time & billing software vendors and the e-billing value added networks. Full implementation from time & billing vendors to the corporate consumer is expected by 2010. See the quotation below from that earlier blog post:

“What you can expect is an increase in corporate demands for information. By 2010, you are likely to be submitting budgeting information and regular projected cost updates on work undertaken for major corporations. You are likely to be required to update timekeeper information in real time for any change to that information.”

“Law firms with business and billing software that is not on the leading edge of LEDES developments will find they are at a competitive disadvantage when competing to gain or retain work from major corporations and financial institutions. The following legal business system vendors are on the board of Directors of the LEDES Oversight Committee: Juris, Inc., Aderant, Thomson Elite, and RainMarker.”

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

Midsized Firms Have Available Capacity and a Pricing Advantage

Admin — Wed, 04 Oct 2006 17:21:00 GMT

Altman Weil has been conducting an annual Survey of Law Firm Economics since 1972. Its survey for 2005 contains information from 285 law firms. The survey indicates associate income gains outpaced increases in partner compensation. Given the associate compensation bump occurring in the current year, 2006 is likely to show more of the same. Altman Weil slices and dices their annual survey in many ways, and it has been one of the more popular sources for benchmarking one’s own performance against others. You can read more about the survey in their August news release or purchase the survey by going to the Altman Weil Publications, Inc. product page.

When you compare survey results, there is always a little “apples and oranges” problem because different surveys slice things differently. Nevertheless, I thought it would be interesting to compare some of the Altman Weil news release numbers to those in the Juris® Law Firm Economic Survey. The Juris survey for 2005 combined information from 274 firms compared to the 285 in Altman Weil’s, so the sample sizes are the same for all practical purposes. The Juris survey does differ through its emphasis on midsized law firms; whereas, Altman Weil's survey includes firms with 150+ attorneys. The billing rate and billing hours reported in the news release for partners was for equity partners with 21+ years of experience and for associates with 4-5 years of experience.

Partner compensation from the Juris survey is the average of all firms surveyed. The top quartile in the Juris survey earned more than twice the average. What is striking is that midsized firm partners are on a par with firms in the Altman Weil survey as far as compensation is concerned, but midsized firms appear to be significantly more competitive in terms of billing rates. It follows that they must have a materially lower cost structure given comparable partner compensation numbers. The implication is that midsized firms have competitive pricing for competing with large firms and may very well have more pricing increase room.

Partners are working harder in midsized firms surveyed by Juris, Inc., and they are less skilled at fully utilizing associates. Improvements in scheduling and delegation would fall directly to the bottom line, partner compensation, for midsized firms.

Considering the lower billing rates and the lower associate billable hours, in the Juris survey compared to the Altman Weil news release numbers, one must conclude that midsized firms have both available capacity and the opportunity to improve pricing. Improving either or both would materially increase partner income.

You can purchase or learn more about the Juris survey by going toJuris® Law Firm Economic Survey.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

CitiGroup Private Bank Benchmarking Involvement

Admin — Mon, 02 Oct 2006 17:12:00 GMT

Competitive intelligence and specifically peer group benchmarking has been growing in importance as law firms increasing adopt traditional business practices. This post is one of several summarizing information garnered from the September 2006 Benchmarking Symposium held in Nashville Tennessee.

One might be surprised that a bank is one of the leading players in benchmarking services to law firms. CitiGroup Private Bank has 200 professionals who serve law firms. The bank has relationships with 650 firms. Its venture into benchmarking was initially to assist the bank in risk management. Benchmarking separated high-risk situations from those law firms that represented quality relationships for the bank. That evolved into using benchmark information to help bank customers improve financial performance and eventually became a highly sought after service by larger law firms.

CitiGroups answer the question, “Why should you consider benchmarking?” this way: “It lets the members of the law firm know where they are and if they are making progress toward their goals.”

As the City Group representative pointed out during his presentation at the recent Nashville Benchmarking Symposium the legal industry is consolidating and becoming more competitive. Law firms are run more like a business than ever before. Given these conditions a good fact base gained from benchmarking can help gain consensus about important decisions.

Thomson West has partnered with CitiGroup as the content provided for its new PeerMonitor™ service. The service is targeted toward large law firms. Thomson’s news release explained the new services: “Law firm leaders, often frustrated by the lack of real-time competitive information available to them, now have an answer that will help them to make more informed management decisions.” According to Thomson West, PeerMonitor provides law firms with competitive facts as current as the most recent monthly financial statements. PeerMonitor enables law firm executives to benchmark their business performance to a named group of peer law firms across a range of pricing, profit and expense categories.

Other benchmarking providers speaking at the symposium included, Juris, Inc., PriceWaterhouseCoopers, and CitiGroup Private Bank. Juris Insight service is targeted at midsized U. S. law firms. Redwood, PWC and CitiGroup are primarily targeted at the largest 250-attorney to 300-attorney law firms.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

Benchmarking Services by Redwood Analytics

Admin — Fri, 29 Sep 2006 18:39:25 GMT

Redwood has secured a lead position in business and competitive intelligence among BigLaw since it arrived on the scene in 2003. The company originated automatic benchmarking services. Focusing on AmLaw 200 firms, Redwood has 125 participating firms and provides both macro-level comparisons as well as custom peer and segment groups. Redwood is somewhat unique in that it approaches the comparisons from the view of what it refers to as Client Investment. Under this approach, Redwood tracks what happens to fee revenue—what portion goes toward categories of write-offs, expenses, and income. Tracked metrics include realization, growth, lawyers statistics, pricing, business development and profitability among other items.

During Redwood’s presentation at the recent Benchmarking symposium in Nashville, Norm Mullock, chief development officer, gave the following reasons as support for benchmarking:

Source of comparative and trend information for the legal industry
Support for business strategies and initiatives
Offers a facet of the catalyst required for change
Unbiased, quantitative assessment of internal operations
Analytic insight into area of risk or opportunity not normally reported by the firm
Speaks to a larger audience and from a different viewpoint than internal firm reporting
Supports BI/CPM infrastructure

The role of benchmarking in a firm’s efforts to improve financial performance is illustrated in Redwood’s Performance Cycle graphic:

For more about Redwood’s services visit their web site. Other benchmarking providers speaking at the symposium included Juris, Inc., PriceWaterhouseCoopers and CitiGroup Private Bank. Juris Insight service is targeted at midsized U.S. law firms. Redwood, PWC, and CitiGroup are primarily targeted at the largest 250-attorney to 300-attorney law firms.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

The Importance & Power of Legal Surveys

Admin — Wed, 27 Sep 2006 17:34:00 GMT

Understanding the Importance & Power of Legal Surveys was the title of PricewaterhouseCoopers’ presentation at the September 2006 Benchmarking Symposium. While their presentation slides are not generally available, Laurie J. Lieb, PWC’s Director of Law Firm Surveys, indicated that she would make them available to attendees. I have noted below some of the key points made during their presentation. For more information about PWC’s benchmarking programs or to request a copy of their presentation, contact Ms. Lieb. You can reach her at 623.561.8481 or laurie.j.lieb@us.pwc.com.

Why are surveys important? PWC noted the following key reasons:

It gives the law firm a sense of its place in the market compared to peers.
It provides the firm with insights for making strategic decisions such as expanding into new areas or practice areas.
It points to opportunities to improve performance by disclosing weaknesses compared to similar firms.

One of the helpful tips was the speaker's point that not everyone in your firm needs the same benchmarking information nor do you have to settle for a one-size-fits-all survey report. As I understood the speech, PWC can custom design survey reports to fit a law firm’s needs. With that in mind, the speaker suggested that you find out the needs of the functional and practice management members of your firm: 1. where you are currently blindsided; 2. what do you need to know? PWC also pointed out that you can control the focus of information needed:

Firm-wide by geographic area
Office level by location
Practice group comparisons
Your custom peer group

The point is benchmarking is detective work; it is market intelligence.

Participating in surveys can be costly because of the drain on law firm resources. With that in mind, the firm should determine carefully which surveys it will participate in. Certainly you should follow PWC’s advice and consider the reputation of the survey vendor—and today you have the option of going with a vendor that extracts survey information automatically, substantially eliminating the labor and billable hour drain of participation on the law firm. PWC will introduce its data extraction option in 2007.

PWC has two off-the-shelf flavors of survey offerings. Their Law Firm Statistical Survey (LFSS) is the more mature one. The LFSS program was started in 1957 and has a consistent base of participants. The total number of firms participating in 2006 was 180. PWC’s standard surveys are aimed at large firms, those generally characterized as BigLaw. The statistical survey is unique for its focus on expenses including staffing ratios and functional area cost.

Their Billing Rate & Associate Salary Survey program was initiated in 2000 and for 2006 had three hundred participating law firms. Three fourths of the participants are in the AmLaw 200. Its focus has traditionally been on billing rates and associate compensation but in 2005 PWC added other revenue drivers. They have the ability to provide office level and practice group benchmarks. The introduction in 2007 of a new data extraction tool will give firms the option of eliminating the labor intensive participation of the traditional survey format.

As noted by the PricewaterhouseCoopers representative, there is always a small group of firms (perhaps 5%) that are unusually concerned about confidentiality, security and antitrust considerations. The well established vendors have procedures in place for confidentiality and security that all but that small minority of firms consider adequate. As for antitrust, there are safe harbors. For example, the following safe harbors currently apply for shared fee-based information:

Conducted by a third-party
Data that is three months old
Minimum of 5 firms in a peer group

PWC follows the safe harbor guide and adds others as well. It is worth noting that the safe harbors represent a conservative approach. One you would expect from PWC’s Big Four position among CPA firms. Technology lets us capture and return more current information. That does not automatically mean an antitrust problem exists. Likewise a group of three versus five may be perfectly okay with regard to some data.

There is significant value from benchmarking to participating law firms and in the end it is the law firm that has to sign off on the acceptability of the vendor’s confidentially and security measures. Likewise, the firm has to decide that it may participate in the benchmarking process without violating antitrust laws.

Other benchmarking providers speaking at the symposium included Juris, Inc., Redwood Analytics and CitiGroup Private Bank. Juris Insight service is targeted at midsized U.S. law firms. Redwood, PWC, and CitiGroup are primarily targeted at the largest, 250-attorney to 300-attorney law firms.

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.

Six Basic Law Firm Metrics

Admin — Tue, 19 Sep 2006 17:24:49 GMT

What top-level metrics should you track? If you are among the 20 percent of midsized firms who have a formal planning process, what you track depends on that plan and your objectives. But regardless, there are six basic metrics that every firm should track:

Productivity or Utilization

Effective (Blended) Rate

Realization

Margin

Days of unbilled fees (work in process)

Days of billed fees outstanding (accounts receivable)

Current performance should be compared to prior periods to determine if the firm's financial performance is improving, holding its own, or declining. It should be compared to the firm’s targets to determine if it is achieving its objectives. It should be compared to benchmarks of similar firms. Doing so will most likely indicate areas that deserve attention and that represent lost opportunities.

While I have not included it among the basic metrics, leverage is still the primary factor correlating with per-partner income. For example, in a recent survey, the top performing 25 percent of midsized firms had 2.5 associates for every partner, compared with an average of 1.3 associates for all firms. The chart below appears in the Juris Law Firm Economic Survey of midsized firms for 2005. The chart clearly illustrates the dominant influence of leverage on per-partner income.

If you need help computing any of the six basic metrics, refer to the previous posts linked below:

Morepartnerincome.com is sponsored by Juris, Inc. For information about Juris® products and services for increasing law firm performance and partner income, go to www.Juris.com.