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Certain Hours Are More Valuable Than Billable Hours

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Many firms continue to act as if billing a particular number of hours is the most valuable use of every attorney’s time. In the grand scheme of things, however, devoting time and resources to strategizing the firm’s positioning in the market can be more lucrative.

Firm leaders, having never been taught to value management time themselves, often bring this perspective to their hiring practices. They make the assumption that what they most need to grow their firms are lawyers who will bill a lot of hours. This approach that focuses only on billing time leads many managing partners to neglect an element that’s especially important now – finding and fostering future leadership.

Successful companies groom personnel for leadership roles over time through the management ladder. Too many law firms, in contrast, wait for a crisis to recognize that they don’t have the skills needed to adapt to market changes or take advantage of industry trends. Firms pay close attention to the legal skills of their attorneys but often don’t prioritize leadership skills or management ability.

This is especially dangerous for smaller firms in today’s market. As the pace of change in the legal industry increases, positioning yourself in the marketplace is more important than ever. And decisions about positioning require leaders who can initiate conversations and reach consensus on a range of thorny issues.

As consultants to law firms, we often see that the time it takes to answer questions about a firm’s positioning and future strategy is often more valuable than billable work.  This includes addressing questions like:

  • Should we expand into other practice areas?
  • Can we grow through succession planning (by taking on the book of a retiring lawyer)?
  • What compensation structure most encourages the behavior we need from our senior partners?
  • Who at the firm has the potential and desire to become a future leader, within the ranks of both lawyers and staff?
  • How do we identify future leaders during our hiring process?

Boutique and mid-sized firms may have an advantage. They should be able to pivot more quickly and precisely than their national competitors. And in today’s market, where large firms have many competitive advantages, the quality and quantity of time devoted to leadership, positioning, and strategy are what increasingly will allow smaller firms to thrive.

Train Your Lawyers to Discuss Fees

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Managing partners and other law firm leaders can be reluctant to allow junior lawyers to discuss fees with potential clients. One of the recurring concerns is that the associate might commit the firm to fees that are too low. And some firms are gun shy about discussing hourly rates because of what those figures might reflect about associates’ compensation.

As consultants to law firms, we have seen firsthand that keeping lawyers in the dark has its own disadvantages. Notably, questions about fees routinely come up in discussions with potential clients. Thus, firms who seek to improve the rainmaking abilities of their more junior lawyers should strongly consider providing more training on how to talk to potential clients about fees.

Specifically, the training should address the following five questions:

 

1) What can associates tell potential clients about basic rates?

For firms that charge by the hour or on a flat fee basis, the best practice is to train associates to mention a fairly broad range rather than quote a single number.

2) What can they say about the firm’s position on alternative fee arrangements?

When asked about their firms’ openness to alternative fee arrangements, most junior lawyers answer with an “I don’t know.” This can leave a bad impression on potential clients and referral sources. Advise mid-level associates to instead communicate to clients that the firm evaluates fees on a case-by-case basis and would consider an alternative fee arrangement. It might be appropriate to provide associates with a sense of the firm’s willingness to charge blended rates, as well as some guidance around RFPs, contingency fee cases, and other special circumstances.

3) What should they convey about the process of providing quotes?

At every level, lawyers should know enough to tell their potential clients how fee decisions are made (by committee, by the head of the practice area, etc.) and when (an approximate timeline). This may seem simple, but firms often fail to offer this kind of guidance, thereby leaving the potential client in the dark about when they can expect to receive a specific quote or fee agreement.

4) To whom should associates mention a lead?

If a junior associate meets a potential client, what’s their next step? Do they report this to the billing partner, the head of the practice area, the managing partner? Make this clear. You don’t want to lose out on a valuable matter because one of your lawyers didn’t know whom to tell so that the firm could follow up.

5) What has happened with other matters the firm was pursuing?

Share success stories with mid-level associates (and special counsel and non-equity partners) so that they can incorporate the same strategies into their own interactions and learn to bring in new business.

 

This training shouldn’t just be about what to do but also about why those methods work. Well-designed training should provide lawyers with the confidence to communicate effectively about the firm’s fees.

Your Most Important Hire in 2021 Might Not Be a Lawyer

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The changes that have started to develop this year will manifest themselves more clearly in 2021. This includes the reduced staffing levels we’ve seen as firms became focused on cutting costs, adjusting to remote work, and keeping rainmakers happy during an economic downturn. The pandemic led many to shed practice areas they viewed as more marginal and to cut back on administrative staff, but so far, not enough time has passed for the industry to really see the impact of this trend.

There is, however, a trend that pre-dates the pandemic and is sure to survive it: When corporations hit a certain size, the CEO is no longer on the front lines. Running the place, setting strategy, getting teams to work together, managing finances, and complying with government regulations constitute a big enough job on their own, yet many law firms work on a model that requires equity partners and heads of practice areas to keep billing hours.

This system is becoming increasingly untenable, so firms would be wise to invest more in attracting, cultivating, and supporting managerial talent. In 2021, firms of all sizes will benefit from making managerial talent a top priority. For mid-sized firms, this could mean hiring an office manager or Chief Operating Officer. Having someone who can perform all the important functions of accounting, payroll, IT, and HR for the firm will open up partners to bill hours they would have otherwise spent on administrative tasks. For larger firms, this means challenging the idea that the most powerful people in a firm are necessarily lawyers and, instead, empowering management to make decisions for the strategic growth of the organization.

With so many changes this year to the usual policies and procedures, law firms need to improve the quality of their management. Whether that’s bringing on a professional office manager or even, dare we say, retaining a consultant, the most important hire you make in 2021 might not be a lawyer.

What Firms Can Do to Help Staff With School-Aged Children

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There is compelling anecdotal evidence that workers with school-aged children are having an especially hard time dealing with the present situation. When the pandemic began, it was the virus itself that drew most of the attention. Now, an increasing percentage of the lawyers we advise are reporting that, while they and their families are safe, they are struggling to cope with the added burdens of running schools out of their homes.

Even the most capable multitaskers are finding it difficult to keep up with their job responsibilities while simultaneously facilitating sometimes multiple school curriculums. Lawyers are affected in particular because their income and performance are so dependent on billable hours. And we have been told by more than one attorney that school-related responsibilities are cutting two to three hours a day into their lawyering time.

This situation isn’t likely to improve as some school districts implement hybrid plans where children attend school on some days of the week and stay home on others. Schools rarely coordinate these plans with one another, so parents with children in multiple schools are faced with an increasing array of requirements to which they have to adhere. We are aware of one household where the parents of three children have to schedule up to 17 different Zoom calls for their children on a single day. This is coming at a time when law firms are counting on lawyers and paralegals to continue to generate revenues.

The most important thing law firms can do right now to support lawyers and staff with school-aged children is initiate an honest conversation about the impact that schooling and other burdens are having on them. Employees might be understandably hesitant to open up about their particular circumstances, so don’t wait for a worker to tell you an emergency has taken place or things have generally fallen apart. Let your team know now that it’s ok to say if they’re not fully ok and that the firm will respond in a flexible and intelligent way.

There are also concrete steps that a firm can take to help employees cope and continue to perform their duties. For example, consider having prepared food delivered to lighten the load on parents who have an enormous amount of caretaking to do at the moment. For larger firms who have more employees, it could make sense to subsidize or underwrite online tutoring services so that burden doesn’t fall only on the shoulders of their workers.

Some of these new benefits might seem novel or strange. So did many benefits that are now more commonplace, like providing free breakfast on Fridays. Workers without children may have a legitimate concern that their needs aren’t being as fully recognized as those of their colleagues with children. Their views and needs should be heard too. It’s possible to initiate a conversation with all of your people about what they might need while recognizing that those with school-aged children are likely to be carrying additional child-rearing responsibilities.

These times call for creative solutions, and the proper response starts with opening the door to your lawyers and staff so they can feel comfortable expressing what’s especially difficult right now and how the firm can help. The cost of not taking these extra steps can be great, in the form of workers’ compensation stress claims, lost clients due to poor work product, and malpractice actions against lawyers who weren’t able to keep up. Don’t wait to check in and offer support to those juggling the most.

Strategies for Managing Your Remote Law Firm Workforce: Communication

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The shift to working remotely came suddenly for most without much lead-time for planning. Law firms adapted to the new normal thinking it would be a few months or maybe just a matter of weeks. It’s become clear, especially in cities like Los Angeles where social distancing measures haven’t contained the virus, that we are now looking at a much longer period of fully or partially remote work.

This means that firm leadership should be implementing strategies for managing a remote workforce over the long haul. In advising our clients on this issue, we’ve been able to provide a number of specific strategies for maintaining efficiency and employee satisfaction. Today, we’ll start with communication.

When your team members aren’t in the same office, an information vacuum is likely to appear, as each memo or notice needs to be consciously relayed to those whom it concerns. Email is a great way to pass along information that many workers need to know, but more frequent phone calls will help to re-create a space for ideas and suggestions that would have been tossed around casually from one desk to another.

If you aren’t holding staff calls in addition to one-on-ones, you should be. Whether these are for the whole firm or separated by practice area will depend on the size and scope of your firm, but these calls can be key to keeping everyone on the same page and making sure all concerns are heard. If you are a senior lawyer, it might feel like you are constantly communicating with colleagues, but the perception of more junior workers is often different. More frequent phone calls with smaller groups of junior attorneys, paralegals, and staff are especially important now.

More communication doesn’t need to mean more of a burden on your workforce. Send agendas in advance for staff calls whenever possible, and keep department meetings to an hour or less. Checking in with each person on your team for twenty minutes a week can also be extremely effective without interrupting their work or yours.

Finally, while Zoom was all the rage when stay-at-home orders went into effect, don’t insist on video conferencing when it’s not adding to the conversation. There are instances when you might want to share a screen or where you could expect some benefit from seeing each other’s faces, but much of the time, this is just more intrusive to your workers and wasteful of their time as they coordinate their appearance, the room’s lighting, and the activities of others in their households. So stick with traditional phone calls unless there is a very good reason not to.

Even as law offices gradually reopen going into 2021, it’s increasingly unlikely that all of your people will be in the office at the same time. Thus, you need to obtain feedback regularly from the full range of your workers to determine how your modes of communication need to evolve to keep up with the needs of a remote workforce.

California SB-939 Signals Potentially Major Changes in Real Estate Leasing

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Businesses in California will have an opportunity to rehash traditionally long-term leases if Senate Bill 939 is passed. Applicable to commercial tenants who have experienced a decline in average monthly revenue equal to or exceeding 20% since government restrictions altered the economic landscape, many could qualify “to engage in good faith negotiations with [landlords] in order to modify any rent or economic requirements.”

This provision applies to tenants in food and beverage, entertainment, and performance venues. By its terms, SB-939 would not appear to cover law firms and other professional services companies. Moreover, the bill was recently amended to eliminate perhaps its most far-reaching tenant protection – the ability of commercial tenants to walk away from leases while capping their financial exposure.

Although the protections afforded tenants under SB-939 are narrowing, it is clear that COVID-19 and its aftermath have fundamentally changed commercial real estate. After decades of leaving commercial landlords and tenants to negotiate their own deals and live with the results, the last few months have seen prohibitions on the eviction of commercial tenants and other government interventions that would have seemed unthinkable a few months ago.

In this environment, some law firms are likely to take aggressive action to renegotiate leases. As consultants to law firms, we have already been contacted by managing partners looking to reduce their square footage, especially as relatively few lawyers have expressed enthusiasm about returning to work in a high-rise office.

It would be a mistake for law firms to conclude that they can just walk away from their lease obligations. In this legal and economic environment, it would be easy for law firms to overplay their hands in discussions with landlords. The next few months do, however, provide law firm managing partners with a rare opportunity to address their real estate needs and perhaps negotiate a more appropriate lease.