Archive for the ‘Law firm business model’ Category

A law firm gets serious about knowledge management

July 16th, 2013 by Altman Weil

Latham & Watkins is rewarding time spent on knowledege management (KM) in its bonus structure, according to The Lawyer, counting an hour spent on KM as equivalent to a billable hour. 

“Since its launch in April 2012, more than 860 KM and thought-leadership projects have started within the firm,” said [Latham’s Global Director of KM, David] Fitch. “That equates to around 50,000 hours contributed of attorney time.”

The range of KM projects Latham’s lawyers are involved in that generates credited hours includes drafting and updating of forms, organisation of precedent and know-how resources, the drafting of client alerts and other thought leadership pieces.”

Read it at The Lawyer

Changing your business model

June 21st, 2013 by Altman Weil

There’s lots of talk about the changing law firm business model, but how does a firm actually go about making such a big systemic change?  Addleshaws (a 600-lawyer UK law firm) has been working on re-engineering its service delivery model, and offers some insights on what they’ve done so far.

Read it at The Lawyer

New survey on legal industry trends

May 22nd, 2013 by Altman Weil

Altman Weil has released its fifth annual Law Firms in Transition Survey. Conducted in March and April 2013, the survey polled Managing Partners and Chairs at 791 US law firms with 50 or more lawyers.  Completed surveys were received from 238 firms, including 37% of the 250 largest US law firms.

Some top trend data from the survey:

  • 96% of firm leaders think more price competition and greater practice efficiency are permanent changes in the legal market
  • 90% of leaders believe there will be more commoditization of legal work
  • 80% of leaders believe there will be more non-hourly billing arrangements
  • 79% expect more competition from non-traditional legal service providers
  • 45% of firms are working on more efficient legal service delivery
  • 29% of firms have changed their strategic approach to pricing since the recession
  • 91.5% of firms raised their overall billing rates for 2013, with a median increase of 3%
  • A median of 20% to 30% of all legal fees are discounted
  • A median of 10% of fees are generated from non-hourly billing

The complete 63-page survey report includes sections on industry trends, pricing and alternative fee arrangements, economic performance, law firm growth, lawyer staffing levels, succession planning, and the future of the profession.

It is available to download at: www.altmanweil.com/LFiT2013.

Differentiating your practice

March 20th, 2013 by Altman Weil

Marketing expert Sally Schmidt is right on point the value of differentiation in today’s Attorney at Work. 

“Differentiation is perhaps the hardest concept for lawyers to embrace. I say “embrace” and not “understand” because most lawyers understand the concept of differentiation—they just can’t or don’t want to do it. Perhaps it’s because they like to handle a wide range of matters; litigators, in particular, often like to say they can litigate any issue. Perhaps they think that, by defining or limiting the scope of their message, they will lose out on opportunities: “If they think I do ‘X,’ they won’t send me ‘Y.’”

The reality is, if you are completely undifferentiated from other lawyers, people won’t send you “X” or “Y.”

Read it at Attorney at Work

Non-Equity Partnership Trends

March 12th, 2013 by Altman Weil

Since 1999, the Am Law 200 lists have tracked the number of non-equity partners in the 200 highest-grossing law firms in the United States. Between 1999 and 2012 there has been a significant change in those numbers.

In 1999, 65.5% of Am Law 200 firms had non-equity tiers; in 2012, that number had jumped to 84.5%.  Seventeen percent of all partners in two-tier firms were non-equity partners in 1999.  By 2012, 39% of all partners were in a non-equity tier.  Finally, the average number of non-equity partners in a two-tier firm went from 35.5 in 1999 to 108.8 in 2012.

The growth of non-equity partners as a lawyer category has reshaped law firms.  Many argue that the non-equity tier provides an easy way to offer the pride of partnership to associates, to introduce senior lateral hires, to increase billing rates of senior associates and elevate their status in the market — or to park underperforming equity partners.  However, it also builds a seemingly permanent class of high-priced leverage whose average billable hours are below those on either side of them (senior associates and equity partners).

It is critical for two-tiered firms to rethink their strategic intent with non-equity partnerships, including:

  • Analyzing short and long-term impacts on firm profitability
  • Rethinking non-equity compensation
  • Establishing tougher standards for entry and retention in the non-equity tier
  • Regularizing performance evaluations
  • Systematically managing transitions out of the tier

These steps will enable two-tier firms to begin the process of optimizing the productivity and profitability of non-equity partners.

Staffing moves save money, promote efficiency

February 1st, 2013 by Altman Weil

Several recent stories highlight law firms’ ongoing attempts to cut costs and deliver services more efficiently by rethinking their staffing models. 

The AmLaw Daily noted Kaye Scholer’s intention to move 100 back-office jobs, primarily from New York City, to Tallahassee Florida.

“The new operations center should help Kaye Scholer respond to the continuing push by clients to control costs, with Tallahassee’s lower cost of living allowing the firm to save on real estate expenses and staff salaries. [Chief Operating Officer Jeffrey] Hunter also views the move as promoting efficiency: “We think that we can provide timelier and more responsive services to partners and—in turn—their clients by centralizing those services instead of having them scattered across our New York, Washington, D.C., and Los Angeles offices,” he says.”

Read it at The AmLaw Daily

In a similar move in the UK, Magic Circle firm Allen & Overy announced they would relocate 43 US and European staff positions to their back office location in Belfast.

“With low economic growth across many developed markets, we must ensure we are operating in a way that will deliver the cost efficiencies our clients expect of us, so that we may protect the long-term competitiveness of our business,” Wim Dejonghe, the global managing partner for Allen & Overy, said in a statement.”

Read it at The AmLaw Daily 

The Legal Intelligencer reported that Blank Rome is offering buyouts “to its entire legal secretarial pool” as part of a rethinking of its secretarial needs:

“The reduction in legal secretaries is part of the firm’s overall effort to move into a more “efficient and flexible” service delivery model that better represents the fact that its younger attorneys are not utilizing secretaries the way more senior attorneys do.”

Read it at The Legal Intelligencer

Chief Legal Officers are pushing for change

November 5th, 2012 by Altman Weil

Corporate law departments report that they are re-negotiating outside counsel fees, shifting work to lower-priced law firms, increasing in-house capacity, opting for alternative service providers and using new technology — all to develop a more cost-effective legal services model — according to over 200 General Counsel who participated in the Altman Weil 2012 Chief Legal Officer Survey.

“Chief Legal Officers are not waiting for law firms to change their business models,” said Altman Weil principal Daniel J. DiLucchio.  “They are taking change into their own hands in 2012 to create a new internal value proposition.”

Read it at Altman Weil

The commoditization of the profession

October 4th, 2012 by Altman Weil

The Wall Street Journal Law Blog points out an interesting development in the consumer law market.  Jacoby & Meyers (of tv ad fame) has a new licensing deal with USLegal Forms, Inc. that brings them 85,000 legal templates and documents and an online outlet for their distribution.

“The move puts Jacoby & Meyers–which bills itself as “America’s Most Familiar Law Firm”–in a position to take on companies such as LegalZoom.com Inc., which provide consumers with a very cheap alternative to lawyers: do-it-yourself legal documents for divorces, wills, real estate leases and other routine transactions.

The difference here, according to Jacoby & Meyers, is that the firm will be able to augment the bare-bones product–say, a $20.95 will for a New York resident with no children–with legal advice from its own attorneys. That’s something other form providers cannot do, because in the U.S., only businesses that are wholly lawyer-owned are permitted to practice law. (Separately, Jacoby & Meyers has also pushed, thus far unsuccessfully, to allow non-lawyers to invest in law firms.)”

This may not seem immediately relevant to BigLaw, but it’s one more reminder of how legal expertise can be commoditized.

Read it at The Wall Street Journal Law Blog

Law firm pricing directors

September 28th, 2012 by Altman Weil

More than 50 AmLaw 200 law firms have hired Pricing Directors in the last 18 months according to a new article in Corporate Counsel magazine.  This new ‘hot job’ is emerging as a way to maintain profitability in the face of increasing pricing pressures from clients.

“Given the increasingly competitive and tight economics of legal practice today, even in (especially in) the largest and most traditionally successful firms, the market has changed. Price can no longer be disconnected from cost, just as cost can’t be disconnected from value provided.

Enter the pricing director. These emerging leaders in firms are sometimes lawyers, but at this stage in the game, most of them bring experience and disciplines developed outside of the law—where pricing products and services is not only a norm, but also one of the most critical and revered aspects of business. “

What do they do?

“Pricing directors, at their core, are those within firms who help assess which categories the work falls into; which teams and workers are best suited to each matter and purpose or task; what experience, data, systems, or talent the firm brings to the matter that are distinguishing characteristics of the firm’s value; and how much each of these kinds of services provided to clients costs, profits, and advances the firm forward. These leaders are charged with transforming data and process to drive pricing that demonstrates the firm’s value to clients. Their growing role demonstrates a new path to profitability for firms suffering from a self-made downward spiral of discounted service. “

Read it at Corporate Counsel

Law firm as e-discovery vendor

September 26th, 2012 by Altman Weil

The Legal Intelligencer reports an interesting trend that we’ve been watching:

“Amid a flurry of law firms in recent years that have formed an e-discovery practice group, Drinker Biddle & Reath has taken the concept a step further by creating a subsidiary to handle the technical aspect of mining electronic data in litigation. The concept is one consultants said could spread to other law firms as they look to recapture revenue lost to legal process outsource companies.”

Altman Weil experts Jim Michalowicz and Dan DiLucchio are presenting a fascinating new webinar on E-Discovery Strategies for Law Firms on November 1.

Read more at The Legal Intelligencer