Robservations in Law...The More Business Challenges Change, the More Many Lawyers Struggle With Real Breaks From Tradition...

My Robservation is that as we move deeper into year three of the Covid challenge many law firms have a different problem to that which I have seen so often in the past, but one that nonetheless will need strong action taken with innovative solutions.

What I typically observed over decades leading up to March 2020 was many firms not really having enough work for the people resources on the team, leading to it being impossible to generate sufficient revenue to create an actual margin over expenses plus Principals’ market salaries...so, no actual profit, or far too little.

Consequences?

·??????Usually, Principals working far too hard for far too little (in effect investing merely to purchase themselves a poorly paid job), and often worn out, with little appetite for making time to carefully examine what was causing their problems, with the help of truly experienced advisers.?

·??????Poor cash flow, financial health not likely, and lots of stress...

·??????No time for visionary thinking, and no funds to execute on many potential worthwhile initiatives, whether visionary, or just plain common sense. This problem had deepened with the tsunami of change impacting the Profession, an ongoing challenge that has not abated, and quite probably never will.

Currently what I’m seeing is the reverse, firms that have got too much work for the resources they have to get it done with the right quality and timing.

For whatever specific reasons (and there’s no shortage of theories), team members with the right skillsets and attitudes are hard to come by, and this ranges all the way across the spectrum from secretarial support, to paralegals, Law Clerks, Graduates, and all levels of lawyers.

The traditional paradigm, get people with intelligence and good attitudes and train them up, isn’t working well, because very often there is little or no capacity in the team members with experience to get off the files long enough to do the training well.

This conundrum is exacerbated when higher investments than ever before are having to be made in experienced team members to limit the likelihood they will be head-hunted away for even more in competitor firms.?

Fewer hours than previously available for employed team members to generate revenue doesn’t seem to compute, and for that reason on its own, Principals may well be in for another lean year or two.

Further, in some types of work file velocity is deteriorating despite Principals carrying higher workloads, an additional cash flow pressure where invoicing is dependent on getting stages of work, or the whole matter, completed.

I’m certainly observing Principals who are working extra long hours under additional pressure pushing out better revenues if file velocity isn’t an issue, but with insufficient time to attend to many of the FirmTime? management responsibilities they have and were attending to pretty well previously.

I’m also seeing many Principals doing considerable volumes of work at much lower returns than they have been achieving previously, simply because someone has to do the work given that there is no-one with the combination of skills and capacity to give it to. Catch-22 anyone?

While for many of these firms having enough work is not presently a problem, it will be in due course if Principals do not have the time to nurture existing client relationships and start new ones, and guide other team members in learning how best to do that themselves.

Some suggest a route out is to stop taking certain types of work, downsizing the available work to the current size of the people resources.

It’s a bold strategy at any time, but very difficult if fixed costs can’t be reduced quite quickly.

With good revenue capacity in the existing work, and work coming in for the time being, what these firms need is additional capable team members to get it done. Yes, there will be additional direct costs, but these can easily be covered by well-managed team members, and the additional revenue will recreate a gap above the fixed costs, a gap that had already disappeared or was fast disappearing.

Key Robservation...

With this perfect storm upon them, one would assume that everything reasonably possible had been done to source good new talent (not to mention keeping that already existing).

Interestingly, and frustratingly, I do not see that this has in fact always been the case.

Talent acquisition and retention is a multi-facetted process, and to optimise chances of attracting the right people a number of important things need to be got right consistently.

Obviously throwing hands in the air, or throwing in the towel, does not cut it.

Nor does offering market remuneration that is unspecified, or a range that is so wide as to be almost meaningless.

The danger of forgetting loyal team members in the pursuit of additional ones is ever-present.

There is some talent out there, albeit a reduced pool, but many firms are not attracting their attention, with the advertising being at best “same old, same old”, pretty boring.

Law firms have been very traditional for a very long time, and any real differentiation seems to be anathema. A few firms are trying, but frankly, not having a dress code doesn't pay the mortgage or escalating grocery bills.

In the current market real differentiation is critical to cut through the clutter, not only in what you actually do, but in how you let the market know, clearly and attractively, what you do.

Is suitable new talent, in the volume you want it, thus guaranteed?

Of course not, but what have you got to lose in at least trying?