As law firms adjust their strategy to the new normal, they also need to adjust their operations. We may see more staff lay-offs but the time has come to re-think operations, not just cut. Historically, I’ve seen relatively few articles on law firm operations; so I was eager to read Hildebrandt’s recently published The Drive Toward Performance Measurement In Law Firm Administrative Functions.
Author Kristin Stark notes “law firms have been slow to adopt performance measurement and improvement processes, viewing the nature of services provided by lawyers and the operations groups supporting lawyers as ‘unmeasureable’.” She proposes ways to measure and assess support functions such as tracking work activity (outputs and FTEs), benchmarking, and customer satisfaction surveys.
This is important reading for law firm managers and I hope Hildebrandt publishes more on this topic. One of her comments – that measures must be “Relevant to the goals that the department and firm aim to achieve” – conceals a difficult and little-discussed issue: the tension between the wants of the institution (the firm) versus the individual (a lawyer).
I have struggled to come up with a framework for thinking about the amount of support a firm should provide lawyers. Or, turning Stark’s comment to a question, just what is the aim firms seek to achieve? Lawyers might say “do everything for me” whereas firms might say “support is expensive, do more on your own.”
In the old days of the billable hour, it might have been possible, in theory, to maximize (Revenue – Cost = Profit). In practice though, it is not so easy. An example illustrates this. Suppose a partner who bills $1,000 / hour does an all-nighter. Let’s say he needs support that, if he did on his own, would take him 6 minutes. Assume further that he would not bill for this ‘support’ time. Paying a secretary to be available all night just for this partner costs far more than the $100 he bills in 6 minutes.
And in that example you begin to see the institutional v individual tension. Lawyers frequently demand support, even when the economics don’t support it. As a lawyer, if support is “free” to me, why wouldn’t I demand it – after all, I’m not the one paying for it. Economics 101 tells us that free goods generate too much demand. In the example, the firm should make the partner do the work on his own (gasp!).
Of course, I have over-simplified to illustrate the challenge of determining the right level of support. And today, the move to alternative fee arrangements complicates the analysis. In this time of continuing economic hardship, law firm managers need to think about how much support is appropriate. And once they do, they need to measure how effectively they provide it, as the Hildebrandt article suggests.