Definitely Mabey

Increasing law firm profitability—what's working and what's not?

When I advised back in January that I had invited a few folks to write on topics they were both passionate and knowledgeable about, I was hoping that Colin Cameron would be one of those guest columnists. So I am very pleased to say he has graciously agreed to write this month's column.

Stephen Mabey Author
Stephen Mabey, CA
Principal & Managing Director

Colin Cameron
Colin Cameron
Founder, Profits for Partners

While Colin and I come from opposite ends of the country, our passion about and interest in the legal industry are identical. So it was another no-brainer to ask him to do a column on law firm profitability and how firms are striving to achieve their profitability goals in 2012.

For a brief background, Colin is the founder of Profits for Partners Management Consulting, which provides law and other professional service on key aspects related to profitability, including profitability improvement, strategic planning, firm governance, partner compensation, and financial and operational management. He is also the founder and moderator of the LinkedIn discussion group Law Firm Profitability and a chartered accountant who spent 1983 to 2009 as the COO of the law firm Clark Wilson LLP in Vancouver, prior to establishing his consulting practice in 2009. He can be reached by e-mail at colin@profitsforpartners.co or telephone at 604-512-8104.

Leverage

One of the fastest and easiest ways to increase profitability is to increase leverage by moving work down to the most efficient staffing level. I've noticed some firms are adding non-equity partners to increase leverage and profitability, and this is a trend that continues to build. Clients are pushing hard on rates and don't want to pay to train associates. Non-equity partners, by contrast, hit the ground running and don't incur training and supervision costs. Firms don't break even on associates until three to five years of call on average, while non-equity partners are profitable right away.

Other ways to use leverage:


The rest of this article is available in Stephen Mabey's new Book

Book Cover - Leading and Managing a Sustainable Law Firm - Tactics & Strategies for a Rapidly Changing Profession by Stephen Mabey

Available for purchase on BookBaby.

 

 

 

Until next month's column, remember as Herbert Spencer (coiner of the phrase “survival of the fittest”) is reported to have said,

"opinion is ultimately determined by feeling and not by intellect.

 

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First Published in Canadian Lawyer June 2012. Copyright © Applied Strategies Inc.

Legal Strategy Consultant