Edward Poll, The Daily Record Newswire
What should firms expect from young lawyers to justify keeping them? The answer lies in another fundamental question: is there enough work to make a lawyer worth keeping? In analyzing this worth, there is no formulaic expression that specifically depends on origination, billing or collection.
To say that an attorney is worth the amount of profit due to billing or the amount of profit due to business brought in does not take into account the subjective factors that should be considered. For example, does the lawyer’s combination of skill and attitude demonstrate potential for career growth beyond the immediate level of business? Does the lawyer’s skill set encompass not only knowledge of the law, but insight into how the law is applied?
Such questions illustrate what too many lawyers of any age too often do not grasp: success in the law takes looking beyond the borders of the law. That vision should extend in two different directions. Successful lawyers must know the economics of a law practice and their roles in that economic equation. Equally important, effective lawyers should have insight into the broader trends of society and how those trends impact their own firms and the clients of those firms.
All lawyers today need to be more sensitive to law firm financial needs and operation. The necessary conditions for this to happen are increased access to financial information, and better training in using it. That means having the business competency to understand the traditional key measures of law firm performance: realization, utilization, leverage and expenses.
More significantly, it means being able to compute one’s own contribution to the firm’s performance. The calculation is a fundamental one: Billings - [Lawyer’s Total Compensation + Direct and Indirect Expenses] = Net Profit. Doing client billable work in a way that produces net profits for the firm is essential for a young lawyer who wants a long term career at that firm.
This might be called the science of looking beyond the law’s borders. The art is more complex and involves understanding the basic changes in society that are transforming the law firm’s role. There is plenty of evidence to back up those who assert that the law firm world of the future will be figuratively flat – that lawyers the world over have the same aspirations and capabilities, and can achieve them anywhere in the world through digital and electronic technology that makes the “playing field” flat and level for everyone.
In the United States, too many lawyers continue to resist the way that global technology flattens the cost of legal service. They do so at their peril, because it ignores the reality of the future law firm world dominated by globalization and technological efficiencies.
In this emerging world, any law firm and any lawyer may have to deal with global matters and issues, but these will continue to impact small to mid-size businesses and individuals. The volume and fundamental nature of these matters and issues mean they will always be there as long as people need lawyers. Whether matters are a commodity or not, having the vision to address them, reduce the cost of legal services and pass the savings on to the client will be the formula for a lawyer’s survival.
Lawyers cannot afford to isolate themselves, ignore this change, and its financial impact on individual effort. To do otherwise is to ignore reality, and that is the path to self-imposed obsolescence.
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Edward Poll, J.D., M.B.A., CMC, is a law practice management thought leader and contributor to this publication. His website is at www.lawbiz.com.
