Law Firm Capital
This article looks at specifics around law firm capital, and should be read in conjunction with the excellent article by Sean Larkan entitled, “Ignore your law firm capital structure at your peril.” Capital structures of law firms are varied among firms and there is no “one size fits all”. In Australia and New Zealand there…
Continue readingNew Partners
I have just spent the weekend with a smallish firm about to introduce 3 new partners. These people are currently associates with the firm and have been employed by the firm for several years. We spoke about the obvious things that new business owners need to be aware of but there are some things that…
Continue reading2018 – Australian and New Zealand Legal Profession Outlook
One of the benefits of writing an article at the end of the year is the opportunity to look back over the past 12 months and make some predictions about trends that will continue into the new year — hence the snappy title of this article. 2017 was a turnaround year in the Australian and…
Continue readingSuccession – Large Firms
When it comes to succession in larger firms there are a number of facets that need to be considered – transition of clients from one generation to the next, the management of the firm and of course the financials, or transaction of succession both in and out. This article looks at the financial side and…
Continue readingGreen Shoots Showing in Australia and New Zealand Legal Markets
After a number of years of patchy performance, the legal market in Australia and New Zealand appears to have found its feet and is performing strongly – that said, those plucky Kiwis probably climbed out of the slump a little earlier than 2016. There is always a danger in making sweeping generalisations about an industry…
Continue readingDo We Need to Slice the Pie Differently?
Recent client engagements have had a heavy emphasis on partner compensation. What makes this newsworthy is that many of these firms have historically been committed to equal profit share but perceived differentials in performance are giving rise to tensions that some in the partnership feel can only be remedied through differential compensation. Being part of…
Continue readingSuccessful Succession
As has been predicted for a while now, the legal profession is undergoing a significant transfer of ownership and clients from one generation to the next. This is happening whilst the pressures arising from the often discussed ‘new law’ models make their presence felt. Many ageing lawyers look blankly when asked about their succession plan….
Continue readingEight Reasons for Optimism
There has been no shortage of pessimistic predictions for the future of legal practice. Issues such as graduate oversupply and underemployment, digital disruption and increasing disintermediation, increasing price competition coupled with increased cost of delivery, greater client empowerment and price sensitivity seem to dominate the legal media. In addition to these now perennial issues, firms…
Continue readingEdge International Welcomes Sam Coupland and Neil Oakes
Edge International has extended its market-leading reach in Australasian legal-services consulting with the appointment as principals with the organization of Sam Coupland and Dr. Neil Oakes of FMRC, Australasia’s leading professional development consultancy. They join Sean Larkan, Edge International’s first Australasian principal. Sam Coupland For the past 15 years, Sam Coupland has worked exclusively with the legal profession, assisting firms in strategy development, practice planning, equity valuations and equity transfers. Tailoring…
Continue readingThe Changing Nature of “Leverage”
Ten years ago, profitability was relatively straightforward: leverage, price and productivity, right? The more the better. Ten years ago, one of the strongest correlates to ‘high-profit performance’ was ‘employed lawyers with less than five years experience per equity partner’. How things have changed. It is becoming increasingly difficult to delegate work and clients to junior lawyers; an…
Continue readingDue Diligence – What to Look for Under the Bonnet
In recent months I have been working with a number of firms going through the process of either merging firms or involved in a sale and purchase. That this activity has increased in recent years should not be a surprise as the ability for firms to grow organically to achieve economies of scale or fill…
Continue readingRethinking Fee Earner Budgets
Law firms of all shapes and sizes have been setting fee earner budgets for many years. In many firms this process has involved some common and consistent features: Fifteen years ago it was common to encounter salaried lawyers who really grasped the ‘pay is a function of performance’ thing. At some stage in the recent past,…
Continue readingAre Traditional Profit-Sharing Models the Enemy of Diversity?
Methodologies for sharing profit among equity partners have been an interest of mine for many years. Some time ago I wrote a doctoral thesis on the behavioural consequences of alternative models, in particular the impact of various models on equity partner diversity. When I started monitoring and consulting law firms in the late 1980s, equal…
Continue readingVariable Cost Base: Why, What, and How?
The legal profession, and arguably all professions, have to date been comprised of top-line focussed firms. In its simplest terms, the management thinking could be summarised as ‘If we get the revenue right, the costs and profit will take care of themselves’. In most cases this proved very effective. For the thirty years prior to…
Continue readingAre Law Firms Valuable Businesses?
Well managed, profitable, organised businesses with repeat customers are worth real money. Why not law firms? We now have a large, successful, publicly owned law firm with a rising share price. It is not uncommon for small, successful firms to be purchased and sold. Many firms have retained goodwill in their balance sheet, sell interests to…
Continue readingBenchmarking – Focus where it Matters
From the early 2000’s a number of performance trends have gathered strength in the legal profession. Benchmarking data from the FMRC Legal Business Monitor (www.legalbenchmarking.com.au) shows a continuation of performance polarisation and a heavy reliance on price to grow (or maintain) gross fees. These internal issues are compounded by external pressures such as further commoditisation…
Continue readingCost of Production
Price is critical to profit. Price determines your client mix. Price determines how hard you have to work. Price is a critical part of your marketing strategy. Many aspects of success are determined by price. In our training and consulting work we encounter many firms who have become comfortable with the strategic elements of the…
Continue reading6 Strategic Opportunities
1. Life balance versus performance ethic Chargeable hours worked by employed solicitors are declining as salary expectation continues to rise. Employees are not prepared to work the long, arduous hours that made many of their employers successful. Motivating young lawyers to perform at best practice levels is a function of engagement. They will not work…
Continue readingProfit Improvement for Small Law Firms
Financial performance in the legal profession is best described as patchy. Some firms are doing exceedingly well, others are muddling along and a lot are struggling. Whilst the more financially successful firms share some strategic and operational traits, there is no one true model for guaranteed success. Financial performance in the legal profession is best described…
Continue readingA Year of Practice Management
Law firms usually don’t mirror the economy. More often than not they lag behind it, slowing down some time after economic slowdown and growing some time after economic escalation. The future of the Australian economy and its component parts that drive law firm growth remain uncertain. Whilst it is difficult to predict the future, I…
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