Check your engines by Jane Pritchard, TV Edwards

This blog post was also featured as a column in the April 2016 issue of Legal Practice Management magazine. To read the issue in full, download LPM magazine.

When the partners meeting conversation is driven by the need for more cash, the first victims on the drawing board are usually anyone in central resources. They don’t make money, so they can’t increase revenue – right? Since the 2007 recession, it’s fair to say the drive for austerity has impacted on decision making globally and across all business sectors. For SME law firms, however, the failure to invest in central resources – the engine room of the business – can be catastrophic.

Whatever your plan for increased revenue and profits, a detailed review to check that your infrastructure is fit for purpose in delivering that plan is essential. This may sound obvious, but my experience in delivery of project work through mergers and business growth is that too little attention is paid to the design and size of the engine room.

There are certainly economies of scale that the larger end of the SME legal market can benefit from, but what is the right ratio of support staff required for a firm of four or 400? To assess this, I would go back to basics. Draw your staff organogram to include all fee earners across all departments, all secretarial support staff, all cashiers, accounts and billing personnel, and reconsider (thinking outside the box) what should be done by whom.

Consider splitting your staff into teams across, and outside, traditional department structures. Reconsider the skillset your lawyers and support personnel need. Do they have it? Do you need to retrain or recruit? Don’t build your teams around what you have. Be aspirational. With that magic wand out, what part do IT systems play? Is it necessary to invest further or wiser to improve performance and output? The best developed and applied practice management system in the sector won’t replace the need for skilled staff to insert the data and moderate the contents.

To improve billing output, it's often first necessary to invest in the billing team rather than recruiting additional fee earners. This won’t just help to liquidate WIP quicker – it can increase capacity for chargeable hours and therefore increase revenue without increasing the case load.

It’s a brave decision to invest in central resource at a time when cash is king – the easy option is to make easy savings through cuts. But turnaround consultants and banks alike will tell tales of businesses whose downfalls were due to expanding their practice while ignoring investment in the capacity of the engine room. Do the maths – ratio of engine size to output – and, despite market changes, you will have a machine that purrs. 

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