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©2004 Baker Robbins & Company Understanding Your Firms Business ---------- Figuring Out What Makes Your Firm Tick Sally R. Gonzalez

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Presentation on theme: "©2004 Baker Robbins & Company Understanding Your Firms Business ---------- Figuring Out What Makes Your Firm Tick Sally R. Gonzalez"— Presentation transcript:

1 ©2004 Baker Robbins & Company Understanding Your Firms Business Figuring Out What Makes Your Firm Tick Sally R. Gonzalez

2 © 2004 Baker Robbins & Company The basics… All commercial law firms are in the same business Every law firm, and its business, is unique Change is the steady state Challenge: How do you figure out your firms unique character and situation?

3 © 2004 Baker Robbins & Company Why are you here? I want to add value to my firm Im just curious! Its too hot to go outside I want to understand where my job fits

4 © 2004 Baker Robbins & Company Pop Quiz! What do you think your managing partner is worrying about?

5 © 2004 Baker Robbins & Company Hildebrandt International says… #6 – Managing income expectations #5 – Dysfunctional Practice Groups/Leaders #4 – Risk management in risky times #3 – Dealing with problem partners #2 – Flight risk of rainmakers #1 – Loss of key clients

6 © 2004 Baker Robbins & Company Why the disconnect?

7 © 2004 Baker Robbins & Company How-Tos… Tips from the Pros

8 © 2004 Baker Robbins & Company Read External materials Legal Trade Press for major countries the firm practices in Non-legal press (magazines & newspapers) Books Internal materials Business plans Marketing pitches

9 © 2004 Baker Robbins & Company Listen Internally Attend management meetings Attend practice group meetings Attend internal education seminars Externally Local peer groups Conferences Seminars

10 © 2004 Baker Robbins & Company Find a mentor Target one or more approachable individuals Openly request their help Negotiate the boundaries (time, topics, duration, etc.) Stick to the rules

11 © 2004 Baker Robbins & Company Barter Form focus groups Host brown bag lunches with lawyers Offer to speak at meetings youd like to listen in on

12 © 2004 Baker Robbins & Company Engage spies I used to think I wanted to attend all those top management meetings so I could understand what was really going on in the business. Once I started going regularly, I found that they werent the best use of my time. So now I rely on my ED to tell me what I need to know from those meetings.

13 © 2004 Baker Robbins & Company Stalk I know my ED likes to go for a Starbucks at a certain time each afternoon. If I need to talk about something, I call him at about that time. He usually says Want to take a walk? and I get the air time I need with him.

14 © 2004 Baker Robbins & Company How to + What to = Success All of this is excellent advice All of it is a bit vague WHAT do you look for? WHAT do you need to understand? HOW do you apply it to your work? This talk will try to help you plot a course

15 © 2004 Baker Robbins & Company Understanding… The market place What-tos…

16 © 2004 Baker Robbins & Company 2003 in Review Economic performance stronger than predicted Merger pace slowed Dissolutions increased dramatically High value litigation continued to drive growth Transactions activity recovered in Q4 03 Outsourcing gathered momentum Source: Hildebrandt International

17 © 2004 Baker Robbins & Company Average size of top firms grows ,085 1,220 1,294 1, Source: The National Law Journal ,085 1,220 1,294 1, Average # lawyers in top U.S. firms

18 © 2004 Baker Robbins & Company Global expansion continues EngFrGerBelgItalyPolRusSpnCzechSwedSwitzOther Number of offices are listed in red 36 7 Number of lawyers by country – 250 Largest US Firms EngFrGerBelgItalyPolRusSpnCzechSwedSwitzOther Number of offices are listed in red 36 7 Source: The National Law Journal.

19 © 2004 Baker Robbins & Company Pace of mergers slows 35 Mergers in 2003 v. 82 Mergers in 2001 Includes only mergers where smaller firm had at least 5 lawyers. Source: Hildebrandt International

20 © 2004 Baker Robbins & Company Number of dissolutions increased Near record number of law firm dissolutions in failures Many were high profile Few were economically driven

21 © 2004 Baker Robbins & Company Firms focus on 3 key areas Practice Management Professional Development Operational Efficiencies and Outsourcing

22 © 2004 Baker Robbins & Company Where to learn more? Talk to your marketing and/or business development people Read the trade press At least one issue weekly (AmLaw, NLJ) Sign up for Hildebrandt Headlines Watch for, and attend, seminars sponsored by local ABA

23 © 2004 Baker Robbins & Company Understanding… Your firms positioning What-tos…

24 © 2004 Baker Robbins & Company The legal service value pyramid Low High Price Sensitivity Bet-the- Company Expertise/Reputation Bread and Butter Commodity 20% 5% 75% High Low Value Focus Q: What tier is your firm targeting?

25 © 2004 Baker Robbins & Company How to learn more? Read the firms strategic business plans Talk to practice group/department leaders individually Where are they on the pyramid today? Where do they want to be in the future? Why do they want to get there? What things to they think they need to do to get there? Note: Expect to get a range of answers

26 © 2004 Baker Robbins & Company Understanding… The firms clients What-tos…

27 © 2004 Baker Robbins & Company Todays client base Observing the 80/20 rule Who are the firms top clients? What business sector(s) are they in? What kind of services does the firm provide to these clients? What kind of services does the firm want to provide these clients in the future?

28 © 2004 Baker Robbins & Company Tomorrows client base Has the firm targeted new clients or market sectors?

29 © 2004 Baker Robbins & Company Understanding… The Culture What-tos…

30 © 2004 Baker Robbins & Company Variety is the spice of life WachtelIf we try to do systems here, people will go bananas Linklaters & SAP – one size fits all Eat what you kill vs. lockstep Preserving partner collegiality Interesting, high value work vs. profits Commodity work and proud of it

31 © 2004 Baker Robbins & Company Remember: Culture trumps all

32 © 2004 Baker Robbins & Company Understanding… Law Firm Economics What-tos…

33 © 2004 Baker Robbins & Company Its all about… PPEP

34 © 2004 Baker Robbins & Company PEPP is simple… PPEP = Profit # of Equity Partners

35 © 2004 Baker Robbins & Company What drives PPEP? L = Leverage (1 + associate to partner ratio) BR = Blended hourly billing rate R= Realization (revenues / standard value of time recorded) U = Utilization (billable hours recorded) M = Margin (partner profits / revenues) PPEP = (L)x(BR)x(R)x(U)x(M)

36 © 2004 Baker Robbins & Company Hygiene vs. health factors Health Factors (increase revenue) Hygiene Factors (control cost) PPEP = (L)x(BR)x(R)x(U)x(M)

37 © 2004 Baker Robbins & Company partner delegation skills volume of work work type better supervision reporting systems communication processes type of work client type change of instructions type and range of services type of work culture client relationships communication processes type of marketing activities client relationships staff mix perceived value of work client relationships indirect fee- earning cost career development pricing competition value/rates type of work management processes performance expectations and feedback staff retention salary costs and cost multiple type of clients organizational structure culture partner attitude quality assurance partner attitude Increase Leverage Improve Utilization Raise Billing Rates Improve Realization Increase Margin Managing to PPEP

38 © 2004 Baker Robbins & Company Finding out more… Get conversant in the topic Read Maister and other sources Read the tea leaves Read firm and practice group business plans/strategies Listen between the lines in practice meetings Understand your firms current situation and goals Talk to your CFO Talk to your ED

39 © 2004 Baker Robbins & Company Understanding… What Law Firms Do What-tos…

40 © 2004 Baker Robbins & Company Law Firm Value Chain

41 © 2004 Baker Robbins & Company Law Firm Value Chain Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Exceeding Expectations Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Supporting The Practice Managing The Firm Doing Work Doing Work Managing Work Managing Work Staffing Work Staffing Work Getting Work Getting Work

42 © 2004 Baker Robbins & Company Law Firm Value Chain Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Exceeding Expectations Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Supporting The Practice Managing The Firm Doing Work Doing Work Managing Work Managing Work Staffing Work Staffing Work Getting Work Getting Work

43 © 2004 Baker Robbins & Company Law Firm Value Chain Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Exceeding Expectations Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Supporting The Practice Managing The Firm Doing Work Doing Work Managing Work Managing Work Staffing Work Staffing Work Getting Work Getting Work

44 © 2004 Baker Robbins & Company Law Firm Value Chain Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Exceeding Expectations Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Supporting The Practice Managing The Firm Doing Work Doing Work Managing Work Managing Work Staffing Work Staffing Work Getting Work Getting Work

45 © 2004 Baker Robbins & Company Law Firm Value Chain Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Exceeding Expectations Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Supporting The Practice Managing The Firm Doing Work Doing Work Managing Work Managing Work Staffing Work Staffing Work Getting Work Getting Work

46 © 2004 Baker Robbins & Company What can technology do? Legend: Work processes Copyright, Michael Farrell Group, 2002 Underserved Processes Indirect Marketing Direct Marketing Work Finished Client Billed Time & Charges Recorded Deliverables Prepared Project Managed Project Opened Proposal Prepared Inquiry Received Conflicts Cleared Proposal Delivered Work Started Team Assigned

47 © 2004 Baker Robbins & Company How can technology help?

48 © 2004 Baker Robbins & Company Improved Productivity is Key Every other element of the Maister model is market constrained Productivity is the only thing a firm holds entirely in its own grasp to improve Applying technology to improve productivity is a natural WHAT ARE INNOVATORS DOING TODAY?

49 © 2004 Baker Robbins & Company Improving management productivity Our use of workload planning and management systems [at Booz Allen] coincided with an increase in productivity of about four to five percentage points. R Malcolm Schwartz Chief Financial Officer (former) Booz Allen & Hamilton Inc. Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Exceeding Expectations Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Supporting The Practice Managing The Firm Doing Work Doing Work Managing Work Managing Work Staffing Work Staffing Work Getting Work Getting Work

50 © 2004 Baker Robbins & Company Integrated design for BP flow

51 © 2004 Baker Robbins & Company Fragmentation rules today Fragmented solutions targeted at specific processes Inconsistent data models create barriers to information flow Productivity suffers Effective business decision making suffers

52 © 2004 Baker Robbins & Company Aligning information & processes Clients Projects Skills and expertise Performance measures Work required Process Logic Getting Work Staffing Work Doing Work Managing Work Information Assets

53 © 2004 Baker Robbins & Company Blocked information flows Doing Work Getting Work Staffing Work Vendor A Vendor B (?) Vendor C, D Managing Work Vendor E, F

54 © 2004 Baker Robbins & Company Aligned information flows Getting Work Staffing Work Doing Work Managing Work

55 © 2004 Baker Robbins & Company Improving lawyer productivity Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Exceeding Expectations Exceeding Expectations Supporting The Practice Managing The Firm Doing Work Managing Work Staffing Work Getting Work Supporting The Practice Managing The Firm Doing Work Doing Work Managing Work Managing Work Staffing Work Staffing Work Getting Work Getting Work

56 © 2004 Baker Robbins & Company Enterprise Search… Eternally seeking… a Google-like Search

57 © 2004 Baker Robbins & Company Enterprise Search… Results federated from multiple sources & ranked

58 © 2004 Baker Robbins & Company Enterprise Search… Finding the words and concepts the lawyer wanted

59 © 2004 Baker Robbins & Company Bringing it all together...

60 © 2004 Baker Robbins & Company Value matrix for planning Ease of Implementation High Value to the Firm Low High Support for firms strategies Economic payback Beneficial behavior change Keeping up with competitors Meeting clients needs Investments needed Complexity of work Clarity of requirements Familiarity with technology Required behavior changes Acceptance

61 © 2004 Baker Robbins & Company Plotting your projects Ease Of Implementation High Value To The Practice Low High

62 © 2004 Baker Robbins & Company Aligning projects with value Field of Gain Field of Dreams Field of Distraction Field of Pain Ease of Implementation High Value to the Firm Low High Copyright, Michael Farrell Group, 2002

63 © 2004 Baker Robbins & Company Value matrix for your work Ease Of Implementation High Value To The Practice Low High

64 © 2004 Baker Robbins & Company Sorting priorities If youre confused about the value dimension, use the matrix as a prop for a dialog with the right people

65 © 2004 Baker Robbins & Company Wrap up Understanding your firms business is an attainable goal Combine the how-tos with the what- tos and youll have all the information you need Use the information to set priorities for your workchoosing to invest the right amount of effort in the higher value activities

66 © 2004 Baker Robbins & Company QUESTIONS?


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