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November 09, 2004

comment on five-by-five by managing partner

As the Managing Director of a law firm, I was particularly interested in the comments made by Dennis Crouch in the Five-By-Five posts. Dennis observes: 1. To be successful in large law firms a lawyer must meet hefty billing minimums, which can only be met at the expense of their family life and professional development; and, 2. having to work so hard for the firm means that a lawyer doesn’t have time "...to build a practice of their own." These candid observations deserve serious and candid discussion.

First, successfully fulfilling the billing and other requirements in a firm is how a lawyer earns their place in the firm practice. The firm assumes the associate knew and appreciated the terms of employment and the necessary sacrifices when they took the job. Second, most law firms don’t want associates setting up "...a practice of their own." Law firm business development is one thing, creating a firm within a firm is another.

However, that discussion obscures what might be the more important point Dennis makes. For many years now the owner’s share of law firm revenues has been squeezed. A significant cause of that squeeze is the competition for desirable job candidates. The only opportunity in most law firms to make up for these increased costs is by increasing billable hourly minimums; and, that can become inelastic very quickly. Thus, Dennis’ suggestion that law firms should begin trading billable hour quotas for reduced compensation may be worth considering from both the employer and the employee perspective. I wonder what kind of changes or tradeoffs new associates would consider. What quality of life issues takes precedence over maximizing your income?

Believe me, most of us who own and manage law firms would like to figure a way to get off of the compensation merry-go-round. We just don’t know how to do it. Making an associate meet the billable hour load created by the need to recover the expense of hiring that same associate is anything but the best part of my job. I am open to alternatives.

Posted by at 11:15 PM.
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