Profitability Factors: Matter Staffing

We've talked about the importance of selecting good cases/matters both for improved profitability and for risk management. The next step in determining why a firm is not as profitable as it could be is to look at matter management; and, specifically, matter staffing.

Take a minute and think about 1) whether work is delegated in your practice and 2) on what basis. I have never worked with a firm that delegated work too much. I have never worked with a firm where the associates were fully employed and the partners were working on more sophisticated work, developing a higher-end practice or actually proactively managing their firm. Why? Because if the firm is doing these things, it most likely won't need much of my services or any other consultant's services. The firm is doing it right. Firms that are not doing it right are most likely having a difficult time improving or maintaining their profitability. So, if your profitability is flat or declining, look at how you are staffing your matters. Here's some research for you to do. Find out the following:

• Are your timekeepers' billed fees less than 95% of the standard $$ value of their hours billed for the past 12 months? What about of standard $$ value of hours worked? If yes to either, find out why.
• Are your partners' average hours billed significantly greater than the average hours billed by your associates? In other words, are some of your associates under-employed while some partners are over-burdened with work; specifically with non-paying or low rate work? If so, in which practice areas is this occurring or on what client work is it occurring?
• Does any particular timekeeper or practice group have a large number/amount of pre-billing fee adjustments? If so, why?
• Compare timekeeper standard billing rates to timekeeper effective billing and collection rates. Are they 95% or greater than standard rates? If not, why?

If you are not monitoring these types of performance benchmarks, it is important that you begin to do so. Why? So that you can make the most effective adjustments to your practice to improve your profitability.

A second point is that by effectively delegating work to the most appropriate level, the firm will have a better opportunity to improve the caliber of its practice through the development of higer-end work; which, in turn, will continue to yield dividends in the long term.