Why so many employed lawyers have untapped potential

My experiences over many years, in particular the last twenty five consulting to law firms, have shown me very clearly that both employers and employees have very misguided views on what employed lawyers are capable of in an average working day. They're both generally way too low.

The cost of legal services have gone up, and where there is an element of billing by the hour, hourly rates have gone up, for a long time now.

Fees targets for employees should have kept pace.

Unfortunately, human nature being what it is, the mindset of many is fixed on numbers for fees output that can be decades out of date.

When I tell either management or employee the fee budget I believe they are capable of achieving I almost inevitably encounter a form of "sticker shock".

"Sticker shock" is generally considered to be, "Disgust, shock or fright upon learning the price of an item offered for sale". Wiktionary.

The right management response is to use a KMSWorkPlan to logically determine what each individual is capable of if they are organised to have  a healthy backlog of client work.

This almost always gets through to employees that their personal paradigms about fee expectations are way out of whack with present reality.

Far too often though, when an employee comes to understand what a proper fee budget is, their immediate reaction is to seek a pay rise related to their new fee budget. It is important to resist the temptation to "fold" at this point.

A smart firm will insist that the employee focus on being paid a proper market salary, and of course a firm that does not want to do that has deep-seated problems.

To reiterate, these days smart firms do not pay employees one-third of the professional fees they bill and collect...and truly smart employees understand  they are not entitled to such a remuneration structure.

One poor "management" response to the conundrum of working out what an employed lawyer should produce is to decide that the way to get the "most" out of an employed lawyer is to provide them with an incentive based on a formula.

All too often such a formula is something like a shares of collected fees after a threshold level of fees is reached.

The threshold level is quite often three times the employee's base remuneration.

In my view what tends to happen with these unsophisticated arrangements is that they reward the employee with far more remuneration than they would be entitled to in the marketplace, and rob the firm of much of the profit it needs to remain financially healthy.

In effect, such arrangements share profits with employees who in most cases would be perfectly capable of working a full day for a proper remuneration without additional incentive...and this sensible WorkPlan-based approach is how the majority of my client law firms operate.

Readers may also be interested in a post I did on 19 March 2012 entitled Employed Lawyer Remuneration...The Right Formula...

The blog format lists my most popular posts automatically near the top of the Home Page, and level of readership has kept this particular post right up there all the time since it was written.