Lawyers and averages...Lies, Damned Lies and Statistics...

“There are three kinds of lies: lies, damned lies, and statistics.” This wonderful quote is very hard to pin down to a single original witty genius....the web is replete with items discussing its possible origin, but that doesn't diminish its worth.

Some of the dangers of managing law firms by averages...


Many lawyers are in my wide experience wedded to the attractiveness of averages in trying to assess how their firm is traveling, and what they should be shooting for in future...

In most areas of practice management unfortunately the worst thing about setting targets to achieve, or modestly exceed, averages achieved by others is that you may just get there!

Thereafter you may well rest on your laurels and bathe in the afterglow, continuing to ignore the genuinely huge improvement available to you by understanding what your optimal outcome would have been, and organising to go after it...

Take an example...many firms review surveys of the profession in relation to employed fee-earner productivity...

How many wonder why the average Client hour targets are low, and yet, in the averages, seemingly still never achieved...

Few in fact, because most lawyers would consider the targets satisfactory...and especially because they are averages of what's happening in peer firms, they believe...

Employed solicitors should be one of your fee-earning powerhouses, and in many surveys you'll observe that the average targets are around 6 billable hours a day...with worryingly low conversion of about 74%! That's just 4.44/day.

Ignore for a moment the extra sting in the tail...that "4.44" is probably actually 44.4 6-minute units, rather than 4.44 hours actually worked and recovered...two entirely different things...

The real point is that the main reason lawyers fail to reach a target of 6 hours a day worked on client files and recovered is not because the target is too high...more often it's because they don't have the work, or have the work and for many reasons fail to actually bill all of it to the clients they purported to be working for during that time...

In a KMS client firm, where I have the figures in front of me as I write this post, the average target for employed lawyers is over 7 hours a day, and the achievement level 91%...when measured in units...66.8 is the actual number.

The devil is certainly in the detail, because even at a modest charge rate of $285/hr the difference is 22.4/day or potentially $147,000 a year per employed lawyer.

A further thought...in general such surveys are completed by the better organised firms...you might wonder if these firms are getting such poor outcomes, what's happening in the mass of firms, most of the Profession, that are not so well organised?

I know the answer from long experience, and it is very sad, and the major cause of poor to non-existent profits in most of those firms...

That this scenario exists while a myth of 33% profitability still abounds in the Profession is quite wondrous, given that the Profession is populated by measurably intelligent people...

The bottom-line...profits are poor in most legal firms for a very obvious, basic, reason...

The firms' management does not organise itself properly to ensure that the firm actually produces a proper margin over it's Expenses...because it does not know how to do that...I'm certain it's not usually because it can't be bothered!

Fortunately the answer to the problem is just as basic...plan the application of the available time and skill sets of each individual to the firm's business plan in a way that will deliver you excellent outcomes...so far above average it's not funny...except for those who do it, to whom it's fun but certainly no joke...

Fundamental to this approach is ensuring there is enough work, and in the main this means that lawyers need to overcome their suspicion of marketing and get out there and do what needs to be done consistently, year in year out.

If individual fee-earners cannot be co-opted into the process effectively, their contribution out of their day's work for a day's pay needs to come in other ways...preferably working on client work that has been introduced to the firm by a more valuable contributor...someone who can introduce plenty of work.

There is very little value in a fee-earner who has no client work to do...

What management needs to fully come to grasp with is that if there is only enough work to cover the Expenses of having someone on board...44.4 units a day is a figure that comes quickly to mind...that fee-earner has no opportunity whatsoever to contribute to a real commercial profit in the firm.

Of course the first response must not be to let them go!

The management response that should have been urgently implemented, as close monitoring showed the first signs of inadequate new file openings, was to beef up the already focussed and effective marketing to a new level.

That those who cannot, or will not, be properly involved should spend most of their day on Client work is simply a no-brainer, and effective managers will arrange to get the work, and arrange for fee-earners to do it without complaining that their peers in other failing firms are only expected to do X, Y or Z billable hours a day!