Practical Tips On Mechanics and Economics of Employing Graduate Lawyers…

On 11 August 2015 I posted a suggestion for improving the job prospects of Graduate lawyers, hopefully improving their stress levels about getting a job.

In that post I mused that the median starting salary for Graduates in NSW of $55,000 might be seen as a barrier to the economic viability of an employment decision by some Principals in small firms.

It certainly need not be, and in this post I will provide some pointers on how I approach this with my clients in firms throughout Australia and in New Zealand.

Many of the points will not be news at all to managers in larger firms.

At the outset I should say very clearly that it will be very hard to create a mutually satisfactory relationship with a Graduate lawyer if a firm allows them to meander or waft around the practice unfocussed, expected to both learn and somehow benefit the firm through some mysterious amalgam of osmosis and effluxion of time.

Unfortunately this approach is exactly what happened in the past in far too many small firms, leading unsurprisingly to mutual disappointment in many cases.

Reviewing the KMS client small firms currently employing graduates successfully, all have the team members on WorkPlans™, working on actual client files closely with more experienced practitioners.

Graduates certainly need training, but the main body of training should be in real world situations, assisting others meet the needs of the clients. In addition there will be ad hoc and formal training away from the files, including Continuing Professional Development.

The essence of a KMSWorkPlan™, for a practitioner of any experience, is that it focuses the agreed inputs of the individual to where the firm needs them, at the same time as meeting the needs and interests of the team member.

For the newly-graduated team member there will be many areas of KMSFirmTime that are relevant for more experienced practitioners that are not relevant to them.

For example, it will be a rare (but certainly not non-existent) Graduate that will have a lot to contribute in the areas of Precedents and Knowledge Management, Supervision and Training, Mentoring, and certain types of Marketing.

Looking at the WorkPlans of current Graduates in KMS client small firms I have put together a sample that interested readers are welcome to have. I’m happy to provide it to interested firms who email me at Graduates@lawfirmprofit.com

For the purposes of discussion I have used a modest average work day of just 7.5 hours net of all private time, that the sample Graduate would be employed to work for the firm, and be expected to capture details of all activity, whether that be ClientTime™ or FirmTime™.

I am very aware that many Graduates are expected to work significantly longer days than 7.5 hours, but I wanted to use the shorter day to emphasise my point about the economics.

After allocating almost 350 hours a year of FirmTime™, mainly to formal and informal training, the Graduate in my example still has six hours a day on average to invest in assisting more experienced lawyers with appropriate tasks on their client files, further learning all the while.

Exactly how firms choose to charge various types of work to various clients does not make much difference in practice to the economics of having a Graduate on board. As more and more firms move away from having large slabs of their services charged by the hour, there will still need to be systems for calculating even an approximate relationship between all costs of having any employee and the revenues that proper utilisation of that employee can generate.

In my current example, drawing on current practical experience in client firms, such revenues should be in the region of $175,000…details are set out in the sample WorkPlan™ referred to earlier.

Two points should be noted.

In the sample I have used a notional hourly rate of $175, and have assumed that across the first twelve months only 75% of the Graduate’s effort invested into client files will make it into a bill rendered to a client.

I regularly see Graduates doing far better than this, depending on their own abilities, and the training and supervisory skills of those they work with, but believe being conservative is a safe route in this planning.

I would also suggest setting fee contribution targets for month one at 50% of the standard WorkPlan™ calculation, and month two at 80%. This builds in extra time for the team member to get up to speed.

I believe it is important for a Graduate to learn early how to prioritise work, coping with competing demands of clients and others, and working comfortably despite having at all times a healthy backlog of client file work. The supervisor must take a very active role in ensuring that this happens.

No doubt some supervisors have a bit to learn themselves to make these relationships work well, but for my part, having available a keen, smart, Graduate to assist with relevant tasks on my files is a very useful option, allowing my own focus on tasks much more worthy of my experience.

From experience, it is not likely that an lawyer will meet annual WorkPlan™ targets reasonably set if they don’t have a healthy backlog at all times, enabling them to do a full day’s work pretty consistently while meeting all the reasonable (and sometimes unreasonable) deadlines.

Finally for this post, I suggest protecting your sanity, and doing the right thing by the Graduate, in insisting that only their best efforts be presented to you for review. Your role should not be in fixing obvious errors. A useful “acid test” is to require the employee to “warrant” that they would be happy for their work to go to the client or to the Court in the state it is presented to you.