On average, it now takes 3229 days to make partnership

3229 days – on average that’s how long it will take you to make partnership in 2023. And when I say “partnership”, I’m not talking about equity partnership.

Last week (15 August 2023), Marlene Gebauer and Greg Lambert interviewed Laura Leopard, founder and CEO of Leopard Solutions, on their ‘Geek in Review‘ podcast. It’s a really interesting chat around law firm partner succession plans (or lack thereof), which was actually the primary topic of their conversation.

But, it was an insight that Laura shared at the 13 minutes and 21 second mark that had my hair standing up:

  • In 2023, on average, it takes 3229 days for a new entry level hire to make partnership.

Two things to note here:

  • this figure reflects those making partnership in 2023 (as opposed to new entry level hires in 2023 – see below for why this is important)
  • as Laura and Greg discuss, this reflects ‘partnership’ (i.e., salary partner), not equity; which could take you a further three years to acquire

So what? After all, this information is useless unless put into context. What I mean here is this: Has this number changed at all over the past 10 years?

Well, as it happens, Laura shares this with us too.

  • In 2012, on average, it took a new entry level hire 1353 days to make partnership

On average then it is now [2023] taking new entrants about 5 years longer to make partnership than 10 years ago!

What can you do to make the path to partnership shorter?

Okay, you’ve decided you want to be a partner: What can you do to make the path to partnership – which, let’s face it, is growing by about 6 months every year – easier / quicker?

Here are a few tips you may want to consider to help make that happen:

  • Know what your offering / sector expertise is
  • Learn your firm’s economics / financial metrics – what is realization / utilization / leverage / write-offs / average billing rates? If you don’t know you need to learn this quick! “Play the game”
  • Look at / speak to your existing network – both internal (referrals) and external (referrals and clients)
  • Grow your professional network – for example, join industry associations and attend relevant industry conferences
  • Speak at industry conferences / events (that are relevant to your core area)
  • Build your personal thought-leadership brand (LinkedIn)
  • Understand and communicate your value proposition

Most importantly though, have a plan and if you think it will help hire a business development mentor / coach to help you reach your partnership goal.

On the rules of compound interest, a one hour talk each month with someone who knows how to build a book of business will take you a long way to achieving your goals quicker than the industry norms.

As always, feel free to reach out to me for a free chat if you want to talk through how I can help with this.

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REPORT: Dynamic Law Firms consistently invest more in Business Development than Static Law Firms

The numbers have been crunched and the results are in: ‘Dynamic Law Firms’ invest considerably more in their business development and marketing activities/departments than static firms are willing to do.

According to the latest (8th) iteration of Thomson Reuters Institute’s 2023 Dynamic Law Firms Report, Dynamic Law Firms consistently invest greater sums in their business development and marketing teams than Static Law Firms:

As you can see from the over graph, in 2022, on average, this investment by Dynamic Law Firms in their business development and marketing teams accounted to over $12,000 per lawyer. Roughly $2,500 more per lawyer than Static Law Firms.

Importantly, this investment in business development pays off:

With Dynamic Law Firms consistently outpacing Static Firms in all growth Key Performance Measures; but, most notably from a business development perspective, in both ‘worked rates’ and ‘fees worked’.

So why is this? After all, business development and marketing is a ‘cost-center’.

Well, as the Report itself states:

“The first goal of MK&BD investment is to raise top-of-mind awareness of the law firm.

Research conducted over the course of many years by the Thomson Reuters Institute has shown that top-of-mind awareness is a vital first step toward winning work – a process that will see a firm move along a continuum from awareness to being viewed favourably, to being considered for and ultimately winning work, and hopefully, to a point where the firm has gained enough experience with the client that they garner credibility in the board room and can begin to box out competitors.”

A fact backed-up by the authors of Simple Heuristics who, in their principle of “recognition” [firm brand or lawyer], state that recognition is number one in any client’s decision process around whether or not to buy something.

And so it goes without saying that this ‘awareness‘ factor is critical in the ‘buying cycle’. If we don’t have this advantage, then we need to hope to hell the other providers aren’t a known commodity so we can proceed to the next level in the buyer’s decision process (typically experience – have they done this before?; then can I trust them not to mess this up and make me look stupid! – SIDE NOTE: price isn’t in the top 3 decision making selection criteria.).

Which is why, if you want to make sure your firm stays one step ahead of its competition, you actually need to be investing more, not less, in your business development team right now.

Yep, the evidence is in. It’s undisputed. Business Development and Marketing is not a ‘cost center’ (not that I ever thought it was). They not only pay for themselves, but they ensure your firms stays ahead of its competitors and earns more $$$s.

So the next time you think to yourself: “I need to cut costs, I’ll cut my business development and marketing budget” – I’m here to tell you that’s dumb – think again, because not only will it hurt you but it will take you on a journey to blandness.

As always, feel free to reach out to me for a chat if you want to talk through how I can help with this.

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What does China mean to law firms?

The unfortunate truth is, too much…

…rarely do international law firms get the return on the investment they make in China that they do in other jurisdictions (for example the Middle East right now; but Malaysia and South East Asia if we want to look closer to home!). 

If you don’t believe me, take a quick look at the number of firms who have entered/exited the China market in the past 15 years (tip: focus on US firms). 

Law firm’s short-sighted approaches to this issue are typically for two reasons:

  1. lack of knowledge of the market
  2. lack of understanding that Asia is a long-term – multi-generational – investment (not, typically, your law firm investment M/O).

So why the post (other than the shout-out that I have been part of a team that has successful established not 1, nor 2, but 3 international law firms in SE Asia)?

Well because, while the Eversheds / KWM tie-up has a long way to go, comments like those in this article…

[‘The art of the possible’ – Eversheds’ international CEO on its eye-catching KWM China alliance‘]

makes me wonder.

Law firm culture isn’t everything, certainly post 2008, it still counts for something.

And the most interesting comment in that article is who initiated the introduction: – Sue Kench.

Which makes me ask: Are the partners in KWM Australia off loading their investment in KWM to Eversheds?

[this article first appeared on rws_01]

Photo credit to: Li Yang on Unsplash

The Hourly Rate is alive and well: there is no such thing as Alternative Fee Arrangements

If you are wondering what types of Alternative Fees Arrangements (AFAs) in-house General Counsel are asking their private practice suppliers to provide them with – or, to flip the coin, what AFAs private practice lawyers are charging their in-house GCs, then wonder no longer. The latest market report from the Association of Corporate Counsel (ACC) sets this out in a nice clear table:

Some take-aways:

  • The #1 AFA fee request of outside counsel is Discounted Hourly Rates. No less than 100% of companies with revenue over $20BN or more use Discounted Hourly Rates with their private practice lawyers! When, oh when, will we learn that Discounted Hourly Rates are NOT a fee structure? On this point, I have been arguing for years (literally, the linked post was from 2018!) that there is no point having a pricing function in your law firm if all you are going to offer clients is discounted hourly rates! Seriously, save yourselves the money.
  • Say what you want, the #BillableHour is far, far from over if it is the preferred billing method of over three-quarters (77%) of all in-house GCs participants in the survey!
  • Capped fees are dumb! They are a lose-lose: both for the law firm who if they come under the cap can only charge what is on the clock and if they go over the cap have to wear the additional cost; but also for the in-house team who will get under served as soon as it becomes clear the cap cannot be met (and probably never was going to be). So why are they so prevalent? I can only assume capped fees are driven by the CFO wanting “cost certainty”.
  • Given the continued popularity of hourly rates, Blended Hourly Rates are nowhere near as popular (at 37%) as you would think. On transactional matters in particular, you would think this rate of use would be a lot higher.
  • The use of Success Fees is woeful. Is this a reflection of the amount of M&A and privatization work actually being done (where you would expect it to be prevalent, or is it an actual fact that in-house counsel don’t like/understand the benefits of this arrangement? Or could it be, every deal is getting done so why take the uplift risk?)?
  • An understanding of Performance Based Holdbacks has a long, long way to go.

Importantly though, despite talking about implementing AFAs for over two decades, we are still a long way off actually using them in practice.

Again, take a look at my linked article above where I talk to Patrick Johansen’s Continuum of Fee Arrangements™, where Patrick sets out 16 different types of fee arrangements that can be used:

  • Hourly
  • Volume
  • Blended
  • Retainer
  • Capped
  • Task
  • Flat
  • Phase
  • Fixed
  • Contingency
  • Portfolio
  • Hybrid
  • Holdback
  • Risk Collar
  • Success/Bonus
  • Value

And ask yourself, how many of these are being actively used in this latest report from the ACC?

Notably missing from the list above? Value Based Billing!

Yes, despite what you may read and hear elsewhere, in practice we are long, long way away from understanding and implementing the appropriate (a term I learned from Toby Brown) use of relevant fee arrangement for the task at hand.

In-house or private practice, if you’re struggling to get to grips with this issue, feel free to reach out to me for a chat.

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‘Customer service’ vs ‘Customer experience’

Ever wondered if there is a difference between ‘customer service’ and ‘customer experience’?

I was fortunate enough to come across this quote by Paul Roberts, CEO at My Customer Lens that, frankly, sums it up better than anyone else I have seen lately:

“It’s important to define the difference between customer service and customer experience. I like to define customer service as what you do, and customer experience is how you make people feel.”

Too often in professional services firms we concentrate on the ‘customer service’ at the expense of the ‘customer experience’; when the reality is that we should be much more focused on the customer experience than we are on the customer service.

As the article states:

“Improving the client experience is about looking at the entire client journey, from initial enquiry through to case completion, and beyond. It’s a rethink and review of every customer touchpoint throughout your organisation; from the way the phone is answered, to your hold music, reception waiting room and website home page.”

Spot on advice.

If you or your firm is struggling to get a grip with this, feel free to reach out to me for a chat.

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Some initial thoughts on the Eversheds Sutherland and King Wood Mallesons ‘exclusive alliance’

Woke up this morning – Australia time – to news that had broken overnight that Eversheds Sutherland (ES) and King Wood Mallesons (KWM) had entered into an exclusive alliance, along with a whole lot of DMs (Direct Messages) in my LinkedIn box asked me what my initial thoughts were.

So here I go with some initial, off the cuff, thoughts about this:

  • With the closure of the 6 KWM offices across the UK, Europe and Middle East, the deal likely brings to a happy end KWM’s sad foray into those markets and puts final closure on the SJ Berwin story.
  • Both KWM Australia and KWM Hong Kong are not part of the deal. While this is good news for ES’s Hong Kong team – who I hold in very high regard – it seems very odd and shows possible cracks in the Swiss Verin model that is KWM (with KWM China being party to this arrangement). I’ll be very interested to see what this means for KWM Australia in particular.
  • The arrangement requires – subject to “client preference and conflict clearance” – KWM China to refer all outbound UK, Europe, Middle East, Africa and South America instructions to ES. I understand the “UK, Europe and Middle East”, but why include “Africa and South America” (noting that ES has offices in Africa but not South America that I can tell)? I think this could be particularly telling given both Africa and South America will be geographies in which KWM Australia plays and so there is the potential to see KWM Australia pitching for work against work that ES has been referred from KWM China.
  • Noting the deal is with “Eversheds International”, there is no mention of whether the consultancy arm of Eversheds is included in the arrangement. If it is, then KWM China has boosted it offering in this space significantly overnight (although there may well be some regulatory restrictions around that [consultancy] in China).

To me though, what will likely make or break this “formal cooperation agreement” however will be:

  • How are inbound/outbound referrals being tracked?
  • How are the referring partners being rewarded for the referrals?
  • And, what will the KWM Australia partners make of all this given access to a network of lawyers in one of their biggest overseas geographic locations, the UK, will be gone? Do they refer work to ES, even though they are not part of the deal? Or do they refer work to lawyers/mates in other law firms who compete with ES in the UK – including, interestingly US firms with news earlier this week that: “Nearly half of the UK’s largest law firms are US-headquartered”.

I guess we will have to wait and watch this space, but my three big observations are:

(1) Not sure what Eversheds is getting out of this deal – do KWM China refer that much work into UK, EMEA and South America?

(2) Looks to be a great deal for KWM China.

(3) Are KWM Australia being left in the wilderness?

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Law Firm Partnerships and ‘Slippery Fish’

*warning, graphic content follows…

My son has just entered daycare. Nothing too special about that, after all he is 2! But, he came home recently signing a song that well, frankly, needs to be the theme tune for law firm partnerships!

Slippery fish

The song in question is ‘Slippery Fish‘ and here is how the lyrics go:

Slippery fish, slippery fish, sliding through the water,
Slippery fish, slippery fish, Gulp, Gulp, Gulp!

Oh, no! It’s been eaten by an …

Octopus, octopus, squiggling in the water.
Octopus, octopus, Gulp, Gulp, Gulp!

Oh, no! It’s been eaten by a

Tuna fish, tuna fish, flashing in the water,
Tuna fish, tuna fish, Gulp, Gulp, Gulp!

Oh, no! It’s been eaten by a …

Great white shark, great white shark, lurking in the water,
Great white shark, great white shark, Gulp, Gulp, Gulp!

Oh, no! It’s been eaten by a …

Humongous whale, humongous whale, spouting in the water,
Humongous whale, humongous whale, Gulp! … Gulp! … Gulp! … BURP!

Not graphic enough for you? Watch the YouTube version and I guarantee you won’t sleep tonight 🙂

And what does this have to do with law firms?

So,:

  • the fish is the poor graduate lawyer
  • the octopus is the associate
  • the tuna fish is the senior associate
  • the great white shark is the special counsel, and
  • the humongous whale is the partner

Hope you enjoyed that one!

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Shoutout to Todd Cravens on Unsplash

Happy New Financial Year!

Happy New Financial Year to all in #Auslaw.

It’s that strange time of the year when we start all over again as if the previous 12 months didn’t happen. Only it is not quite as simple as that. From today:

  • most lawyers will be charging clients 10% or more extra for their services, with little or no explanation about where the extra value is being delivered and with the new fee rate being completely and totally justified by the date in the calendar and CPI rate increases.
  • judging by the LinkedIn notifications I have been receiving, a fair number of lawyers will be promoted to new roles – “congrats all”. Along with those promotions comes increased fees charged to clients!

So while we are all enjoying the various EOFY parties over the next few weeks, or simply enjoying some downtime over the school holidays: keep in mind that you need to have a carefully crafted value message to explain to your clients why you justify that higher fee rate; and if you want to ensure that your realisation rate stays healthy I suggest it be better crafted than “we are in a new financial year”.

And if you are struggling with any of that, feel free to reach out to me for a chat.

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Shoutout to Christine Jou on Unsplashed for the image 

“Burden partners”

Came across the term “Burden partners” in this article in the Australian Financial Review today. “Burden partners” is a term denoting those partners within a partnership whose cost to the partnership is greater than their contribution.

In simple terms, partners who withdraw more from the kitty than they have deposited.

The reality is that by its very nature (due to economic cycles), there will – from time-to-time – be partners who have years in which they withdraw more than they have deposited that year; but in most cases these partners will have previously made significantly higher deposits than withdrawals and are effectively withdrawing savings (having said that, retained earnings is not a given with law firm partnerships so this is more a reputational issue than financial one).

It is circumstances in which this is a prolonged (and often unfixable) trend where this becomes a problem.

You can also often see this with new partners who have probably been made-up too soon and don’t really have the book of business yet to justify their promotion to partnership ranks.

Either way, if the term “burden partners” sounds familiar and you want to discuss ways of how this can be fixed, feel free to reach out to me for a chat.

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Shoutout to Sean Stratton on Unsplash for today’s image