- Serious profitability declines
Obviously, a significant decline in profitability is an indication that something may be amiss. Yet, how a firm should react depends in large measure on what the underlying causes are and the firm's forecast for a rapid change in fortune. First, and obviously, firms should assure that their costs are kept under tight control and prudent management. This does not mean paring expenses to minimal levels, but rather that the firm ensures its expenses are properly aligned with its business base and its strategy.
In addition, unless the profitability decline is viewed as short term, the firm should be focused on matching its capacity with reasonable expectations concerning the available business. This may require reductions in lawyers in practice areas subject to significant downturns, while still maintaining the critical base of core competencies necessary to compete in a turnaround.
- Significant hours shift from associates to partners
This is a subtle sign that partners may be hoarding work in order to appear busy, often an indication that the business base is eroding. However, the erosion may not show up in short- term production numbers, as partner billing rates are generally somewhat higher than associates. Later, this may translate into somewhat increased write-offs or client fee problems.
Although both partners and associates should work hard, associates should generally bill more hours than partners. Partners have responsibilities for other important things like client development and management. Assuming your firm normally follows this pattern, a significant reversal may be a sign that the business is drying up or that a fundamental change in the nature of the work is occurring. Managers should track this pattern on an annual basis, but should also review monthly data and three-month trends and focus on problems early in their development. The risk is that the volume of work declines, partners begin to hoard the available work, focusing more on billing than on marketing. The result will be continued erosion of the firm's business base.
- Emergence of a 9—5 mentality
It is impossible for a law firm to be successful when many of the partners are “9-5'ers.” It is difficult if many of the other employees have this mentality. Successful careers in the profession require a significant time commitment, especially when billable workloads are down. Partners must focus on marketing and other critical investments of time. There is always more to be done, even if it is not client chargeable. Unfortunately, in many firms, a slowdown in work can generate a subtle change in commitment, which, if left unchecked, will seriously compromise the firm.
- Serious decline in “cross-selling”
Similar to a shift in work from associates to partners, a serious decline in cross-selling may be an indication that partners are holding on to more work, perhaps because they are concerned about the amount of work available in the firm. Many firms do a poor job of cross-selling, so just an absence of it is not necessarily an indicator of storms ahead. But, a significant reduction in the share of work cross-sold could be such a leading indicator. Managers should be alert to cross-selling levels generally (through monitoring “import-export” statistics at the practice level), and measuring performance against established cross-selling targets.
- Serious decline in new matter opening
New clients and matters are critical to the life of the firm. In effect, they are the “sales” figures for the organization. However, because opening new matters is not generally coincidental with the revenue stream, but rather leads it by a number of months, many firm managers pay only minimal attention to the number and quality of new matters being opened.
A drop-off in new matters may not have an impact on the level of firm activity for three to six months, because lawyers remain busy on existing work. However, as these matters are completed, lawyers start to become idle.
Three months later there is a related drop in revenue. However, this is an indicator that can be spotted well in advance of revenue drop-offs, and efforts can be made to ratchet up marketing activities before people run out of work to do. Such aggressive action may be able to head off, or at least soften, a serious decline in firm performance.
- Significant increases in “closed door” conversations
Most firms pride themselves on having an “open door” environment. But, there are any number of things which appropriately must be kept “behind closed doors.” Unfortunately, among the most common closed door discussions, particularly for those not involved in management, are those about “what's wrong with the firm” and about forming new firms, as well as discussions with headhunters and prospective new employers. If you notice significant increases in the amount of time lawyers' doors are shut, it may be a time to make serious efforts to improve communications with the specific partners involved. Often, they feel as though no one is paying attention to their issues and concerns, leading to significant disaffection and the potential for departures.
An extension of this issue, of course, is an increase in lawyer departments. Departure of recent laterals should be particularly troubling, as it may signal an attempt to “get out of Dodge” before it is too late.
- Bickering over compensation
In most situations, tensions over compensation are generated through perceived inequities in the application of the compensation system, a management failure. Usually, there is a perception that under-productive lawyers, often “cronies” of the management team, are benefiting well beyond the value of their contributions. Such tensions can have a rapid and meaningful role in triggering key lawyer departures, and the resulting downward spiral in the firm. Management must be vigilant in assuring first, that there is no basis for perceptions of inequality, and second, that the compensation system is clearly understood by all firm partners as supportive of the firm's strategy.
A subset of fighting over compensation is increasing tension regarding “origination.”
Fights over new business credit can erode performance significantly. It can also be an early warning sign that the firm may be headed for a crisis. This is due to four separate but related issues.
First, these fights are an indication that the compensation system is not, or is not perceived to be, assuring that those who make marketing contributions to the firm are properly rewarded. As a result, individuals make sure “their numbers” look strong, further distorting compensation data
Second, credit fights are often signs of poor client service. Partners are unwilling to devote the appropriate time to clients for whom they receive “no credit.”
Third, credit fights suggest that partners are hoarding their clients to assure their future compensation and options. The result is that lawyers are less integrated into and dependent on the firm, and more flexible to move rapidly when an opportunity arises.
Finally, when these tensions occur, it is usually the case that the lawyers feeling short-changed are the younger partners with high levels of responsibility for managing and servicing the clients. In many cases, these partners actually have a following with the client, and may be able to walk out with some or all of the business.
- Excessive interest in serving on “management”
Developing sound management is a critical function for any business organization. But, in most firms, particularly small to medium-sized firms, the best choices for management positions are obvious. Whenever lawyers spend a lot of time debating who should be in various management roles, it is a clear indication that there is significant dissatisfaction and perhaps lack of trust among the partners. This must be corrected quickly, or the inevitable result will be departures, often beginning with those who expressed the greatest dissatisfaction.
Similarly, high-quality management takes a significant investment of time. However, usually it takes a significant investment of time from a limited number of the right people—the managing partner, practice group leaders, and a few others. Most of the lawyers should be primarily focused on marketing, serving clients, mentoring and a few other basic endeavors. Sometimes, it seems as though everyone has some role in management, committees seem to multiply (and for every additional person added to a committee, the time for meetings increases), and lawyers spend more time on whatever task they have been assigned than they do on their basic responsibilities.
Such situations are a sign that the firm has lost focus on what it takes to be successful. In many cases, the “management” roles serve as a justification for not doing the things the partners should be doing. The result is the law firm equivalent of “Nero fiddling while Rome burned.”
- Build up in work-in-progress and accounts receivable and increasing write-offs
Significant build-ups in and declining value of inventory are a result of management neglect and lack of personal partner accountability. Partners are usually not motivated to write anything off because it will generally reflect poorly on their own performance. In addition, they are frequently motivated to accept poor quality business simply to get credit for the revenues. The result is a buildup of inventory unlikely to ever be collected. Management should monitor inventory aggressively, and force at least an annual clean-up to ensure appropriate accounting and performance measurement.
- Unfocused or nonexistent strategy
This may be the longest lead-time indicator available, and it is not completely reliable. However, there have been few, if any, law firm failures where the firm had a clear, sound and well-understood strategic focus. Clear strategic vision is an excellent vehicle to bring focus on all of the various components of success, and may be the best means available to steer clear of business problems.
There are a number of other potential warning signs that may be subtler but are also important. However, those listed are all clear indicators of problems in the firm. While any one of these signs does not automatically indicate your firm is about to crash, they all suggest the need for management intervention.
And if a number of them begin to appear together, management is well-advised to focus on clearing the clouds away before the storm breaks.
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How to Hire a Legal Recruiter for Your Law Firm: How Law Firms Recruit Attorneys Using Legal Recruiters |
About Harrison Barnes
No legal recruiter in the United States has placed more attorneys at top law firms across every practice area than Harrison Barnes. His unmatched expertise, industry connections, and proven placement strategies have made him the most influential legal career advisor for attorneys seeking success in Big Law, elite boutiques, mid-sized firms, small firms, firms in the largest and smallest markets, and in over 350 separate practice areas.
A Reach Unlike Any Other Legal Recruiter
Most legal recruiters focus only on placing attorneys in large markets or specific practice areas, but Harrison places attorneys at all levels, in all practice areas, and in all locations-from the most prestigious firms in New York, Los Angeles, and Washington, D.C., to small and mid-sized firms in rural markets. Every week, he successfully places attorneys not only in high-demand practice areas like corporate and litigation but also in niche and less commonly recruited areas such as:
- Immigration Law
- Workers Compensation
- Insurance
- Family Law
- Trust and Estate
- Municipal law
- And many more...
This breadth of placements is unheard of in the legal recruiting industry and is a testament to his extraordinary ability to connect attorneys with the right firms, regardless of market size or practice area.
Proven Success at All Levels
With over 25 years of experience, Harrison has successfully placed attorneys at over 1,000 law firms, including:
- Top Am Law 100 firms such including Sullivan and Cromwell, and almost every AmLaw 100 and AmLaw 200 law firm.
- Elite boutique firms with specialized practices
- Mid-sized firms looking to expand their practice areas
- Growing firms in small and rural markets
He has also placed hundreds of law firm partners and has worked on firm and practice area mergers, helping law firms strategically grow their teams.
Unmatched Commitment to Attorney Success - The Story of BCG Attorney Search
Harrison Barnes is not just the most effective legal recruiter in the country, he is also the founder of BCG Attorney Search, a recruiting powerhouse that has helped thousands of attorneys transform their careers. His vision for BCG goes beyond just job placement; it is built on a mission to provide attorneys with opportunities they would never have access to otherwise. Unlike traditional recruiting firms, BCG Attorney Search operates as a career partner, not just a placement service. The firm's unparalleled resources, including a team of over 150 employees, enable it to offer customized job searches, direct outreach to firms, and market intelligence that no other legal recruiting service provides. Attorneys working with Harrison and BCG gain access to hidden opportunities, real-time insights on firm hiring trends, and guidance from a team that truly understands the legal market. You can read more about how BCG Attorney Search revolutionizes legal recruiting here: The Story of BCG Attorney Search and What We Do for You.
The Most Trusted Career Advisor for Attorneys
Harrison's legal career insights are the most widely followed in the profession.
- His articles on BCG Search alone are read by over 150,000 attorneys per month, making his guidance the most sought-after in the legal field. Read his latest insights here.
- He has conducted hundreds of hours of career development webinars, available here: Harrison Barnes Webinar Replays.
- His placement success is unmatched-see examples here: Harrison Barnes' Attorney Placements.
- He has created numerous comprehensive career development courses, including BigLaw Breakthrough, designed to help attorneys land positions at elite law firms.
Submit Your Resume to Work with Harrison Barnes
If you are serious about advancing your legal career and want access to the most sought-after law firm opportunities, Harrison Barnes is the most powerful recruiter to have on your side.
Submit your resume today to start working with him: Submit Resume Here
With an unmatched track record of success, a vast team of over 150 dedicated employees, and a reach into every market and practice area, Harrison Barnes is the recruiter who makes career transformations happen and has the talent and resources behind him to make this happen.
A Relentless Commitment to Attorney Success
Unlike most recruiters who work with only a narrow subset of attorneys, Harrison Barnes works with lawyers at all stages of their careers, from junior associates to senior partners, in every practice area imaginable. His placements are not limited to only those with "elite" credentials-he has helped thousands of attorneys, including those who thought it was impossible to move firms, find their next great opportunity.
Harrison's work is backed by a team of over 150 professionals who work around the clock to uncover hidden job opportunities at law firms across the country. His team:
- Finds and creates job openings that aren't publicly listed, giving attorneys access to exclusive opportunities.
- Works closely with candidates to ensure their resumes and applications stand out.
- Provides ongoing guidance and career coaching to help attorneys navigate interviews, negotiations, and transitions successfully.
This level of dedicated support is unmatched in the legal recruiting industry.
A Legal Recruiter Who Changes Lives
Harrison believes that every attorney-no matter their background, law school, or previous experience-has the potential to find success in the right law firm environment. Many attorneys come to him feeling stuck in their careers, underpaid, or unsure of their next steps. Through his unique ability to identify the right opportunities, he helps attorneys transform their careers in ways they never thought possible.
He has worked with:
- Attorneys making below-market salaries who went on to double or triple their earnings at new firms.
- Senior attorneys who believed they were "too experienced" to make a move and found better roles with firms eager for their expertise.
- Attorneys in small or remote markets who assumed they had no options-only to be placed at strong firms they never knew existed.
- Partners looking for a better platform or more autonomy who successfully transitioned to firms where they could grow their practice.
For attorneys who think their options are limited, Harrison Barnes has proven time and time again that opportunities exist-often in places they never expected.
Submit Your Resume Today - Start Your Career Transformation
If you want to explore new career opportunities, Harrison Barnes and BCG Attorney Search are your best resources. Whether you are looking for a BigLaw position, a boutique firm, or a move to a better work environment, Harrison's expertise will help you take control of your future.
Submit Your Resume Here to get started with Harrison Barnes today.
Harrison's reach, experience, and proven results make him the best legal recruiter in the industry. Don't settle for an average recruiter-work with the one who has changed the careers of thousands of attorneys and can do the same for you.
About BCG Attorney Search
BCG Attorney Search matches attorneys and law firms with unparalleled expertise and drive, while achieving results. Known globally for its success in locating and placing attorneys in law firms of all sizes, BCG Attorney Search has placed thousands of attorneys in law firms in thousands of different law firms around the country. Unlike other legal placement firms, BCG Attorney Search brings massive resources of over 150 employees to its placement efforts locating positions and opportunities its competitors simply cannot. Every legal recruiter at BCG Attorney Search is a former successful attorney who attended a top law school, worked in top law firms and brought massive drive and commitment to their work. BCG Attorney Search legal recruiters take your legal career seriously and understand attorneys. For more information, please visit www.BCGSearch.com.
Harrison Barnes does a weekly free webinar with live Q&A for attorneys and law students each Wednesday at 10:00 am PST. You can attend anonymously and ask questions about your career, this article, or any other legal career-related topics. You can sign up for the weekly webinar here: Register on Zoom
Harrison also does a weekly free webinar with live Q&A for law firms, companies, and others who hire attorneys each Wednesday at 10:00 am PST. You can sign up for the weekly webinar here: Register on Zoom
You can browse a list of past webinars here: Webinar Replays
You can also listen to Harrison Barnes Podcasts here: Attorney Career Advice Podcasts
You can also read Harrison Barnes' articles and books here: Harrison's Perspectives
Harrison Barnes is the legal profession's mentor and may be the only person in your legal career who will tell you why you are not reaching your full potential and what you really need to do to grow as an attorney--regardless of how much it hurts. If you prefer truth to stagnation, growth to comfort, and actionable ideas instead of fluffy concepts, you and Harrison will get along just fine. If, however, you want to stay where you are, talk about your past successes, and feel comfortable, Harrison is not for you.
Truly great mentors are like parents, doctors, therapists, spiritual figures, and others because in order to help you they need to expose you to pain and expose your weaknesses. But suppose you act on the advice and pain created by a mentor. In that case, you will become better: a better attorney, better employees, a better boss, know where you are going, and appreciate where you have been--you will hopefully also become a happier and better person. As you learn from Harrison, he hopes he will become your mentor.
To read more career and life advice articles visit Harrison's personal blog.
