The Partner Conundrum
In a recent article written for the New York Times, it was stated that there has been a shift in major law firms around the country. The story reports than many firms are demoting and letting go of partners at alarming rates because of concerns over profitability. The article explains that firms are expediting the exit of partners who aren’t shepherding enough business to the firms or billing the desired amount of hours. This mass exodus is being brought on by pressure from clients who want to bring down costs. Within a highly competitive industry, the pressure to compete and offer lower costs to clients has greatly increased, so firms have looked for ways to cut costs in the most expedient way, through demotions and layoffs. But there is another side of the coin: the rise of a new type of management in Law Project Management.
Whereas law firms want to cut costs by firing partners who are not billing enough hours, clients are concerned with law firms billing too many hours. There has been a worry that attorneys are billing and calculating time “liberally” and charging for hours that haven’t been worked. With a firm’s desire to stay competitive, it must provide lower cost offerings in the market. This is coupled with the goal of revenue generation, which is naturally achieved by billing hours. These factors can result in the practice of overbilling, which is a combination of internal pressure, poor business ethics and lack of monitoring in project structure. In an effort to monitor projects and increase the flow of information and awareness between attorneys and their clients, a management style has be created utilizing the ideals of traditional project management to oversee and regulate the procedures of legal matters and/or cases. Companies applying Law Project Management are seeing a detailed and in-depth account of scheduling, cost and
risk on projects that have hired attorneys working on them. One of the biggest focuses of Law Project
Management is monitoring the allocation of funds and making sure that the hours being billed are proportionate to the hours worked by attorneys. The emergence of Law Project Management and the recent trend of demoting partners have created a unique environment that may be correlated in effect. This change in industry management methods is not trending in a positive direction for attorneys, as employment numbers and promotions lower. Meanwhile, layoffs and expectations to produce increase. The application of Law Project Management strategies has steadily become more of a mainstream method of production activity as clients look to honest business practices and a better understanding of how their money is being spent.
To check out the original article: http://www.wsj.com/articles/law-firms-demote-partners-as-pressure- mounts-over-profits-1476137818