29 Jan Why highly effective solicitors understand law practice economics
Is it enough for solicitors (at any level of seniority) to just keep their heads down, focus on their technical excellence and clock up their 6(?) billable hours each day? Can’t they just leave the running of the practice to the partners and managers?
Maybe, but a true understanding of law practice economics is often the trigger that can turn an effective but limited solicitor into a highly effective one.
By using the term ‘economics’ I’m not talking about detailed profit calculations, specific ratios or benchmarks, I’m talking about the interplay of supply and demand in legal services, and specifically how to create and convert (monetise) value.
However a practice charges, I don’t believe that a client’s or a practice’s perception of value is limited to either the quality of specific outputs, or the number of hours it took to create them. In all of their activity, solicitors should retain a focus on how value is created and converted in terms of time, price, business development, practice efficiency, productivity, competitive position, personal brand, costs, billing, client experience and everything else. For me, economics is just the fascinating interplay of all these things.
An understanding of law practice economics can help solicitors understand why they can’t have a pay rise, why they need to meet their productivity targets, why clients are so price/costs sensitive, why they only start making profits for the practice after 3.15pm, but also why specific value-adding behaviours can get them noticed as someone who ‘gets it’, contributes a little bit more and puts them on the fast track to promotion.
An understanding of law practice economics can change behaviours in terms of how they work with colleagues, manage their career, their time, their files and their client conversations. It can make sense of partner pleas and expectations and can highlight how they make themselves more valuable to both the client and to their practice.
Highly effective solicitors are highly productive, can ‘communicate value’ to clients (sell), can either price their work intelligently or resist downward pressure on fees, can spot opportunities for adding value or increasing efficiency, and are an all-round asset to the practice. All of this requires an understanding of value and the mechanics of value.
To create and convert more value in your practice, register now for one of the following workshops:
- 7 habits of highly effective solicitors, – full day workshop, March 15, Brisbane
- Power pricing & productivity (= profits), – half day workshop, March 16 (PM), Brisbane
- 7 habits of highly effective young lawyers, – full day workshop, March 21, Melbourne (with Paddy Oliver of Lexcel Consulting)