Here they are: Secrets to Profitability
As the chairman of Levenfeld Pearlstein PC in Chicago, Bryan Schwartz has been managing firms for 16 years. The firm's net income per partner has more than doubled over last 8 years "and we don't bill more time than anyone else," he said.
Speaking today at the Chicago Bar Association's Law Practice Management & Technology Conference, he said the secrets to higher profits are:
- Hire the best staff and lawyers, who will attract the best clients and most interesting work.
- Specialize and charge higher rates. "Who will get more money on an environmental matter -- someone who dabbles in it or someone who eats, drinks and sleeps environmental law?"
- Don't focus on revenue or origination. Instead, determine your costs and focus on each lawyer's profitability. (It's no good for a lawyer to bring in $1.5 million but cost the firm $2 million.)
- Don't focus on cutting costs, focus on providing resources for lawyers to make profits.
- Have a business plan, and say "no" to new clients that don't fit the firm strategy.
- ...and most importantly, firm leaders must create a culture that energizes the lawyers and gives them a reason to stay with the firm. "It makes a big difference in profitability. An inspired group of people can make a lot more money than people who are trying to bill a lot of hours."
Following these practices his firm grew from 26 to 80 lawyers in eight years. "Most law firms' plan to increase profitability is to bill more time -- it's ridiculous. It's a lose-lose end game. You have to work hard, but more it's important to work smarter," he said.
Culture is key. "Our lawyers are the most competitive people, but it's a culture where everybody helps the other person, they don't compete against each other," he said.
