The Secret to a Successful Legal Career? Be a Profit Generating Attorney
For those of you who began your careers as a law firm associate, think about your answer to the following questions:
How long did it take before you felt like a reasonably competent lawyer?
How long did it take for you to feel like you were a profitable lawyer?
How long did it take for your clients and supervisors to be confident in your competence and profitability?
Two years? Five years? Ten years? Still figuring it out?
At more than a few firms, an associate’s failure to meet his or her first-year billing targets can permanently dim that lawyer’s prospects in the eyes of management. Associates often drive themselves to generate work that can be added to a client bill because they face the pressures of meeting billable targets—but whether this work is of utility to the client or the firm is often forgotten. Clients responded by just refusing to pay the billed hours from first- and second-year associates.
Therein lies the challenge: firms of all sizes expect entry level lawyers to be generating revenue within weeks of their arrival. New attorneys should bill at the earliest opportunity—even though such opportunities are dwindling. Like it or not, the secret to succeeding as a young associate is figuring this puzzle out and becoming profitable.
Tips for associates:
Establish a niche. In addition to pursuing practices that you are interested in, consider pursuing assignments where you are most productive. Be open to different matters as you never know which will help you meet your hours.
Seek a mentor. Some firms have a formal mentoring system; whether yours does or does not should not matter because you should be seeking out mentor figures regardless. Seek mentors who are not your supervisors that can share their insights and experiences, as well as advocate and cheer for you on your behalf.
Participate in the firm. Should the opportunity arise, take the initiative to become a part of a firm committee or internal project. More than just checking a box, this often gives you the opportunity to discover the inner workings of the firm and find value in your day to day work. No junior associate salary can provide the proper incentive of compensation for a sense of feeling significant or part of something valued. Getting involved with the firm infuses a sense of excitement, meaning, and purpose into the workplace. This is how you start the transition from thinking like an associate, to an owner.
Seek training and feedback—regularly! The best associates will feel overwhelmed if left on their own to learn all that a lawyer must know. Most firms host their own formal training programs or send their associates to continuing education programs. Take advantage of these by asking questions and making suggestions (since you have to sit through them anyway). Additionally, seek feedback for completed assignments outside of the formal evaluation system. Not all partners and senior associates are good at providing constructive feedback, so learn how to ask for it.
Tips for firms:
Improve realization rates. Firms need to bill a higher percentage of worked hours and collect on a higher percentage of billed hours. Law firms have come up with all sorts of strategies, including rewards or punishments for timely entry of time, but it all comes down to discipline. Pay attention to time and send your bills out on time. Educate your timekeepers about why time entry matters. Make sure your attorneys are thinking like owners. Remember that your associates are some of the most profitable timekeepers at a firm.
Retain talented attorneys. Does your firm have a healthy ratio of parters to associates? Of senior to junior associates? Economic pressures have resulted in many firms laying off many lawyers during the recession or cut back on hiring. Now that the business climate has improved, attorney retention is an issue once again. This creates a pipeline problem to get attorneys in at the firm, as well as a leaky bucket problem because the best attorneys are in demand outside of the firm and may trickle out. Do what you can to retain talented attorneys. This may mean introducing a non-partnership track, developing a new commitment to pro bono work, and rethinking bonuses and mini-sabbaticals. Legal practice is talent-driven, so do not shave on recruiting, compensation, or bonuses—which may tempt some of your best and brightest to look elsewhere.
Know your costs. Your equity partners should know what the overhead costs are and the numbers required to earn a profit. This information should not be kept secret from your associates and non-equity partners. Encourage the team to understand the numbers and know what the break-even amount is and what the margins of profit are.