Law firms want their lawyers to be more commercially aware, research finds

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By Rhys Duncan on

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TC hunting 101


The majority of law firms are planning to boost their lawyers’ commercial awareness through training, a new study has found.

The report, published by tech firm BigHand, found that 51% of firms are looking to give their lawyers additional training on commercial awareness as part of their efforts to reduce ‘profit leakage’ — i.e. the amount of money that a firm has earned but hasn’t actually collected.

As well as making their lawyers more commercially aware, 64% of firms plan to collect and bill more frequently, while nearly a third (31%) said they will adjust their billing terms.

The study also noted that just 38% of firms provide associates with profit information for matters they’re working on, with 39% providing billing information.

This data is key, the report says, for lawyers to understand the firm’s commercial position within a matter, and for associates to have a detailed discussion with clients on value for money.

“The shift towards a commercial focus for lawyers is inevitable — and firms will fare far better if they drive the conversation, rather than clients. And that demands a different culture, one supported by a legal workforce with the confidence to take a business-focused approach to all client engagement”, the report says.

Elsewhere, it was found that 47% of firms have increased billable hours this year. Counteracting this, however, is confirmation that 59% have seen an increase in write-offs (work it accepts it’s not getting paid for), with 43% saying that this increase was over 10%.

Highlighting the difference between profitability and billable hours, the research comments that:

“In the current economic climate with more pressure than ever to provide clients with more value for less, law firm leaders must turn their attention from short-sighted discounting and billing billable hours write-offs to improving financial transparency from the matter onboarding process and throughout the lifecycle.”

The finds are based on a survey of 800 individuals from senior legal finance roles, CEOs and managing partners at UK and US law firms with 100 lawyers or more.

4 Comments

Anon

Write offs is a problem largely of law firms own making.

I’m in house so use externals. Here’s a typical conversation.

Me: “Hi, I’ve got this job, here’s a spec, please can you provide a quote? will need to be fixed fee as it’s part of the project cost“

Partner: “Great, thanks, so amazing, will provide a quote”

Partner: “Hi Anon, we can do the job for £400k-£500k”

Me: “Cool, I’ll need to get budget sign off so is it 400 or 500”

Partner: “Oh we can definitely do £400k fixed fee.”

Me: “Great, I’ll get that signed off.”

Partner: “Really appreciate the instructions, would you like to go for lunch/come to Wimbledon/sleep with my wife?”

*sign off for £500k anticipated in expectation of inevitable over spend*

*work gets done*

*bill lands for £1,344,659.34”

Me: “Hi, the bill appears to be £800k over the quote”

Partner: “Yes, that’s what was on the file.”

Me: “But the matter was fixed fee”

Partner: “Yes but the parameters changed/you needed more tax advice/the NQ’s dog died so we used 9 equity partners instead”

Me: “But you never mentioned any of this during the deal and now you’re asking me to get internal sign off for over double the spend 8 months after budgets were settled. I can do £500k but that’s the max”

Partner: *wails* *gnashes teeth* “This will leave me penniless, I can do £600k”

Me: “I’ll go make special pleadings to the CFO”

Partner: “Thanks, we can write off the £700k. Do you want to do lunch/come to Twickenham/sleep with my sister?”

That was funny and probs true too

Loooool mate you should be comedy writer 😂🤣

Hilarious!

Please write more. I’ll read. And if you’ve a website/blog, please share.

Junior Leachman

Hello Anon, you are cracking me up.

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