How to Handle Fast Growth
by Barbara Lewis and Dan Otto
(County Bar Update, February 2000, Vol. 20, No. 2)

 

How to Handle Fast Growth

By Barbara Lewis, M.B.A., Law Practice Management Section Executive Committee, and Dan Otto, M.B.A. Lewis and Otto are partners in Centurion Consulting Group, which provides business consulting for law firms. Lewis can be reached at BALewis@aol.com or at (310) 471-8979 or at www.CenturionConsultingLaw.com. The opinions expressed are their own.

The robust economy has had a dramatic effect on law firms. Most attorneys are so busy that they are looking for new hires to assist them. The dilemma de jour is which level of person to hire: a paralegal, a newly minted associate, a junior attorney or a seasoned lawyer. However, before you take the leap and hire help, consider the consequences.

As with most fast growing businesses, law firms are quick to hire additional employees when there is too much work to handle.

Oftentimes, this swift solution only increases expenses and decreases profits. It's this methodology that bloats firms during good economic times and leaves them in a precarious position -- sometimes near bankruptcy -- during recessions.

Some firms use booming business times to increase efficiency. They recognize that fast growth doesn't necessarily signal additional hires. Rather, it's an opportunity to design operations for peak productivity and proficiency.

Take the attorney who was drowning in work and stymied about the level of person he should hire. Instead, he conducted a "work flow" analysis, which is commonly used in manufacturing environments.

The analysis identified the tasks of each person and then segmented the tasks by level of person who could competently complete the task.

For example, a typical matter for a business attorney may be setting up a corporation for a client. The tasks include registering the name with the Secretary of State, developing and reviewing the articles of incorporation, and filing the document with the Secretary of State. Other ancillary tasks include opening the client file, mailing the documents to the client and closing the client file.

Each of the tasks is assigned a level of person. For example, the secretary opens the client file and registers the name, the paralegal develops the draft documents from a template, the attorney reviews the docs, the clerk mails them to the client, etc. So now you have a list of tasks and the level of each person who can competently complete the task.

Next, run timesheets for every employee for one month. You'll probably find attorneys are performing secretarial work and secretaries are doing clerical work. Tasks are not aligned with the proper person. So, essentially, you are paying a secretarial wage for a clerical task. The drowning attorney found that he was performing 25 percent secretarial work and his secretary was doing 35 percent clerical work. This is a common occurrence in today's workplace where computers have replaced secretarial work.

Instead of training secretaries to move into paralegal work, many firms are using high level secretaries for filing and mailing documents -- a drain on the profits...but in an economic boom, who's noticing!

In addition to aligning tasks with the proper level of person, developing standard procedures is critical. When new hires appear on the scene, they can be trained quickly, since all tasks have documented procedures.

All too often, procedures are merely "memories". When the employee leaves, the procedure exits with him. The next person in the position develops his own procedures when trained without a documented standard.

The drowning attorney reassigned tasks and produced procedures to enhance efficiency. The result -- he increased the profit margin to 38 percent from 10 percent in about four months (30 percent is the average margin for law firms). He found that he actually had time for additional work.

So before you throw another employee at that workload that appears overwhelming, determine if every person, including you, is aligned with the proper level of tasks, and develop documents that will help standardize procedures. Then when the next person comes onboard, you'll be operating at peak efficiency, and you will have maximized your profits.

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