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Part-Time Lawyers Willing To Work For Cheap

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The ratio of legal talent and what it costs to hire it is extremely favorable for law firms.  That is the unmistakable conclusion I reached after reviewing applications for three different part-time positions.  The positions were being filled by three different law firms with whom I am consulting.  For two firms, I placed an ad on Craigslist and reviewed all of the applications.  The third firm placed the ad on Craigslist and I reviewed the resumes and other application materials from a sub-set of candidates selected by the firm.  All three positions for were for jobs in or near Los Angeles.

There are many ways in which one could analyze what these three job postings show about the current state of the legal market, but the bottom line is straightforward—with the exception of some applicants who expressed an interest in second-chairing a trial on short notice, not a single lawyer asked for more than $100 an hour.  Some of the applicants had more than 25 years of experience, and even they didn’t ask for more than $100 an hour.

The desired hourly rates for one of the positions ranged as follows:

  • For a position seeking business litigators willing to write briefs and handle discovery, attorneys with less than five years of experience asked for between $30 and $50 and hour;
  • Those with between 5 and 10 years of experience generally asked for between $50 and $75 an hour; and
  • Those with 15-35 years of experience generally asked for between $75 and $100 an hour.

You may be wondering what kinds of lawyers would apply for a part-time business litigation position.  One segment of applicants was comprised of solo practitioners who were looking to fill up their calendars with paying work.  These tended to be lawyers with more than 10 years of experience.

A sizeable portion of the applications from lawyers with less than ten years of experience came from folks who have worked as contract lawyers.  A wide range of legal services are being provided on a contract/project basis.  This is no longer confined to document reviews and includes more sophisticated work such as negotiating and drafting contracts and writing briefs.

The fact that experienced lawyers are willing to work for less than $100 an hour in one of the most expensive markets in the country is troubling.  It is yet another sign of just how many solo lawyers are struggling to bring in enough work to keep themselves busy at their “normal” hourly rates.

This also presents an enormous potential opportunity for law firms willing to devote energy to managing and investing in their legal talent.  Too many lawyers and law firms fail to consider contract lawyers and solo lawyers with excess capacity for aesthetic reasons.  Lawyers with such backgrounds do have resumes that look messier than those who have had more stable work histories.  But this isn’t 1995.  The legal market is dynamic.  People do move around much more than they used to, so it’s a mistake to assume that lawyers who have moved around a lot are somehow inferior.  You can increase your revenues and profits and better serve your clients by tapping into the talent pool that is willing to work on a part-time basis.

As with any hire you need to assess people’s skills carefully.  In the case of the business litigation position referenced above, the firm asked applicants to provide writing samples involving dispositive motions.  More than 90 percent of applicants provided some kind of writing sample, and a third provided writing samples that mirrored exactly what the firm was seeking.  Is it possible that the applicants were lying about the writing sample they provided by exaggerating their role in actually writing it?  That’s possible, but that’s always a risk.  That’s why you interview people and conduct reference checks and why you have the option of firing someone whose actual performance doesn’t measure up.

So how about you?  How could your firm benefit from the pool of talent that is willing to work on a part-time basis?

The Myth of Feeling Indispensable

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Many lawyers and law firms have a difficult time scaling their practices.  Too often lawyers are the bottleneck in the decision-making process. I used to think that this was largely a function of not being trained to delegate, combined with not fully understanding the financial benefits associated with leveraging time.

Those factors are still relevant, but there seems to be a deeper reason why lawyers are reluctant to delegate. They pride themselves on their abilities and delegating most of the the work on a representation to others would prove that their legal skills aren’t necessary. Too many lawyers suffer from the myth of feeling indispensable. Sometimes as a consultant to lawyers and law firms it falls to me to disabuse lawyers of this feeling.

Here are some examples that are based on my real-life consulting work:

A transactional lawyer who says that they couldn’t possibly delegate work to an associate midway through a deal.

A litigator who says that they and they alone should draft a brief because they know the underlying facts better than any of their colleagues.

An elder law attorney who insists on personally creating every pre-bill for every client.

In each of thse cases I pointed out that, if for some reason the lawyer in question became unavailable because of illness, the firm would in the matter of few days find a suitable replacement.

Lawyers dont want to hear that virtually all of them are replaceable. That’s understandable. What is more perplexing is how few lawyers see the financial potential of building a work-flow system that allows a firm to serve clients without them being directly involved in every detail of every case. When lawyers fail to delegate and see themselves as indispensable they create an artificial ceiling on how much revenue they can generate. That ceiling is set by the number of hours the lawyer can work.

If lawyers want to maximize profitability they should seek to leverage the work of other lawyers and staff members. They should strive to minimize the extent to which their involvement  is required on non-essential decisions. That might make some lawyers feel less special, but that’s ok.

 

 

Why Law Firms Mismanage Their Profit Margins

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Too many lawyers don’t know how much profit they generate from different kinds of work they do on behalf of clients. When I ask potential clients questions about their margins, most say that they can track that information down for me. And most lawyers don’t understand why I think that they should know that number on a pretty much weekly basis. The basic reason is that business owners and margins should at least be aware of their profitability. You can’t begin to manage your profit margins and make appropriate management decisions if you don’t know them in real time.

The billable hour is partly to blame. Almost every lawyer can tell you their annual billable hour requirement. And even lawyers who work on a contingency basis tend to be focused more on revenues than expenses or profit margins. This focus is understandable. For many small firms, and for a majority of individual lawyers, the most common complaint is that they don’t generate enough of a book of business. But an excessive focus on revenues can be debilitating to law firm growth and to proper law firm management.

In my experience as a business consultant, I often see that law firm leaders tend to under invest in infrastructure and marketing. This is in part a result of insufficient attention to profit margins. Companies that properly understand profit margins are steeped in understanding the potential return of an investment. This in turn leads companies to conclude that certain substantial investments are justifiable. Well-run companies take calculated risks.

Too many law firms, however, take an unnecessarily restrictive approach to investing in projects that would substantially grow their margins. They tend to focus on the absolute level of expense rather than its potential return. They are often reluctant to spend much more on a specific budget item than they did before. But such a backward-looking approach can be fatal to growing a practice. For example, a solo practitioner with whom I started working about five years ago initially sought to generate $20,000 in monthly revenues. At the time, he was essentially a solo practitioner. Now four lawyers work for him and his monthly payroll expense exceeds $50,000. A hallmark of any rapidly growing enterprise is that its present expenses dwarf its past revenues. And that is desirable so long as the enterprise’s margins remain healthy.

Moreover, you can’t make intelligent and strategic decisions about potentially profitable investments if your financial information isn’t current and accurate. This is another benefit of focusing on margins. It will help lawyers and their key staff members collect and maintain more accurate financial records.

So how about you? What expense that you have been reluctant to incur would generate the highest return over the next year or two?