Lexpert Magazine

62 LEXPERT MAGAZINE | SEPTEMBER / OCTOBER 2018 BY RICHARD STOCK | COLUMNS | Richard G. Stock, M.A., FCIS, CMC is a partner with Catalyst Consulting. For law department manage- ment advice that works, Richard can be contacted at (416) 367-4447 or at rstock@catalystlegal.com. Poor Leverage Means Poor Service A DETAILED ANALYSIS of law firm staffing patterns over the years reveals vari- ations in the ratios of partner, associate and paralegal time that cannot be explained except by a partner's preference for how to staff different matters for different clients. ese idiosyncrasies should be of signifi- cant interest to both law firm leadership and to corporate and institutional consum- ers of legal services. Law firm leadership should understand the extent to which partners under-leverage the time of associ- ates at all levels of experience, of paralegals, and even of less senior partners. Proper leverage on each file is cen- tral to law firm profitability. More oen than not, everyone in the legal food chain can readily delegate 20% of the work to the next band of experience. In most instances, this means delegating certain tasks rather than entire files. But this requires planning and teamwork. Associates must do more than meet formal and informal billing targets, and firms should be more explicit in setting leverage objec- tives for individual partners. A core busi- ness responsibility of practice group leaders should be to ensure that partners delegate enough tasks to associates and paralegals, appropriate to the complexity of the work. General counsel should take a keen inter- est in the staffing patterns of the law firms they retain both for individual matters and for portfolios of legal work over time. Some of the reasons for doing so are the same as the ones that preoccupy law firm manag- ing partners: turnaround time, knowledge transfer and stable legal teams. However, the financial imperatives dif- fer for the law firm's clients. e cost of a matter can be as much as 15% less, de- pending on the extent of delegation. In recent years, law departments have been asking for detailed matter budgets for complex work beginning with files re- quiring at least 50 hours. e distribution of work by phase and task and by fee earn- er is now an established process in most firms. Yet, too few clients are rigorous in requesting and diligently reviewing mat- ter plans and budgets. Negotiating a blended hourly rate for all fee earners on the file helps the law firm to focus its resources on the tasks at hand, thus properly overseeing the distribution of who does what by when. e firm and the client should ensure that matter plans and blended rates reflect the relative complexity of the files. However, a discounted blend- ed rate will not control for the number of hours. Better to agree on a capped number of hours, or on an annual fee that generates a productivity dividend — fewer hours — from the firm. It is easier to do this when the file is large enough or with a collection of matters over time. More eggs in fewer legal baskets. Failure to delegate tasks is a much more widespread challenge for law depart- ments. e law firm leverage model is sim- ply not available in-house. Counsel will work collegially enough, but individually will then do more than 90% of the work on a file, no matter how complex or simple the tasks may be. To the extent that there is any delegation by inside counsel, it will be by co-counselling with a law firm to use its associates or because the law firm has paralegals available. I recently spent time looking at file al- location patterns and service delivery in a 38-lawyer law department. About 85% of the department's lawyers were litigators, supported by a legal assistant for each three lawyers. Amazingly, there were no para- legals. Workloads were measured by file count without regard to any complexity levels or the mix of file types al- located to each lawyer. ere ap- peared to be no distinction made in file allocation to entry level and senior lawyers. No targets were set for file cycle durations. All in all, this was a collection of hard- working solo practitioners. Demographics suggest that most inside counsel have at least 10 years of practice experience. What is the solution when there are no juniors or paralegals on board? Twinning a lawyer with another lawyer and encouraging them to divide the work — that is to say, the tasks of any given file — between them will drive productiv- ity, with two provisos. e first proviso is that work intake and allocation must be centralized with group leaders in the law department such that workflow and dead- lines are more explicit and capped. e sec- ond is that law department leadership has a system to monitor file count, file complex- ity, and cycle times against objectives. General counsel and law firm leadership have much to gain by addressing the poor team-based lawyering. Law departments must be rigorous in reviewing matter plans and budgets LAW DEPARTMENTS "A CORE BUSINESS responsibility of practice group leaders should be to ensure that partners delegate enough tasks to associates and paralegals, appropriate to the complexity of the work."

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