Originally published in Canadian Lawyer
One of the fastest and easiest ways to increase profitability is to increase leverage by moving work down to the most efficient staffing level. I’ve noticed some firms are adding non-equity partners to increase leverage and profitability, and this is a trend that continues to build. Clients are pushing hard on rates and don’t want to pay to train associates. Non-equity partners, by contrast, hit the ground running and don’t incur training and supervision costs. Firms don’t break even on associates until three to five years of call on average, while non-equity partners are profitable right away.
Other ways to use leverage:
– Large national firms are pushing out underperforming partners with practices that don’t meet their minimum size standards, as they continue to lever themselves for maximum profitability.
– Personal-injury firms are outsourcing legal work to India to reduce costs. This is quite…
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