1. Driving Productivity in Law Firms
Andrew Allen November 2017

2. Application to “a law firm” Impact of model variables
Overview
Profit making model
Explanation of model
Application to “a law firm”
Impact of model variables
Improving productivity
Practical MI
pkf-francisclark.co.uk

3. Profit making model
GEARING
HOURS
RATE
RECOVERY
MARGIN X X X X

4. Profit making model GEARING HOURS RATE RECOVERY MARGIN X X X X G5
Team size per EP
Productive time
Average rate?
Billing skills
Overhead management
GEARING
HOURS
RATE
RECOVERY
MARGIN X X X X G5
G1,150
£130
80%
23%

5. PEP £137,000 Profit making model GEARING HOURS RATE RECOVERY MARGIN X
Team size per EP
Productive time
Average rate
Billing skills
Overhead management
PEP £137,000
GEARING
HOURS
RATE
RECOVERY
MARGIN X X X X G5
1,150
£300
80%
23%

6. Profit making model –Future ?
Team size per EP
Productive time
Average rate
Billing skills
Overhead management
GEARING
HOURS
RATE
RECOVERY
MARGIN X X X X G5
1,200
£130
90%
23%

7. PEP £161,000 Profit making model GEARING HOURS RATE RECOVERY MARGIN X
Team size per EP
Productive time
Average rate
Billing skills
Overhead management
PEP £161,000
GEARING
HOURS
RATE
RECOVERY
MARGIN X X X X G5
1,200
£300
90%
23%

8. Profit making model Chargeable hours? (and raised recovery to 90%)
52 weeks less 6 weeks holiday x 5 working days x 5.0 hours per day = 1,150
PEP = £155,000 (PEP increase = 13%)
52 weeks less 6 weeks holiday x 5 working days x 5.5 hours per day = 1,265
PEP = £170,000 (PEP increase = 24%)
52 weeks less 6 weeks holiday x 5 working days x 6.0 hours per day = 1,380
PEP = £186,000 (PEP increase = 36%)

9. Profit making model
Average rate and hours increased? (80% recovery retained)
Increase average hourly rate from £130 to £150 creates PEP of £159,000; an increase of £22,000 on the base model (16%)
Increasing average hourly rate from £130 to £150 AND increasing chargeable hours average to 5.5 hours per day creates PEP of £175,000; an increase of £38,000 on the base model (28%)
Increasing average hourly rate from £130 to £150 AND increasing chargeable hours average from 5.0 hours per day to 6.0 hours per day creates PEP of £190,000; an increase of £53,000 on the base model (39%)

10. Profit making model – Practical actions?
Based on a typical law firm….
Actual Fees per fee earner in 2017 = £120k
20 Employed fee earners plus 5 equity partner fee earners – so 5 fee earners per partner
PEP achieved £130k
Increase fees per fee earner £5k to £125k
So; every fee earner on average increases their recovered fees by £5k with no other additional costs i.e. from productivity improvements
Extra 125k of fee, no additional costs, divided by 5 partners
Increase in PEP = £25k (19%)

11. Profit making model – Practical actions?
Achieving extra £5k on average?
(Equivalent to £20 per working day per fee earner)
Fee negotiation / scoping
Time recording / capturing improvements
Controls over extra service delivery
2nd partner / fee earner reviews of write offs
Setting chargeable hours and recovery rate targets
…..not necessarily by doing more work!
(What would a £10k improvement take to achieve PEP growth of £50k? )

12. Influencing the model – Practical actions?
Chargeable hours
Partner driven behaviour
Budgets & MI; reviewed
Time management training
Time recording processes
Software advancements
Reward structure
Rate and recovery
Partner driven behaviour
Budgets & MI; reviewed
Fee negotiation training
Second review of write offs
Second review of budgets
Client communication
Work allocation (margin)
Reward structure

13. Profit making model – MI provision
Partner Driven
Regular MI (all month and ytd vs Budget)
Chargeable hours
Fees
Recovery
Debtors
WIP
Ensure the focus is a “recovery culture” not a hours culture

14. Profit making model - Summary
Your role as partners…..
Get good people
Record time (keep them busy)
Think about pricing and billing the time
Get better at bringing in new business

15. Regulatory update and outlook SRA AR Phase 3
Provision of banking services
VAT on disbursements
pkf-francisclark.co.uk

16. Contact
Andrew Allen

17. Disclaimer & copyright
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