There is much talk about how competitive the legal-services market has become.
Lawyers and law firms worry about how they stack up against the competition, and are busy trying to find the metrics that show how they rank — with reported profits-per-partner figures often near the top of the list.
But all that angst can be counterproductive. An old Chinese proverb states, “He who doesn’t turn runs far.” Baseball great Satchel Paige put it a different way: “Don’t look back, something might be gaining on you.”
In track and field events, coaches tell runners to look at the tape in front of them, not at the other contestants behind. The equivalent in running a law practice is to look ahead at doing the best you can do by improving your skills, efficiency and cost effectiveness — and above all, focus on what you should be doing, not what the competition is doing.
UCLA basketball coach John Wooden, who won more national championships than anyone, said flatly: “An organization — a team — that’s always looking up at the scoreboard will find a worthy opponent stealing the ball right out from under you.” Consider two practical examples, one from the cost side and one from the revenue side.
Office space is one of the biggest cost items for any law firm, but you should look at space rental costs from the perspective of your own practice: what you expect in revenues and what rent you want to pay.
Don’t obsess over “experts” who say a firm should allocate 9 percent or 12 percent or some other such fixed proportion of revenue to rent. Such generic numbers either allow lawyers to become self-satisfied if they are within the range (and thus not looking for improvement), or to become obsessed with cutting corners if they are outside the range (and thus shortchanging both lawyers and clients).
Of course, you cannot expect to stay in business if you fall too far out of line with your competitors, but that is true of all expenses, not just rent.
On the revenue side, think for a moment about something we are now told is impossible: raising your fees. Again, you cannot stick your head in the sand on this issue. Any attorney should have a feel for the current rates, depending on market and practice area.
But to say that rates can never be raised above such norms is self-defeating. The lawyer who adds value, who achieves results, who is cutting-edge or who scores a major success has every right to a reasonable fee increase, and every prospect of having it accepted.
The key is to have adequately demonstrated your worth to your clients, regardless of what another lawyer — whom they’ve never met — may be charging.
There is no question that comparative information can be helpful in running a law firm. The concept of benchmarking can be a tremendous benefit in any competitive endeavor by helping define where you may be falling short, understand where you are relative to your goals, and provide fact-based assessments to colleagues and clients.
But comparisons must not be controlling. For the typical small or mid-sized law firm, the only thing that matters is what your goals and strategies are, not what someone else’s may be.