Law Practice Magazine
Practice Building Strategies for New Partners
Thinking like an Owner.
Thinking like an Owner.
You’ve just made partner. Now … what does that mean? You know that your life has changed and the firm will be looking to you to fulfill myriad new responsibilities—some stated and some unstated. But in terms of contributing to profitability, exactly what have you gotten yourself into by accepting partnership?
Okay, we admit that we have a fixation with numbers and what they can tell us, so with that in mind, here’s our take on what the life of a new partner means: The firm will expect you to start measuring up to ownership by making contributions—and showing your commitment to—the organization’s long-term financial health.
As an associate, you were primarily expected to meet billable-hours requirements, which are most closely linked to short-term cash flow. Up until now, you were only one of multiple available leverage factors at work within your firm. As we’ve discussed in prior columns, leverage can be thought of in several different ways: in human terms—meaning the number of associates per partner; in technological terms—saving and packaging intellectual assets for reuse; and in economic terms—taking capital (whether obtained through savings or debt) and investing it in the firm to produce a greater net financial gain than would be available through other uses.
In your new ownership persona, when we speak of turning an eye toward long-term profitability, we are speaking of your added responsibility to devote time to tasks in addition to those associated with client billings—tasks that will ensure the firm’s viability into the future. You must move from a short-term view of the world of your work (putting in enough hours on the next client file) to a more strategically based view—one of ensuring that there are files in the office for the associates and staff—not just today, but tomorrow and the day after that—as well as the needed technology and capital to turn into profits for the firm.
Each firm has its own specifics, but here we will give you a general idea of appropriate time expectations for your role as a freshly minted partner.
When we speak of expectations for hours, we are not referring just to time spent on client files (which this certainly includes), but also to time spent on tasks that you have not previously associated with recordable time. You are probably thinking to yourself, “If it isn’t billable time, then why should I be worrying about it?” There are several reasons for tracking time spent on these additional new tasks.
The first is the maxim that states “what gets measured gets done.” When you establish an expectation for yourself that you, as a partner, will spend a stated minimum amount of time on various tasks other than working on client files, your partners will see that you are actively taking part in the long-term viability of the firm.
Second, by tracking your time on these various activities, you can see for yourself where you are measuring up and where you may be falling short. As Andrew Mason said, “Admit your errors before someone else exaggerates them.”
Third, without any plan for what you should be doing, and for how long you should do it, you will have no idea whether or not you have succeeded. Writing down your expectations—and setting a specific time allotment for each—allows you to determine the relative amount of time and energy that you should spend, proportionally, on the different aspects of measuring up to be a good partner.
So what is the magic number? Available information indicates that an average partner in an average firm should plan to log at least 2,500 hours per year (or 50 to 60 hours per week) in pursuit of the aims of his or her firm. Since this is a global number, it will naturally need to be broken down among the various component tasks typically associated with partnership. And, of course, the total hours will vary with the size of the firm (e.g., larger firms generally have higher billable-hours expectations), the type of practice area, the culture of the firm and so on.
Now, of the 2,500 billable hours that you log each year, how do you go about allocating them to the different tasks and categories, particularly those for which you are newly responsible? Here is our typical breakdown and what it means for you, the new partner on the block (or in the high-rise).
Remember that first and foremost you are still an active worker bee in the firm. As such, you need to keep up your billing numbers on client files as a priority. Your partners (as you should know) will be looking to you to continue to be a financial pillar supporting the firm.
Billable time per year spent on client fee activities that can be translated into cash (what you did before you made partner) should still lie in the range of 1,750 to 1,850 hours per year. A new factor to consider, though, is that at least 90 percent, and preferably 95 percent, of your fees should be collectable. As an associate, your supervising partner could write off your time (for reasons you probably didn’t understand in your earlier years). Now that you are a partner, you will be expected to be far more discerning when it comes to client selection and, consequently, in your account realization. No partner wants to hear that there has been a big write-off of another partner’s time. Accordingly, you must continually assure that several things are happening:
You will also be expected to actively develop new business, extend the goodwill and good name of the firm, develop the professional as well as the community image of the firm, and invest in activities that will add value for all other partners in your being associated with the firm.
There are many ways to achieve these multiple goals, in line with your own personality, preferences and skills set. A discussion with your in-house marketing staff or an outside marketing consultant can assist you in determining how you can fit your activities into the overall marketing plan for the firm as well as your already crowded schedule. You will be wise to seek guidance from one or more notable rainmaking partners within your firm, too.
However you decide to go about developing your marketing activities, you should plan to devote at least 200 hours per year to a combination of the following:
Another of the new experiences awaiting you is the opportunity to participate in the management activities of the firm and its practice groups. Again, each firm is different and a lot will depend on the size and culture—for example, some firms are organized into committees, while others are less structured.
Regardless of how your firm is set up, though, there is no doubt that you will be expected to begin to shoulder your portion of the burden that is shared by all partners. Generally, your firm will probably expect that at a minimum you spend approximately 200 hours per year on management activities in and for the firm.
As a partner, you are now an asset to the firm. Nonetheless, as we all know, intellectual assets have a definite half-life. To continue to be an asset, you will have to invest in yourself and your continuing professional development. You cannot rest on your laurels in the ever-changing world of law if you want to remain competitive (or even relevant).
Accordingly, expect to invest at least 200 hours per year on writing, CLE programs and professional reading in your field of expertise.
You will doubtless encounter other to-dos related to your role as a partner that do not fall neatly under any of the typical responsibilities descriptions. Well, every balance sheet has a “retained earnings” entry that allows the assets to balance to the liabilities and equities. And we have a catchall category as well for all the other tasks that don’t comfortably fit into any other category.
Plan on allocating around 100 hours each year to such miscellaneous activities.
There you have it—our list of how to spend your time as a new partner. There are many details that you will have to delve into, but the message here is that you need to:
You’ll also need to renew your commitment to billable client hours and get used to recording all your time—all day long—so that you can make sure you meet firm expectations as well as those you’ve set for yourself. Then, and only then, will you have taken the first steps toward effective management of your time as a partner.So here’s your key. Take ’er for a spin. You’ve earned it. Welcome to firm ownership!