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September/October 2019

Practice Management Advice

Smart Growth: Hiring Due Diligence

John D. Bowers

In the previous issue of this column, we tackled a common growth debacle: rescuing underwater timekeepers who simply can’t take on additional, perhaps even better, projects. Though it may seem like an obvious hiring trigger, we outlined how savvy leaders must first monitor productivity data to discern what really lies beneath the surface of oft-claimed “busyness” and consider work reassignments before tapping the job bank.

Assuming your data uncovers significant work overflow that you are unable to reassign to existing timekeepers (for any variety of reasons), you must do your due diligence. To be sure, cultural reasons to avoid hiring are plentiful since law practices scramble to prove they have attained:

  • Strict partner autonomy, which contributes to lack of accountability for, and awareness of, overall leverage in the practice.
  • Increasing profitability, which relies heavily on plateauing or decreasing overhead.
  • Predictability, which straitjackets innovation into a happy, vegetative state and can lead to revolts against even slight change.

Lawyer leaders who recognize a need to grow thus confront the most frightening word in the legal lexicon: risk. And worse, risk that you, as a leader, are introducing into an otherwise safely status quo environment. Indeed, the hire could be a flop for want of performance, smaller profit margins or the soft failure to “fit in” to the culture. Do name the fears, leaders, or suffer your partners to state them at inconvenient times with relish. In so naming, however, do not abandon a worthy cause of hiring in spite of the obvious risks.

All the same, proceed gingerly through the gauntlet. Though your half-cocked reaction may be to call your favorite staffing firm—you do owe them a call since they have been so gracious with lunches—keep your decision to hire internal until you’ve checked a few more boxes. If you decide to hire through headhunters, this due diligence will only make their work on your behalf more efficient.

The Oracle at Delphi

The first step to smart growth through hiring is to identify work that a new position would handle. Certainly if you have landed a large new client or increased volumes of work from a current client, this decision is quite simple. If, however, you are attempting to bail out deluged timekeepers, you must determine whether the overflow work dictates the skills of a legal assistant, paralegal, junior associate, senior associate or a lateral partner.

Though you may be inordinately capable of answering these questions by yourself, don’t move forward without consulting the weighed-down timekeepers you hope to help and the data you studied to get to this point. You’ll be surprised at how subjective and varied your answers will be. On the data side, how much billable fees will be available if your affected timekeepers meet production goals rather than exceeding them?


Now project production in line with historical data. Calculate the combined collection realization rate of timekeepers currently doing this work. That is the amount the group billed over the course of 12 months divided by what clients have paid during the same time period for that work. If the new help will support specific clients of your practice, remember to account for any discount agreements with those clients.

Lateral attorneys offer a minefield all their own. Particularly, if the lateral is bringing clients, request a list of clients they anticipate bringing, with corresponding revenue over the preceding 12, 24 and 36 months. When you have the list, cut the revenue figures in half in order to plan production for budgeting purposes. This devaluation may seem extreme but, in some cases, it may still not be conservative enough: It is much more difficult to get rid of an underperforming attorney than it is to hire one.

Make the call on a projected hourly billing rate for the new position based on this revenue input, similarly situated timekeepers in your practice and what the market dictates. Since it may feel arbitrary, plan to solicit early client feedback on matters on which the new timekeeper performs in order to quickly gauge perceived value or lack thereof.

Finally, calculate the anticipated revenue over the course of the next 12 months. If the total revenue isn’t enough for a timekeeper on a full-time basis, consider part-time or contract staffing options.

Minus Costs

Since you’ve computed the revenue of the position, you need to now project the costs of the new position, which—at the very least—should include compensation, benefits and payroll taxes. Decide whether the position is hourly, salaried, paid on a percentage of billings or a full equity partner, with all the financial considerations that means for your practice. Consult your state and local bar association resources for lawyer compensation, staffing firm reports and the Association of Legal Administrators for staff encapsulated in their annual Compensation and Benefits Survey. Take care to properly classify part time, and therefore nonpayroll, employees by consulting your employment lawyer. Contemplate whether your practice awards full benefits immediately or if your plans have eligibility requirements.

You've Done the Math, Now Stick to It

By now you will have a strong handle on what the total compensation package should be. It’s at this point that we jump into a realm far more nuanced. In my next column, we’ll cover the hiring process as well as setting performance goals.

Even the most calculating attorney gets emotionally involved in a thorough hiring process with excellent candidates. Yes, there will be occasions where the numbers simply don’t work for you—or the candidate. You can spend a lot of time hand-wringing and spend a lot of money making the numbers match up. Inevitably those expenditures will be annuities that don’t run in your favor for the duration of the given employment relationship. When your ideal candidate’s cost doesn’t fit with your revenue projections, move to another qualified candidate without looking back. 

John D. Bowers is the chief operating officer at Patterson Intellectual Property Law, PC in Nashville, Tennessee. He also serves as executive director of the Tennessee Intellectual Property Law Association, is the treasurer of the Middle Tennessee Chapter of the Association of Legal Administrators and is a former editor-in-chief of Law Practice and continues to serve on its editorial board.