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  November 2007  
 

Welcome to The One Minute Manager. Our goal is to provide you with quick tips that will enhance the success of your practice. Within 60 seconds you will gain an idea that will increase your profitability or simply ease the burden of a difficult management issue. We hope you will find this a valuable resource.

The One Minute Manager . . . . .

Miguel R. Rivera, Sr. may have shot the bullet memo that will be heard throughout the legal world. Miguel is the Associate General Counsel of Wal*Mart and sent a memo to "Relationship Partners" on November 1, 2007 regarding a moratorium on across-the-board law firm rate increases.

His issue is that law firms are dramatically increasing junior associate lawyer rates in order to recover their sizable increases in salaries. With this large rate increase at the benchmark first year associate level, the laddering effect has rippled throughout remaining billing rate structure. The result is greatly increased rates without adding substantial value.

Undoubtedly the pushback from other General Counsel, as well as most other law firm clients, will impact the distributable income of partners. With clients resisting rate increases and talent wars pushing up salaries, the only flexible point of a finite revenue pool is the partner pie.

The split of a diminishing pie, however, will become increasingly difficult since the talent war is also being waged at the partner level. Significant rainmakers are being continually raided by aggressive firms. Junior partners that are rising stars need to be protected to grow the firm and succeed retiring baby boomers. There is little room in the partner ranks for the "coasters" of the past with modest client bases and average work effort or talent.

The culling of partners and the higher threshold to achieve partner status is the new reality of law firms. Those firms that accept new partners on a tenure basis only; and do not deal with the "coaster partners" will face challenges. Sadly, this is the case for most law firms. They are evidenced by marginal incomes and rancorous partner meetings. Well managed firms are vibrant with superior income to attract top talent. Effective management is the determining factor.


Robert Hardie, Managing Director
Management Counsel Group

phone: (416) 402-0759