Posted by ALPMA, A Survival Guide for Legal Practice Managers on March 17, 2015

After working with legal firms for 25 years, as a consultant and accountant, I focus on one simple formula to consistently and effectively measure a firm’s efficiency – the productivity ratio.

The ratio measures the number of support staff to fee earners. For example a 1:1 ratio will have 1 staff member supporting 1 fee earner.

The legal profession, probably more than any other professional body, has the opportunity for dramatic improvements to their productivity. It is still common to find a 1:1 ratio in many law firms. But with minimal investment in modern office systems, we have seen improvements of the ratio to 1:4 and even as high as 1:8 for some high-tech firms.

Ask yourself if you recognise some of the traits below. You could substantially improve your productivity ratio by leveraging basic systems technology – allowing you to reduce salary expenses or grow without employing more support staff.

Document Management

How does your firm store its documents? We repeatedly meet firms that say, “Oh, they’re on the ‘W’ drive on the server”. We even see firms who have more than one drive. And in some cases those who store documents on local workstations.

The loss of productivity around this situation is huge. Time spent trying to locate documents for edits or reprinting alone is the biggest waste of time in any legal firm.

If you still manage your firm’s documents and correspondence in this way, then the best thing you can do in 2015 is to invest in a document management solution which allows for:

  • Clear structure
  • File/Matter number identification
  • Key Word and content searching
  • Version control.

Document Assembly

The key to productivity in any legal firm is the automatic assembly of documents. If your secretarial staff are overwriting old files with new names or addresses (don’t laugh, this is still common practice), then you are:

  • Risking document errors
  • Not maximising support staff productivity
  • Denying your firm basic quality assurance in presentation.

Consider this, how many letters did you send last year? Even the most basic of documents contain a number of variables that can be automatically pre-filled – Date, Reference Number, Name, Address, Re: and signature. This will save your secretary approximately 150 keystrokes per document. More importantly, it ensures accurate and standard representation across your documents.

Precedent Management

Your firm’s intellectual property and brand is an asset that requires constant time and effort – and rightly so, it’s how you differentiate your practice.

It’s not uncommon, when working with a firm to consolidate precedent sets, to find four or five template variations. Often, the content is the same, but fonts, style and numbering differ from partner to partner. If you are as serious about your brand as I am, then your firm can only afford a single and well-managed set of precedents.

Excluding forms, all your precedents sets should follow your branding and not just dropped down from a precedent provider. Ensure that:

  • Precedents are maintained by a minimum and consistent number of staff
  • Only one set exists
  • The precedents are easily accessible to all staff

Your firm’s ratio

The productivity ratio is the clearest indicator of a firm’s efficiency – so how does your firm look?
Traditional practice management systems can create bottlenecks preventing you from moving your firm forward. Instead of focusing on the management and development of your business, practice managers are often tied down to administering accounting functionality.

If your firm does not engage with a software solution that streamlines the key functions above, then you are, without doubt, stuck with a low ratio. As firm’s evolve, you’ll have to compete with firms whose ratio is as high as 1:4 and above.

In a typical 4-5 partner firm with 5 employed solicitors and 10 support staff, an investment of $40,000 to $50,000 in a good software solution (including data migration and training) will easily return a ratio of 1:2 with an annual saving of 5 support staff – roughly $300,000 every year.

Now that is profit growth which is a no brainer.