I am the managing partner of a four attorney (all partners) estate planning firm in Tulsa, Oklahoma. We are all working hard but I do not believe that we are making the money that we should be. Last year our fee collections were $600,000 and our net income $250,000 which was the total amount that was available for partner compensation. Thus, we each made $62,500.00. Each of us have been practicing for over 20 years and I believe this is totally unacceptable. We appear to be busy and have plenty of work. I would appreciate your thoughts.
I agree that the firm should be doing much better. Regardless of practice area (unless you are an insurance defense firm) and where you are located I believe you should be averaging $300,000+ fee collections per lawyer. You are averaging $150,000 per lawyer. You expenses of $350,000 ($67,500 per lawyer) is actually low and not the problem. You need to dig into the numbers and look into why the revenue numbers are not higher. Usually the culprits are lack of business, inadequate billing rate (or effective rate for flat fee matters), not putting in the hours, or poor time management and time keeping habits. Each attorney should strive for 70% of worked time to be billable (client production) time. Lexis has published a couple of studies on billable hours that you might find useful - Billable Hours Survey Report, Non-Billable Hours Survey Report and Where Do all the Hours Go
I find that many estate planning firms that do much of their work on a flat fee basis often are not realizing effective rates anywhere near their target time billing rates.
Look into the numbers and determine the culprit or culprits and then develop a strategy for dealing with each one – marketing to improving work ethic and time management and time keeping habits.
John W. Olmstead, MBA, Ph.D, CMC