Getting the Most from Survey Participation

Helpful hints on these key steps follow.

Identifying and Prioritizing Issues

Often a survey uncovers a broad array of differences from comparable firms. Management is then faced with the daunting task of deciding where to begin. First, as mentioned in part two of this series, it's essential to know your peer groups in order to fully understand the data. By adding your personal knowledge of the marketplace and your firm, you can better interpret the survey findings. Law firms are not nearly as homogeneous as they used to be, and significant variances may be encountered due to the uniqueness of a firm's structure and practice. Due to a variety of strategic reasons, for example, you may be operating your firm on an efficient basis even though your profitability results fall below the average. Once you identify which survey findings actually do signify problems, focus your action plans on the three or four areas of greatest concern. The selected areas should be those that are most important to improving the financial performance of the firm, and the efforts planned should be achievable. The familiar “RULES” approach can help you attain this needed focus. Opportunities for improving financial performance are conveniently summarized by the acronym RULES, which represents the economic drivers of the firm: Revenue (rates, realization) Utilization (hours) Leverage Expenses Speed (billing and collections) Most would agree that the greatest potential for bottom-line improvement is on the revenue side. Indeed, the impact of improvements from any of the top three factors far outweighs the impact of improvements from the last two. Interestingly, the last two are far more controllable than the top three – which makes it tempting to focus on them. Given this inverse relationship coupled with the finite resources and time that most firms have to dedicate to improvement initiatives, the need to properly prioritize action steps is clear. From your survey results, rank your firm's significant areas of potential improvement according to the RULES structure. Then estimate the degree of change that is realistically achievable for each, including the potential impact to the bottom line, where measurable. Finally, pick three or four items that will generate the most positive results for the firm, and get to work.

Communicating Survey Results

There are many ways to communicate survey results, ranging from distribution of the actual survey reports to all partners, to summarizing the results and key issues in a memo to all partners. Whichever method you select, effectively communicating the issues at hand is vital for gaining approval to implement appropriate courses of action. The following scenario illustrates this style of communication. A survey persuades you that your firm is experiencing lower revenue per lawyer than your peer group. You might depict the problem in a graph like Exhibit A. Based on your analysis of the survey data, participants' demographics and other factors, you conclude that this revenue problem is attributable to the following factors:

' Poor utilization (hours).

' Over-investment in accounts receivable and work-in-progress.

' Low realization.

' Low billing rates.

You then use other charts to illustrate and support your analysis of the problem. Among others factors, these charts would likely address average billable hours (by type of fee earner), months or days invested in accounts receivable, and work-in-progress or realization by practice areas. Next, you would review possible solutions to improving revenue per lawyer. Considerations might include a review of productivity by practice area or region, and the need to implement better policies and procedures. You might recommend specific policy or procedural changes to refine client intake, improve how partners and the overall firm manage client files and budgets, enhance client communication on billing issues, and the like. Drive your points home by illustrating how these improvements will benefit the partners in terms of higher profits. For example: “Reducing the number of months invested in accounts receivable and work-in-progress would result in increasing partner net income by $500,000.” “If we increase the firm's realization rate by 2%, partner income will increase by $275,000.” Next, calculate the increase on a per-partner basis to answer the “what's in it for me” question. Exhibit B provides an illustration on increasing partner profits by improving realization. A survey may turn up more than one significant problem, of course. Exhibit C illustrates a comparison of expenditures. In this example, Our Firm's high investment in office and occupancy costs resulted in the firm having too few dollars to invest in more strategic areas such as technology and marketing.

Other Considerations

When presenting survey information, be sure to include multiple-year trends. Such trends can demonstrate growing problems, but they can as well illustrate progress, eg, expense reductions, decreasing turnover or improving realization. Trends are compelling and can influence behavior. The CEO of a major corporation was fond of saying, “Trends are our friends.” If appropriate, consider including subtle SSP (subtle self-promotion) messages and examples. For instance, if you implemented plans to reduce turnover or operating expenses, survey results can help validate your efforts. Alternatively, if your plans failed miserably, you can demonstrate your intellectual honesty by admitting that the survey results vindicate your critics!

Conclusion

Law firm surveys can be highly valuable management and financial tools – given appropriate planning and follow-through. The keys to success are making certain the firm is ready to accept and use the results in a meaningful and productive manner, and that appropriate forethought is given to ensure the results are used effectively.

The Association of Legal Administrators sponsored a panel discussion entitled “Law Firm Surveys – The Good, The Bad, and The Ugly” at their 2003 annual convention in San Diego. The panel included Don Williams (Chief Operating Officer – Schwabe Williamson & Wyatt, P.C.), Pete Peterson (former Legal Administrator for several Midwest law firms and current law firm consultant with the Law Firm Business Institute), and Bill Bachman (Executive Director – Bingham McCutchen LLP). Mike Short (Director – Hildebrandt International) moderated the discussion.

In an insightful Dilbert” cartoon, the boss is reviewing the results from a recent survey with two employees. The survey results being less than desirable, the boss states, “Managers' bonuses are linked to these results. You can be sure we'll make big changes … to the survey. ” Surveys can be a strategic asset and viable financial tool when assessing certain aspects of your firm. Surveys can also be useful in evaluating merger opportunities. Perhaps the best use for survey information is to identify needed improvements and illustrate the benefits of change. Improperly utilized, however, survey data can cause more harm than good. Survey results taken out of context can create unrealistic expectations among partners, foster unhealthy and divisive comparisons between practices or offices, promote unachievable strategic objectives, and generate broad-based anxiety and apprehension. As mentioned in Part two, most well managed firms find legal surveys a great help in establishing targets or benchmarks. These firms share a common approach to using survey results:

' They analyze and compare survey results to discern actual issues for the firm, which they then carefully prioritize.

' They then communicate to their partners a compelling need for change – and an action plan.

Helpful hints on these key steps follow.

Identifying and Prioritizing Issues

Often a survey uncovers a broad array of differences from comparable firms. Management is then faced with the daunting task of deciding where to begin. First, as mentioned in part two of this series, it's essential to know your peer groups in order to fully understand the data. By adding your personal knowledge of the marketplace and your firm, you can better interpret the survey findings. Law firms are not nearly as homogeneous as they used to be, and significant variances may be encountered due to the uniqueness of a firm's structure and practice. Due to a variety of strategic reasons, for example, you may be operating your firm on an efficient basis even though your profitability results fall below the average. Once you identify which survey findings actually do signify problems, focus your action plans on the three or four areas of greatest concern. The selected areas should be those that are most important to improving the financial performance of the firm, and the efforts planned should be achievable. The familiar “RULES” approach can help you attain this needed focus. Opportunities for improving financial performance are conveniently summarized by the acronym RULES, which represents the economic drivers of the firm: Revenue (rates, realization) Utilization (hours) Leverage Expenses Speed (billing and collections) Most would agree that the greatest potential for bottom-line improvement is on the revenue side. Indeed, the impact of improvements from any of the top three factors far outweighs the impact of improvements from the last two. Interestingly, the last two are far more controllable than the top three – which makes it tempting to focus on them. Given this inverse relationship coupled with the finite resources and time that most firms have to dedicate to improvement initiatives, the need to properly prioritize action steps is clear. From your survey results, rank your firm's significant areas of potential improvement according to the RULES structure. Then estimate the degree of change that is realistically achievable for each, including the potential impact to the bottom line, where measurable. Finally, pick three or four items that will generate the most positive results for the firm, and get to work.

Communicating Survey Results

There are many ways to communicate survey results, ranging from distribution of the actual survey reports to all partners, to summarizing the results and key issues in a memo to all partners. Whichever method you select, effectively communicating the issues at hand is vital for gaining approval to implement appropriate courses of action. The following scenario illustrates this style of communication. A survey persuades you that your firm is experiencing lower revenue per lawyer than your peer group. You might depict the problem in a graph like Exhibit A. Based on your analysis of the survey data, participants' demographics and other factors, you conclude that this revenue problem is attributable to the following factors:

' Poor utilization (hours).

' Over-investment in accounts receivable and work-in-progress.

' Low realization.

' Low billing rates.

You then use other charts to illustrate and support your analysis of the problem. Among others factors, these charts would likely address average billable hours (by type of fee earner), months or days invested in accounts receivable, and work-in-progress or realization by practice areas. Next, you would review possible solutions to improving revenue per lawyer. Considerations might include a review of productivity by practice area or region, and the need to implement better policies and procedures. You might recommend specific policy or procedural changes to refine client intake, improve how partners and the overall firm manage client files and budgets, enhance client communication on billing issues, and the like. Drive your points home by illustrating how these improvements will benefit the partners in terms of higher profits. For example: “Reducing the number of months invested in accounts receivable and work-in-progress would result in increasing partner net income by $500,000.” “If we increase the firm's realization rate by 2%, partner income will increase by $275,000.” Next, calculate the increase on a per-partner basis to answer the “what's in it for me” question. Exhibit B provides an illustration on increasing partner profits by improving realization. A survey may turn up more than one significant problem, of course. Exhibit C illustrates a comparison of expenditures. In this example, Our Firm's high investment in office and occupancy costs resulted in the firm having too few dollars to invest in more strategic areas such as technology and marketing.

Other Considerations

When presenting survey information, be sure to include multiple-year trends. Such trends can demonstrate growing problems, but they can as well illustrate progress, eg, expense reductions, decreasing turnover or improving realization. Trends are compelling and can influence behavior. The CEO of a major corporation was fond of saying, “Trends are our friends.” If appropriate, consider including subtle SSP (subtle self-promotion) messages and examples. For instance, if you implemented plans to reduce turnover or operating expenses, survey results can help validate your efforts. Alternatively, if your plans failed miserably, you can demonstrate your intellectual honesty by admitting that the survey results vindicate your critics!

Conclusion

Law firm surveys can be highly valuable management and financial tools – given appropriate planning and follow-through. The keys to success are making certain the firm is ready to accept and use the results in a meaningful and productive manner, and that appropriate forethought is given to ensure the results are used effectively.

The Association of Legal Administrators sponsored a panel discussion entitled “Law Firm Surveys – The Good, The Bad, and The Ugly” at their 2003 annual convention in San Diego. The panel included Don Williams (Chief Operating Officer – Schwabe Williamson & Wyatt, P.C.), Pete Peterson (former Legal Administrator for several Midwest law firms and current law firm consultant with the Law Firm Business Institute), and Bill Bachman (Executive Director – Bingham McCutchen LLP). Mike Short (Director – Hildebrandt International) moderated the discussion.