Associates Should Take Charge of Their Business Education

Published on: 
02/01/2013
Associate development requires planning by developing overall goals and specific strategies that prepare them for the partnership. The firm must be able to measure the growth of associates by specific standards of billable time, training, and client development effort, documented against near-term targets that are realistic. It can be as fundamental as identifying two or three desired outcomes for the associate within a given time period, defining the behaviors necessary to achieve those outcomes, then giving the associate the means to achieve results. And ongoing business education is fundamental to achieving those results.

Growth Plan

Associates who understand business competency can better assess the value they provide to their firms, and create new ways to provide more of it

Every law firm is a business, and a business that does not have a clear idea of its overall goals and specific strategies for its most important asset–the young lawyers who are the future of the firm–likely does not have much of a future. An excellent acronym, SMART, describes what's required for an effective plan to grow the business development capabilities of associates:

  • Specific: The issue is not more billable hours by associates, it's what kind of billable work and what it contributes to the firm.

  • Measurable: Without measuring the growth of associates by specific standards of training and client development effort, it is impossible know what they've done.

  • Achievable: Set near-term targets that are realistic.

  • Reasonable: Don't set associates up for failure with unreasonable income expectations or business development goals.

  • Timely: Give associates an adequate timeframe that still imparts a sense of urgency.

For any associate, the future depends on whether the individual himself or herself is committed to success, and whether their firm provides the means to succeed. Defining "success" in relative terms such as "more revenue" or "better marketing" sets a subjective standard that is difficult to discuss, let alone achieve.

Business Competency

Making this challenge harder is that most new associates are ill-equipped to handle the business realities of law firm life. They typically enter law school without business training, and law school curricula have little business focus (perpetuating the view that "trade-oriented" business training is "inappropriate"). CLE courses in management and client service are still not widely available. Associates thus lack business competency–understanding the operation of the firm as a business (budget, collections, profit, loss), the firm's billing structure, how each attorney determines firm profitability, and the importance of clients and their own businesses.

How many associates, even partners, would possess the business competency to calculate, or even understand, the traditional key measures of law firm performance: realization, utilization, leverage, and expenses? How many know, or understand, the firm's collection rate–or their own personal one? Until associates possess that kind of business competency, they are not truly qualified to do business development successfully and be owners of their firms.

It's not necessary that a lawyer hold an M.B.A. Except in unusual circumstances (as when a corporation wants a general counsel or deputy general counsel with a strong business background to participate in operations management), an advanced business degree really confers no unusual benefits or advantages to most lawyers. However, even beyond any state bar association resources for business training, the associate who is serious about it has plenty of resources to pursue. Here are four examples.

  • The Internet. Online resources include the comprehensive education programs found at the West Legal Education Center (www.westlegaledcenter.com), which compiles business and legal education programs of the Practicing Law Institute and many others. The studies and reports of the Altman Weil (www.altmanweil.com) and Hildebrandt (www.hildebrandt.com) consulting firms, as well as Bruce MacEwen's www.adamsmithesq.com blog on law firm economics, are excellent for self-education.

  • Business Schools. There are university programs that target lawyers for "executive MBA"-style courses. Both Northwestern University's Kellogg School of Management and the Wharton School of the University of Pennsylvania have developed business curricula in the past, in several instances for large firms in their home cities. Even picking up a basic business class or two at the local community college is a viable option.

  • Leadership Books. Creative approaches to businesslike thinking can be found in books like David Maister's Managing the Professional Service Firm or the prescriptions for business excellence in Good to Great by Jim Collins. See also www.lawbizstore.com for more suggestions.

  • Coaches. One-on-one coaching can help any attorney develop business competency and many coaches are available. For example, there are links to many coaching services and resources available at www.lawbizblog.com.

Personal Calculus

Associates who understand business competency can better assess the value they provide to their firms, and create new ways to provide more of it. They become cost-effective contributors to their firms, and value-added resources to their clients. These are the associates with the best chances of being tomorrow's partners.

Once an associate has the business training to view a legal career as a series of structured business and professional development targets, the dynamic changes. It's no longer a matter of associates guessing what the partners are telling them to do–it becomes a process of understanding what they ought to do. Lawyers who understand how to grow a career can better assess the value they provide, and better reflect it in their performance. Associates who are thus empowered should be able to demonstrate to partners what percentage their billings are of the firm's total, what their expense to the firm is and what their "profit" is to the firm. The result should determine an individual net profit value to the firm:

Billings - [Associate's Total Compensation + Direct and Indirect Expenses] = Net Profit.

Giving associates the education, capability and incentive to do this kind of arithmetic gives them a sense of control and ownership of their careers, and their contribution and importance to the firm.

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