After seeing a recent seminar on legal industry stats, one stat jumped out at me. The stat was interesting not because it was new, but instead since it just keeps slowly trending in the same direction … down. The Stat: Productivity.
Productivity is essentially the number of hours billed per day per attorney. The ‘per day’ approach is used to filter out months with more days and months with more holidays. The number is telling of how busy lawyers are, where busy means billing time to clients. On one level you might say – so what? Everyone knows the market is not doing well.
Well … in the same presentation it was noted that the market for legal services is flat or slightly up. Which is another way of saying it is not going down.
Q: So if there is the same amount of work out there, why is productivity going down?Recruiting has always been highly focused on keeping the talent pipeline full. The basic idea is that partners don’t leap fully formed into the world. Instead they arrive as associates who are stuffed in to the bottom of the talent pipe. Ten years later they emerge from the top of the pipe as partners. Only not all of them survived the entire length of the pipe. Consider the pipe more like a French drain pipe with openings here and there. Some, well actually a majority, of those that go in to the pipe are pushed out through these openings.
A: Firms have too many lawyers.
Q: And why do firms have too many lawyers?
A: They keep hiring more of them. Q: And why do firms keep doing this?
A: Because that’s the way they’ve always done it.
Which ones get pushed out? There is a very simple metric for selecting those that “fall” out. It’s called the 1900 Rule. When your hours drop below 1900, you start to feel a push towards they edge of the pipe. Too many years under 1900 and you find yourself outside the pipe. The only real potential for the system failing is a lack of associates going in to the pipe. The system is truly elegant in its simplicity.
But the system was built during a different time when talent was scare and hours were plentiful.
So why are so many firms still approaching recruiting this way when those two factors are now completely the opposite? With talent plentiful and hours scare you would think recruiting practices would have changed substantially? You would until you considered that partners are partners having survived the 1900 Pipe. So for them - this system obviously works perfectly.
It may be time to call a plumber.