When originally asked to attend a “Solicitors Benchmarking Event” I wasn’t certain what to expect. Several questions came to mind:
- Would gym kit be required?
- Would this be a room of legally qualified bench pressers?
- Would I be looking for the shortest solicitor in the room to stand beside to mark?
I made my way down to our Skelmersdale office for the event –with my gym kit just in case!
However, on entering the room there were no weight machines, no sports hall and no water coolers in sight. Although fuel, by way of nibbles and drinks, was kindly made available in the foyer courtesy of our co-hosts, Armstrong Watson.
Purpose of the day
The purpose of the day was to compare the processes, performance, fees chargeable and best practices of a number of law firms across the UK. The participants were spilt into groups to debate sector averages in a number of areas. The groups debated the average: fee income per equity partner, fee income per fee earner, chargeable hours, charge out rates, staffing costs, profitability costs, net profit percentage, cash flow and financing issues.
Each group provided feedback to all participants at the end of the session with their views on what the sector averages would be. Thereafter Benchmarking statistics were made available to determine how accurate each group’s conclusions had been.
Areas of debate
The participants were solicitors from across the UK from varying practice areas. The different experience levels and areas of practice throughout the room created for some very interesting debate.
It was evident that different practice areas required different business models. For example those firms operating in the high volume personal injury sector required larger numbers of paralegals than those firms operating in high end corporate work. Therefore staffing costs varied greatly.
When discussing costs, the groups’ experience had been that those firms carrying out conveyancing transactions were often quoted higher fees for Professional Indemnity Insurance. This in itself didn’t come as a shock in light of a recent event I attended in which the Scottish Legal Complaints Commission presented at, confirming that conveyancing work was one of the highest areas in which complaints were received.
Staffing costs and rents and rates also differed greatly among the room. The firms with several smaller offices incurred larger costs by employing a receptionist front of house, together with secretarial and admin staff in each office. Firms who operated from one larger premises had the ability to consolidate, therefore avoiding duplication of staff and ultimately achieving cost savings. Those firms outsourcing telephone calls, typing and cashiering/accounts facilities saving even further on staffing costs.
Not surprisingly charge out rates were a big issue for debate among the group. Although the views on the average charge out rate per hour didn’t differ too much across the room some discussion ensued as to whether the time spent on a file by a trainee solicitor should even be charged to the client.
The group also discussed the average annual chargeable hours per fee earner. Some in the room were shocked to learn that on average smaller firms had recorded more annual chargeable hours per fee earner than larger firms.
The Benchmarking seminar was a great opportunity for solicitors to meet with their peers and discuss everyday issues facing law firms across the UK. The generic approach to the day allowed for open and honest opinions to be circulated about firms in general. It offered a learning experience as to how the average firm in the UK is operating and performing . It provided fee earners and partners guidance as to how efficiently their own firms were performing in comparison with the UK average.
Although junior lawyers are traditionally not privy to strategic decisions about the firm’s financials, the seminar made clear the advantages for even junior fee earners to have more of an understanding as to how the firm operates and the associated costs in running the firm. My observation being that some level of in house training to junior lawyers would be beneficial to allow for a broader view on tackling client work in an efficient way.
Although no weight training was involved the sweat bands did come in handy when the group discussed the annual Professional Indemnity fees!
Senior Business Development Associate