Law Practice Management
‘Calculus of the Damned’: Layoffs Gurus Look at Quantity—and Quality—of Associate Hours
Posted May 7, 2009 3:47 PM CST
By Martha Neil
When deciding which associates to let go, law firm managers tend to look for those with the lowest billable hours tallies.
But quality counts as well as quantity, reports the American Lawyer. Feedback from partners hence can make a critical difference.
Under this "calculus of the damned," as Texas Lawyer headlines the story in a reprint, "every hour is not equal," explains the unidentified chairman of one law firm.
"Some people take 100 hours to do a job that someone else can do in 50," he says—"and the 50-hour guy may do a better job."
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Comments
B. McLeod
May 7, 2009 4:17 PM CST
The “50-hour guy” may well do the better job, but the way the billable-hour system works, the firm makes more money on the 100-hour version of the job. Hence, 100-hour guy is retained, and 50-hour guy gets laid off for being efficient.
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Reaperowlish
May 8, 2009 8:22 AM CST
Can’t agree with B. Mcleod any more, cuz given all the cases I saw, all these words are ironically and pathetically true.
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Gone Solo
May 8, 2009 9:16 AM CST
I had the best closing rate of our team of associates… discovery was efficient and thorough, often resulting in plaintiffs settling because of details I uncovered. When I thought we should pay, I pursued settlement instead of costly trials. My firm pushed me out because I was too efficient and they wanted to be able to work the cases more. My boss actually thanked me on my last day for losing a motion to dismiss!
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Flip Side
May 8, 2009 9:18 AM CST
You can’t generalize like that. Many insurance clients may not pay the full 100 hours anyhow - so 50 hour guymay actually bring in more money.
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JWSchreck
May 8, 2009 9:37 AM CST
It is a tough calculus to formulate and apply uniformly, given the disparate mix of cases that can exist across a firm. I have always looked to collected revenue as a better measure, as billables can be written down….also the ratio between the two is critical. If someone is collecting all they book as billable they are efficient and understand the client. Always important!
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bc yim
May 8, 2009 11:01 AM CST
The 50 hr guy goes on to bill another 50 hrs in other cases, so nothing is “lost”. He is more useful to the firm by being able to efficiently and effectively handle more cases over the same timeframe. He also gets the praise of the “client” (of all things) who is absolutely delighted to pay for 50 hrs on a 100hr job by another firm. I say keep the 50 hr guy, all day long.
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B. McLeod
May 8, 2009 11:47 AM CST
But what the firm will see is that the other cases, too, are being closed without exhausting their billing potential. And, since the firm does not have an infinite number of cases to milk, and every case closed by 50-hour guy is costing half the billings 100-hour guy would have generated (so that something is, indeed, “lost”), 50-hour guy is toast.
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I'm just sayin
May 8, 2009 12:26 PM CST
The 50-hour guy ought to be charging 2x the hourly rate of the 00 hour guy
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I'm just sayin
May 8, 2009 12:27 PM CST
I meant: “The 50-hour guy ought to be charging 2x the hourly rate of the 100-hour guy.”
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Tim
May 8, 2009 3:13 PM CST
#4 is right about insurance work. 50-hour guy will stay, and here’s why:
If someone can do it in 50, the 100-hour guy’s hours are not all going to the client. So, by the time the bill goes out, he’s a 75-hour guy. Meanwhile, the 50-hour guy has moved on to another case and billed another 50 hours. So the 100-hour guy nets 75 hours, the 50-hour guy gets 100.
And insurance firms deal in volume, so making sure every case is exhausted re: billing isn’t as important as making sure your insurance co. client likes you enough to send you one of the other 500 cases it’s getting tomorrow.
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Tim
May 8, 2009 3:14 PM CST
Of course, insurance firms also aren’t laying anyone off.
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NCLawyer
May 8, 2009 3:41 PM CST
Absolutely right Tim (#10 and 11). I work at an insurance defense firm, and right now we have more work than we know what to do with, much of it kicking the asses of big firm drones who are more concerned with churning the file than advancing the ball.
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B. McLeod
May 8, 2009 6:41 PM CST
Synthesis: At insurance defense firms (which aren’t laying off anyway), 50-hour guy would be fine, but at the firms that actually are laying off, he’s toast.
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