As the chairman of Levenfeld Pearlstein PC in Chicago, Bryan Schwartz has been managing firms for 16 years. The firm's net income per partner has more than doubled over last 8 years "and we don’t bill more time than anyone else," he said.
Speaking today at the Chicago Bar Association's Law Practice Management & Technology Conference, he said the secrets to higher profits are:
- Hire the best staff and lawyers, who will attract the best clients and most interesting work.
- Specialize and charge higher rates. "Who will get more money on an environmental matter -– someone who dabbles in it or someone who eats, drinks and sleeps environmental law?"
- Don't focus on revenue or origination. Instead, determine your costs and focus on each lawyer's profitability. (It's no good for a lawyer to bring in $1.5 million but cost the firm $2 million.)
- Don't focus on cutting costs, focus on providing resources for lawyers to make profits.
- Have a business plan, and say "no" to new clients that don't fit the firm strategy.
- ...and most importantly, firm leaders must create a culture that energizes the lawyers and gives them a reason to stay with the firm. "It makes a big difference in profitability. An inspired group of people can make a lot more money than people who are trying to bill a lot of hours."
Following these practices his firm grew from 26 to 80 lawyers in eight years. "Most law firms’ plan to increase profitability is to bill more time -– it’s ridiculous. It’s a lose-lose end game. You have to work hard, but more it's important to work smarter," he said.
Culture is key. "Our lawyers are the most competitive people, but it’s a culture where everybody helps the other person, they don't compete against each other," he said.