Is Your Firm Ready for Part-Time Partnerships?
JOEL A. HERMAN, CPA
With the turmoil over the past year and a half, many law firms have needed to be more flexible than ever before to survive and succeed. Flexibility requires options, and one option may be part-time partnerships. Historically, for example, some part-time employees may have earned a partner-level position at your firm based on their skill sets and performance, but they are unable or unwilling to commit to a traditional, full-time ownership position for fear of the time commitment. In other cases, a full-time partner nearing retirement may want to dial down his or her involvement in the firm’s operations. A part-time partnership option provides certain key contributors with the flexibility they need to remain with a firm and produce top-notch client work, while still achieving their desired work-life balance.
Set the tone
If your firm is considering — or has already implemented — a part-time partnership track, do not just “set it and forget it.” The firm needs to make a concerted effort to ensure its success. This starts with the tone at the top, with management’s full buy-in to the program. Reducing a partner’s workload for a specific temporary reason (such as for medical or family reasons) differs greatly from the type of permanent cultural and policy change needed for part-time partners. The key lies in your firm’s culture and support. Do not just pay lip service to a flexible work environment. The firm must treat part-time partners the same as full-time attorneys in actions and policies.
Your firm should, for example, assign part-time partners to manage key client accounts, urge them to assume active roles in firm committees and encourage them to remain active in professional associations. Plan routine partner meetings within their schedule, as well as firm and client events, to facilitate their attendance and participation.
To help ease the process, consider creating a position to oversee alternative partnership tracks and act as a liaison between part-time partners and managers. Doing so can give part-timers a forum to discuss workload balancing and other concerns.
Create workable guidelines
It is important to understand that client demands will put pressure on both your firm and its part-time partners. Clients will need assistance during a part-time lawyer’s off time. When first designing a part-time partnership track, it is important to create guidelines for client responsiveness and provide part-time partners with mechanisms and tools, such as able team members and backup partners, for emergency situations.
To make your part-time partnership program a success, management must fully embrace the concept and formalize the terms and responsibilities. Your firm’s policy, for example, should spell out a partner’s minimum work hours and his or her schedule. If you are unsure about how the arrangement will work, include a probationary period that allows either the partner or your firm to terminate the arrangement. Setting goals is important, too. Budget the number of hours part-time partners need to bill each year, as well as the amount of time they are expected to spend, for example, on marketing, firm administration, outside professional organizations and legal education.
Compensating part-time partners should be no more difficult than compensating full-timers. Evaluate their performance and link their continued employment, compensation and rewards to how well they achieve their stated goals.
Part-time partnerships are not the only arrangement that can benefit law firms. To ensure that a firm is providing its lawyers with the support and motivation they need to produce their best work, the firm needs to consider embracing broader schedule flexibility, including:
- Flextime (altering starting and ending times of the workday);
- Compressed work weeks (working the traditional number of hours in less than five days);
- Telecommuting and remote work;
- Seasonal employment; and
Your human resources (HR) department can be an invaluable resource to make these options a reality. If your firm does not have an in-house HR department, consider outsourcing to an HR organization, hiring a freelance HR specialist or even a law firm consultant to create and monitor a program that benefits both your partners and the firm.
Reap the rewards
Now may be the right time to create a part-time partnership track at your firm. The part-time option can boost your attorneys’ morale, leading to higher productivity and greater client satisfaction.
Signing Up for Law Firm Subscription Plans: Why It May Be Time To Reconsider Your Pricing Model
ROBERT G. SWENSON, CPA, MST
Hourly billing has long been the industry standard for law firms of all sizes. However, the COVID-19 pandemic has prompted many firms to innovate in ways they probably would not have otherwise. Some resourceful firms are adopting a pricing model that has proven popular in a range of industries — subscription services.
What is subscription billing?
Subscription plans generally work as you would expect: Clients agree to pay a monthly or annual fee in exchange for a menu of services. The menu can be as generous or narrow as you prefer, from unlimited legal services to business planning assistance to simple document review.
Subscription billing is not new. For years, the largest clients of the largest firms have had similar arrangements, though not labeled as such. What is more recent is offering these arrangements to smaller clients. These clients may have ongoing legal needs or just one-off questions, but they fear the hassle and expected high expense of hiring a law firm.
And, they are likely already using subscription plans in other parts of their lives, from gym memberships to Netflix, so a model that would have seemed odd to them a decade ago may seem much less so today. Many firms have been using subscription services such as Westlaw and FindLaw for years. Done right, subscription plans offer numerous benefits to both you and your clients.
What are the benefits?
Predictability is probably the biggest selling point. Clients wary of quickly mounting legal bills have assurance that they will not incur unexpected costs that blow up their budgets. This comfort level tends to lead to greater satisfaction and less client churn.
Attorneys also benefit from the predictability, especially small firms and solo practitioners who are particularly vulnerable to unpaid invoices and fluctuating revenue. Subscription plans provide some financial peace of mind because you can count on revenue even during slow periods — and can avoid unpleasant collections work. They also reward efficiency in a way hourly billing cannot. After all, there are only so many hours in a day.
Subscription plans are ideal for relationship building, too. You get to know individual clients and their needs, becoming a partner or teammate, rather than simply a vendor. Closer relationships facilitate early intervention that can preempt — or at least mitigate — damages when problems arise.
Another potential perk is that you do not have to track your time for billing purposes. Nonetheless, it still may be advisable to track time to some extent to ensure that you are achieving the necessary profit margins and adjust as needed.
Are there risks?
It is not all upside. Subscription plan work tends to be “front-loaded” with most of the work commencing shortly after sign-up. If you do not time your onboarding of new subscribers well, you could be buried by an avalanche of competing demands.
And, you also have the risk of overutilization by the subscribers. You would prefer clients who approach the arrangement more like a gym membership — where members continue to pay despite seldom working out — than Netflix subscribers who regularly binge. It is easy to become overwhelmed if a high percentage of your subscribers are “binge users.”
On the other hand, subscribers who rarely end up using the service are unlikely to continue their subscriptions. You will need to experiment to find the right balance.
What are the next steps?
If you decide to test the waters, scalability is critical. For example, you will need to determine how many subscriber clients you can handle and which services are included in a subscription. Do not hesitate to make tweaks as you go along. You also must have the technological capabilities to handle potentially hundreds of subscribers or more.
Craft some rules for the program in advance. For example, some firms require clients to sign up for a minimum period, say six months, to reduce the risks associated with the frontloading of work.
Many clients grouse about hourly billing, but they also resist change. If you are going to propose a subscription pricing model, be ready to counter their reluctance with clear information on how they will benefit.
SIDEBAR: A niche approach can pay off
Some law firms and solo attorneys have found that a subscription model can prove especially fruitful when targeted at specific niche markets with ongoing needs. For example, you might direct your subscription plans at new businesses, shepherding them through entity choice, business launch and brand development.
When you concentrate on a niche, your marketing efforts can be more cost-efficient. A niche approach saves much of the time and money associated with the more scattershot approach that is typical when attorneys appeal to a broad range of clients. Your marketing materials can incorporate industry-specific lingo and reference problems common to the niche. This helps clients feel confident that the subscription plan is tailored to their needs.
A niche approach also makes it easier to build long-lasting relationships — which can translate to lower attrition and, in turn, marketing costs. After all, it is usually less expensive to expand business with existing clients than to land new clients.