A good law firm is a group of individuals working together, collaborating and their clients to provide effective legal services. They do this to achieve various objectives, including helping clients solve business issues. And while these objectives are essential, the actual value of the firm’s law group is not limited to profit-making opportunities. It is also a source of public policy and mission-driven work.
Public policy
Public policy is the set of guidelines and principles that govern society. It includes law firm near me, regulations, court decisions, and other actions. The role of public policy is to solve real-world problems.
While governmental entities such as executive agencies, legislatures, courts, and other organizations make public policy, individuals and groups often attempt to shape it. Law and other government areas significantly impact the lives of citizens, especially the vulnerable.
Laws influence the types of services and resources provided and how the government will address issues such as treating survivors of violence against women. Laws also determine the amount of funding allocated to research grants.
Changing public opinion affects the way that governmental institutions deal with public policy. Political climate changes can alter politicians’ positions, and interest groups often attempt to influence policy through the political process.
Profits
Despite a few positive surprises, it’s no secret that profits per lawyer have declined. Law firms are weathering short-term losses in Q3, but their long-term outlook is not promising.
Many measures can be considered in the quest to improve profitability. Among them are:
- Process improvement.
- A more sophisticated approach to pricing.
- More sophisticated techniques to client penetration and retention.
But how does a law firm implement these strategies to maximize its bottom line?
The most common approach is to look at total cash receipts over the fiscal year. These figures are subtracted from operating costs and then distributed to equity partners. In most cases, this is a purely academic exercise. However, it does highlight a critical distinction between profit and revenue.
Using this measure, one law firm would have made $460,000 more in profits over the past two years than the previous year. Yet, a better approach would be to take a multi-stage process to profit measurement.
Mission-driven firms
While mission-driven companies may be the latest and greatest in the corporate sphere, others come to mind. They have their list of shortcomings. For example, they are only sometimes on their toes regarding customer service and innovation. They do make a difference, and if they can do it right, they are the envy of their peers.
The actual mission-driven company of note makes the most of a balanced employee and customer engagement approach. This includes a robust employee benefits package that keeps costs low and employees happy. Furthermore, they are willing to take risks with their employees and customers. As a result, their product innovation and quality are a winning combination. They also have a solid foundation of seasoned leaders in all areas, including customer service and marketing. On top of all that, the company has an effective internal communications program to keep employees on the same page as their customers.
Equity partners vs. non-equity partners
Equity partners vs. non-equity partners of the law group are two different positions in the legal world. Equity partners enjoy a higher income and are more likely to lead teams. In addition, they have more voice in the firm’s direction and can receive goodwill-based retirement benefits. However, there are a few issues to consider when choosing between these two positions.
Non-equity partners are more like employees who have the title of partner. Although they are not compensated the same as equity partners, they have the honor of being called partners.
Unlike an equity partner, a non-equity partner does not have a substantial capital contribution. Non-equity partners typically receive a salary that is fixed. In some cases, the compensation can be reduced over several years.
Despite the rising popularity of the non-equity partner model, many firms question its effectiveness. As a result, some firms are moving to a hybrid structure where part of the compensation is based on the firm’s equity value. Others have delegated most decisions to a small committee or the firm’s chair.
