Improving Practice Group Profitability – The Five Big Questions

Do all the practice groups in your firm make an adequate margin? If not, what is being done to address the deficiencies?

I’ve been involved in several projects which have looked at how to improve profitability. Here’s my proposed approach, including:

  • The five key questions to ask – strategic and operational are both important,
  • What I do to answer the questions – both hard data (typically spreadsheets from Accounts) and soft data (beliefs held by partners and their behaviours) are needed
  • The actions to take to improve profitability – usually a mixture of quick wins and deeper changes to matter management.

Question 1 – Are we doing the right kind of work for the right kind of clients?

The easiest way to address this question is to review the financial data on profitability by work type and by client.

The output from this analysis is a strategy clearly stating what types of work should be focused on and what types of client to target.

Question 2 – Are the partners selling the value of the work well?

One of the reasons that the work isn’t profitable might be because the partners lack some skills to sell the work well. For example, are they communicating the benefits to clients of your firm doing the work, or are they stating clearly the risks that are being mitigated? Both of these conversations increase the value of the work in the mind of the client.

To investigate this issue I would analyse the financial data, in particular looking at matter profitability by partner. I usually find some partners outperforming other partners, because of their selling approach. I would also meet partners to capture their approach and produce a good practice guide. I would also recommend offering partners a workshop on selling skills.

Question 3 – Are the partners pricing the work properly?

To investigate this question I would meet partners to establish their approach and attitude to pricing. I would also review client engagement letters.

The output from this review could include:

  • A pricing manual (this is how much this type of work has cost before for these kind of clients )
  • Brainstorm some creative pricing propositions – perhaps offering risk sharing
  • A workshop on how to price legal work. 

Question 4 – Are partners negotiating well on fees?

There are two critical stages for fee negotiating:

  • At the outset when the work is scoped initially and
  • During the matter, fees may need to be re-negotiated when the scope changes (eg review all leases rather than a sample etc)?

To answer this question I would meet partners to establish their approach and attitude to fee negotiating and re-negotiating. This would help diagnose if partners need more skills in fee negotiating. If they do I would deliver workshops, perhaps using exercises and role-play.

Question 5 – Are partners managing the work efficiently?

To investigate this question I would meet partners to establish their approach and attitude to managing matters:

  • What and when do they typically delegate, and to whom?
  • How is work briefed and supervised?
  • How much work has to be re-worked?
  • Are checklists and protocols adequate?
  • How is legal risk managed?

It will probably be useful to verify the position by arranging meetings with associates. Do they have ideas for making the delivery of legal service more efficient? They usually do!

The output from this phase of work could be an improved matter management toolkit for each practice area.


Such a programme is relatively quick to deliver and improved results can start to be seen in around 6 months. Not only would you increase profitability, but client service is also likely to be improved.

Another question – the biggest one – what if you don’t do any of this and your rivals do?

This entry was posted in Fee Negotiating, Managing Change, Strategy and tagged , , , , , , . Bookmark the permalink.

2 Responses to Improving Practice Group Profitability – The Five Big Questions

  1. Pingback: From Surviving to Thriving as a Practice Group Head | Tony Reiss

  2. Pingback: 17 Ways to Improve Fee Negotiations | Tony Reiss

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