How to Improve Practice Group Profitability

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

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

  • the key questions to ask – strategic and operational are both important,
  • what I do to answer the questions – both hard data (typically spreadsheet 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.

Issues to Address and Actions to Take

  1. Are partners doing the right kind of work for the right kind of clients? 

To answer this question, you will need to review the financial data on profitability by work type and by client. This should help you produce a strategy for focusing on selling profitable work by work type and client type.

  1. Are the partners selling the value of the work well (eg benefits to clients, risks mitigated etc)?

Some partners will be better than others at selling the same type of work. It will help to analyse your financial data on profitability by partner and talk to partners to establish their approach and attitude to selling.

You can then produce best practice guides and offer workshops on how to sell value.

  1. Are the partners pricing the work properly?

Meetings with partners can help to establish their approach and attitude to pricing. There will be differences! It might help to review engagement letters to highlight any key differences.

This can help you produce a pricing manual which shows how much this work has cost before. Some firms have found value from brainstorming some creative pricing propositions. Client want certainty and risk-sharing. You could also design workshops on how to price legal work

  1. Are partners negotiating well at the outset and re-negotiating when the scope changes (eg clients asking you to review all leases rather than a sample etc)?

To tackle this question, I would talk to partners to establish their approach and attitude to fee negotiating and re-negotiating. Best practice could then be codified and workshops could be delivered on fee negotiating

  1. Are partners managing the work efficiently?

To answer this question, I would talk to partners about their approach and attitude to managing matters (delegating, supervision, managing risk etc). It would also help to review how matters have been resourced to assess if more delegation is possible. It usually can! It might also help to hear the views of associates.

The output from this could be an improved matter management toolkit.


Such a programme is relatively quick to deliver and improved results can start to be seen in around 6 months. Has your firm got a practice group that needs its profitability levels to be addressed?

This entry was posted in Coaching and Training, Leadership and Management, Managing Change, Strategy and tagged , , , , , . Bookmark the permalink.

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