One reason that clients of large law firms want alternative fee arrangements (AFA) is to drive efficiency. The right AFA structure motivates firms to maximize productivity. In AFA World, what does productivity mean and can firms improve it?
In Billable Hour World, “productivity” means annual hours billed per attorney. Elsewhere, it means “output per hour.” In a firm, think of output as briefs per hour, documents reviewed per hour, transaction documents written per hour, and so forth. In AFA World, firms that keep lawyer headcount steady but finish more matters per week or month make more money.
One driver of lawyer output per hour is support staff. The more “non core legal work” lawyers delegate to staff, the higher their output. Many firms, however, have cut support, at least in the form of secretaries. Until about 20 years ago, the typical lawyer to secretary ratio was 2:1. Today, 3:1 is the new 2:1. Many firms now drive it as high 5:1 or 6:1. In AFA World, that trend may have to reverse.
Consider an April 4th Business Week article that asks Where Have All the Secretaries Gone? It reports that companies have cut too many assistants. Now, highly compensated professionals spend too much time on low value tasks such as copying and booking travel. More assistants would improve overall productivity and pay for the extra cost.
The profit-maximizing amount of lawyer support in AFA World will be an empirical question. The answer lies in field work, data collection, and analysis. It lies in determining when lawyers should type and edit and when they should delegate that to assistants. It lies in figuring out who should do quantitative analysis, create presentation, conduct research, and format documents.
My guess is that higher secretarial ratios will still prevail in AFA World but firms will add other types of assistants, for example, business analysts and presentation specialists. Even for core legal work, firms might find that shifting some work, for example, “heavy” legal research” to specialists makes sense.
Smart firms will also ensure that their attorneys get really good at using core technology properly. That means training them to type and/or dictate and to use Microsoft Word, Excel, Adobe, and PowerPoint effectively. If you think lawyers are already good at this, look around and then read a series of articles in Law Technology News by D. Casey Flaherty, corporate counsel for Kia Motors America: Tech Drive – As part of beauty contests, Kia Motors’ corporate counsel tests associates to assess technology skills (Dec 1, 2012); Kia Motors Tests Outside Counsel Tech Skills (Jan 24, 2013), Kia Motors Tests Outside Counsel Tech Skills, Part II (Jan 25, 2013); Monica Bay Interviews D. Casey Flaherty at Legal Tech NY (video, Jan 30, 2013).
BigLaw today still seems to manage support for Billable Hour World. Firms have cut and re-jiggered staff but from what I see, they have not fundamentally analyzed or re-thought support. If AFA World arrives, law firms will have to re-visit their staff arrangements yet again.