I received an email this morning that I found really shocking. It was from Law Firm, Inc., attaching "an offer" from one of its advertising partners, LexisNexis. The offer was contained in what was formatted as an article or blog post, with this title: "Stacking the bench with more associates wins partners more income." Here’s the gist of the ad:
Do you think about leverage—or associate-to-partner ratio—as an important metric when assessing your firm’s profitability? Probably not. But many see it as the secret to increasing profitability in a competitive market. By putting less expensive resources on tactical tasks, your partners can focus on more strategic issues. And ultimately that means more profits where it counts. Employing too few associates and underutilizing the ones you do have can seriously impact your bottom line. In fact, top performing firms understand the importance of leverage—and typically have three fee earners for every partner.
You may be saying to yourself, “With three times more associates to partners, our billings would go down.” That is true, however, even though billings shrink—profit per partner goes up. Firms that have equal amounts of associates to partners may have less profit for partners to share. In fact, partners in firms that have an associate-to-partner ratio of three to one can see 30% more profit than firms that are evenly stacked.
It’s hard to imagine an ad that could be more out of touch these days. The leverage model was a bad, albeit profitable, idea in the good old days, but even the most ardent supporter of that model has awakened to the fact that it is not sustainable and absolutely the wrong approach in today’s client environment. I really shocked that LexisNexis has not found a way to tailor its product offerings. But assuming that it advertises the way it does because people buy their products to achieve the pot and the end of the LexisNexis rainbow, what does the ad say to clients about how law firms are responding to the current challenges clients and firms are confronting? Is this the way you want your firm to respond?