Midsize Firms Are Touting Efficiency, But They’re Not Hiring Efficiency Experts

In a guest post penned for 3 Geeks and a Law Blog, Managing Principal Steve Nelson asserts that midsize law firms are failing at efficiency – and increasingly facing pressure “from above and below”.

By Steve Nelson | May 11, 2017

One of the big topics discussed recently in the legal press is how the very large firms continue to separate themselves from the rest of the AmLaw 200. In an article accompanying the American Lawyer’s financial disclosure reports for the AmLaw 100, the magazine revealed some pretty shocking statistics; while the top 50 firms reporting significant increases in revenue per lawyer, profit per partner and profit per lawyer, the next 50 firms reporting decreases in all of these statistical categories.

This is not a new phenomenon. Over the past few years, many observers have been writing about how the mega-firms are pulling away from the pack. You would think that a large number of midsize firms would be responding by illustrating how they are more efficient and provide very value to clients.  But a recent study performed by The McCormick Group seems to show otherwise.

Since around 2000, and particularly since the advent of the Great Recession of 2008, firms have responded to calls for efficiency by hiring three types of professionals, those handling practice group management so that each practice area can be run more efficiently and more profitability, pricing professionals to respond to corporate calls for alternative fee arrangements, and legal project managers to work directly on engagements to provide value to the clients and efficiency to the firm.

Of those three, one—pricing professionals, have become virtually de rigueur in the AmLaw 200.

Largely because the firm needs to have someone with a financial background respond to requests for proposals and other demands for alternative pricing, more than 80 percent of the AmLaw 200 have at least one professional focused on pricing.  And that has run the gamut from the very large firms down to the bottom of the AmLaw 200.

But the acceptance of practice group management and legal project management is much more uneven