Shining a Light on Profitability

Toby Brown is the chief practice management officer for Perkins Coie. He works with firm partners and clients in developing pricing arrangements and service delivery models that drive successful relationships. This includes practice management, pricing, legal project management, practice innovation, and alternative staffing approaches. Previously, Toby was the chief practice officer for Akin Gump and served in pricing roles for Vinson & Elkins and Fulbright & Jaworski. Before joining Fulbright, Toby served as a director for the Utah State Bar.

Toby presents nationally on legal pricing, practice management, knowledge management, marketing, technology, and law firm management for associations, law firms, legal departments, law schools, and paralegal programs. He is the founder of the P3 Conference and chairs the Client Value group that owns the conference. He is the author of the book, Law Firm Pricing: Strategies, Roles, and Responsibilities. Toby was named to The National Law Journal ‘s 2013 list of Legal Business Trailblazers & Pioneers and received the Peer Excellence Award, the President’s Award, and the Anne Charles Award from the National Association of Bar Executives (NABE). 

Toby maintains the ABA award winning 3 Geeks and a Law Blog with three colleagues. You can find him on Twitter @gnawledge and on LinkedIn.


What projects or ideas have you been focusing on recently?

I have two significant projects in play right now. The first one is a rollout of a firm-wide practice management platform that makes client and matter profitability information very understandable, very transparent, and very immediate. By making profitability information that accessible, we intend to drive more profitable behaviors by lawyers. We cannot expect partners to improve the bottom line when they can’t really see it. Although many firms have established financial dashboards, this system (Umbria from Prosperoware) is a full application that allows lawyers to directly enter budgets and monitor them, along with their profitability, in real time.

The second project is a new role that is focused on partnering with clients on a deep level. As clients are looking to their firms to innovate on delivery and efficiency, we want to develop a better understanding of their needs and then work with them to develop solutions together. This collaborative approach will yield success for both clients and the firm. We brought Keith Maziarek on board to serve in this new role.

What could lawyers look at in a new way that would benefit their clients and society?

A number of articles and reports suggest we have too many lawyers in the United States. I disagree. We might have too many lawyers who want to keep doing things the same way, but we actually have a growing population with increasingly complex legal needs. The current rules in place may have been designed to protect clients, but they have become an impediment to lawyers innovating and serving these growing needs. Consider new technologies that perform lawyer functions and how the ethics rules create barriers for their adoption. Unless the profession steps up, adapts the rules to reality, and adopts innovation, the rule of law will drift into the hands of others. Lawyers hold a deeply important role in society to make sure the rule of law is sustained. If they want to keep that role, they need to get moving.

A number of articles and reports suggest we have too many lawyers in the United States. I disagree. | Click to Tweet

What one thing about the practice of law would you change if you could?

I would change law firm compensation systems so they reward different behaviors. Too many law firm compensation systems reward billed hours first, then client satisfaction and profitability second. I recognize that changing these systems will be very challenging, which means change would best come incrementally. This means firms should start making these changes now, ramping them up over the next few years. Unfortunately, at most firms, this path has so many land mines, many are hesitant to move down it.

What is the most exciting development you have seen recently in the practice of law?

I’m seeing a lot of interesting data analytics tools emerging. I’m not talking AI, but more along the lines of machine learning. These systems are starting to be aimed at law firm data, which has historically had low value. The meta data around time entries, matters, and clients has been limited, focused on the past and very inconsistent. By utilizing these new tools, we should be able to programmatically create useful meta data. One example is using technology to determine matter types. Just knowing what we sell will have tremendous value.


What technologies, business models, and trends do you think will have the biggest impact on the practice of law over the next two years?

Anything that shines a bright light on profitability will drive change in the legal industry. For too long, most firms and partners increased their income the old way—billing hours. In that world their need for profitability information was quite limited. For the past seven or eight years, this approach has been unraveling. By helping partners understand what actually makes their work profitable and sharing the information in an understandable way, change will come.

What’s the best new law practice idea you have heard recently?

Just as we have lagged in many basic business practices, the legal industry has done very little to drive and realize the value of industry standards. In response to this need, a group has come together to create standards for the legal industry. The first effort will be for matter types. Imagine having a commonly understood set of matter types so that when clients ask for bids on work, firms will be able to scope and price in a consistent manner. And the technology will easily support the flow of data between law firms and clients. This effort is being driven by four major industry associations and will be fully up and running by 2017.

About the Author

Nicholas Gaffney is a veteran public relations practitioner in San Francisco and is a member of the Law Practice Today Editorial Board.

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