Uncertainty continues to present managerial and operational challenges for NexFirm's clientele. Covid-19 sicknesses or exposures that require isolation, child and elder care responsibilities, work from home disruption, and the emotional toll of the pandemic has hurt morale, caused turnover, and reduced productivity for many. I frequently speak with managing partners struggling to support their team, recruit talent, and service their clients while negotiating these hurdles.
With these challenges on their minds, many have ignored the robust tenor of the legal market despite experiencing the best financial results in their history. The aggregate attorney headcount of our clients, a key indicator of health, increased 29% in 2021 and continues to trend upward in 2022. From our perspective, the current environment presents a rare opportunity for our clients to grow and improve their positioning in the market.
Is your experience the same? Have you failed to take advantage of these ripe opportunities for growth because you are frozen in fear? This might feel like a small mistake that prevents you from maximizing your income, but it might be a far more serious or fatal one. We observe that over a decade, a small law firm will generate 2/3rds of its earnings in just three of the ten years. If they miss the opportunity to maximize profits in those significant years, they struggle to survive the less productive seven. In other words, to survive, your firm must get while the gettin's good.
This contradicts the instincts of most small firm managing partners who believe that keeping their expenses as low as possible and hiring only when they are sure that they can keep the new staff 100% utilized is the way to be successful. This strategy, which prevents you from having a big year, is the reason why nearly 80% of practicing attorneys in the US are part of one or two attorney firms. It is also why many who strike out on their own eventually return to employment at a larger practice.
When the legal market is strong, you must capitalize on the opportunity to grow your firm. In the management of a small law firm, the best defense is an aggressive offense.
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David DePietto is the founder and CEO of NexFirm. He can be reached at ddepietto@nexfirm.com.
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