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 Clockwork
by Barbara Lewis MBA and Dan Otto MBA

Oftentimes law firms struggle with the task of hiring a new employee.  The firm may recognize bottlenecks where the work is late in completion and decide that another person at that position should be hired so the work can be accomplished in a more timely manner.   Or an employee may complain about additional burden when the workload increases with more new business.  Sometimes a lot of people in the firm appear overworked.  It may be difficult to decide the level and number of people to hire.

 When one managing partner faced this challenge, he was stymied by the decision of whether he should hire a clerk, secretary, paraprofessional, junior or senior attorney.  Revenues were soaring and with the current number of employees, so were profits.   But if he decided to hire additional personnel, his profits would decline.

 Borrowing a technique used in the manufacturing world, we guided him through a five-step process to assist in making the decision.  Known as “time and motion” studies, this method is used in manufacturing companies to determine the amount of time it takes to complete a task and then improves the time to maximize efficiency, which affects profits.  If a person makes five widgets in an hour and through making the task faster, can produce 10 widgets in the same time, then the output has doubled with no extra costs.  The same principle applies to law firms.          

 The first step in deciding whom to hire and when is to describe the tasks for each position.  A typical position may have 20 to 50 tasks that are performed daily, weekly or monthly.  For a secretary, the tasks may include everything from photocopying to setting up corporate minutes.    

 Then describe the flow of work. You can do this graphically by creating a flow chart. This activity may raise questions about your operations and reveal some unnecessary steps or duplication of effort. Draw this on the chalkboard, white board or on paper (in pencil), because you will need to erase steps often. Do this for each type of work product that the firm performs. Estate planning should look very different from litigation. 

 The next step is to identify the level of person who can complete each task. This is not the level of personnel who is currently performing the task, but the level that should perform the task.  In the secretarial example, a clerk can photocopy and a paraprofessional can set up corporate minutes.  Each task is assigned a position with a specific level of competency.  The purpose is to identify tasks that are performed by over competent, higher compensated people, such as the secretary photocopying when a clerk should be doing the work.  Paying secretarial wages for clerical work is costing the firm money.  On the other hand, when the secretary can perform paraprofessional work instead of a higher paid paralegal, then the work is more profitable for the firm.       

 From this the firm has the structure to perform a time study.  Since many law firms operate with timesheets, this process is easier than in industries that don’t record time.  Each employee and partner records every task and the amount of time to complete each task for at least one week, preferably one month, since 30 days is usually the cycle when all tasks in a firm will be tackled.  

 Critical to the success of this step is the understanding by all employees and partners that 100 percent participation is necessary to help improve the efficiency of the firm.  In the end, with more work being accomplished by the same number of employees, profits will increase and so might the bonus pool.  But the goal at this juncture is to record task and time in an Excel worksheet with each task included in easy-to-use drop down menus.    

 At the end of the week or the month, when all partners and staff have completed the time study, then the analysis begins.  All tasks are segmented into direct and indirect, which refers to whether the task is directly related to the client work or is ancillary to the client.  For example, corporate minutes work is directly related to the client, whereas the accounts payable task has no direct client impact.  In firms that use hourly billing, direct and indirect usually refers to billable and non-billable time, respectively. 

 The purpose of the direct and indirect segmentation is to determine the relationship between the work that needs to be performed no matter how many clients, such as payroll, and the variable work not related to overhead such as the client processing activities.  Efficiency improvements can be made in each area.      

 The analysis almost always indicates that in a certain percentage of time, the wrong person is doing the task.   The managing partner, whose firm was swamped with work and who couldn’t decide which level of person to hire, discovered that 22 percent of his work was secretarial.  He recognized that he needed to delegate more tasks to his secretary, which freed him to do more of the attorney work that was bottlenecked on his desk. 

 He also discovered that 38 percent of his secretary’s daily tasks were clerical, a common problem.  The secretaries who historically have completed a work product by doing all the tasks, such as typing, photocopying, collating and messengering, may find it difficult to delegate.  The secretaries may believe that it’s easier and faster if they do the work themselves, a philosophy that contributes to decreasing profits in the firm.  With salaries north of $50,000, it’s not cost-effective to have clerical tasks completed by secretaries.

 The next step is to realign all the tasks with the appropriate level of person.  Employees are encouraged to handle tasks designated above them, but to delegate lower tasks to less highly compensated employees.  Delegation is one of the greatest cogs in the wheel of an efficient firm operation.  With delegation comes the art of supervision and the ability to track and monitor tasks that have been delegated. 

 Good supervision is a talent that can be learned and needs to be practiced.  Yet most people learn by doing and are never taught basic supervisory skills which include explaining the specific delegated task within the big picture project; contracting with the supervised employee the timeframe for completion; providing written instructions; and following up with the supervised employee for progress reports, especially as the task deadline nears.

 If the supervising person receives a project that has been done incorrectly, then he or she may be reluctant to delegate again blaming the supervised person for the mistake.  Yet most of the time, the problem lies with the supervision.  When employees understand how delegation will increase capacity in the firm, which will probably increase revenues and profits and which will impact their bonuses, they are quick to delegate tasks.  And if they are given the skills to supervise their delegated tasks, then the firm can easily increase its efficiency.         

 Employee communication is the key to the success of the program.  Unless employees see the results of their timesheet analysis and understand the impact of realigning the tasks they do through delegation, they may be reluctant to embrace the methodology.

 The managing partner who discovered that 22 percent of his work was secretarial, had the same time analysis performed the following year and saw that 0 percent of his work was secretarial and his secretary had substantially sliced the amount of her clerical work.  His employees recognized the impact that delegation could have on the firm and, more importantly on their bonuses.  After the tasks were realigned, the firm had excess capacity and the managing partner did not need to hire additional employees, despite all the new business.  Instead, he rewarded his employees with hefty bonuses. 

 So before leaping to hire additional employees, who will reduce profits, make sure that your staff has both the proper amount of work and the appropriate type of work.  When firms grow fast, the knee jerk reaction is to hire more employees.  But oftentimes, this only causes the firm to become bloated.  Growing efficiently is the best way to enhance profits.   

 

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