Is there an easy way to increase per partner profits by $27,000?
I previously reported that IBM’s global consulting business built a system to match consultants with the right job.
Business Week (11/21/05) reports that using it, IBM “with 36,000
consultants in its system… saved $500 million in the first year alone,
cutting the time needed to assign the employee by as much as two
weeks.” That works out to almost $14,000 per consultant.
Let’s
play with some numbers: Assume in BigLaw a blended associate billing
rate of $300/hour. If each associate billed 30 more hours per year,
that would generate an additional $9,000 in profit (assuming no
increase in costs). If leverage is 3 associates for each partner, that
would increase per partner profit by $27,000.
Possible?
Maybe. Clearly, associates are, on average working very long hours
already. But not all meet billing targets. More importantly,
opportunities may exist to convert some non-billable time to billable
hours via more effective workforce utilization. This is no sure thing
but IBM’s win should tempt law firms to think about more effective ways
of assigning lawyers to matters.
[Strategic Legal Technology]