Collections

First things first: I’m heading back to the States for a couple of weeks in October, and Troutman Sanders and Miller Canfield have already asked me to take advantage of that visit by giving my “book talk” about The Curmudgeon’s Guide at those firms. That means I’ll be blowing the dust off my speaking notes and reminding myself what I say. I might as well get some bang for the dust; if you’d like me to give the book talk at your firm (or school) in early October, please let me know.

Second things second: Citi, Wells Fargo, and PeerMonitor recently released their analyses of law firm performance to date in 2013, and the pundits were all a-twitter. (Well, all a-blogger, anyway, but the pundits are so retro.)

Here’s one question the pundits posed: Why is law firm headcount up when law firms are suffering from decreased demand for their services?

That’s a pretty good question, and there’s no obvious explanation. Being a curious fellow, I used a clever technique to get to the bottom of this: I asked.

After the jump, I explain why firms are hiring more lawyers during a time of weak demand (as explained by senior partners at a couple of firms) and note an overlooked aspect of 2012 law firm performance that may affect results in 2013 . . . .

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Year-end is fast approaching in Biglaw. For litigators, the last two weeks of December are usually some of the calmest of the year. Even the hardest of adversaries are apt to adopt a “Christmas Truce” and halt the lobbing of discovery grenades at each other. Courts start to slow down, and most everyone is happy to “pick things back up” after the turn of the year. But like all things Biglaw, complacency at year’s end is impossible for a Biglaw partner — even when work is relatively quiet. Why? One word: collections.

For tax and other corporate structure reasons that your firm’s comptroller will be happy to explain to you (if you dare to actually engage a non-lawyer in conversation about the business of your law firm), most Biglaw firms want to have every single drop of revenue possible in the door by December 31st at 11:59 p.m. While your typical partner is fairly insulated from money matters at the firm all year, and mostly just wants no surprises when it comes to their compensation, at year’s end everyone is recruited and expected to give their all. To what? Collections!

How bad does it get? Pretty bad….

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The end of the year was a pretty interesting time for partners at K&L Gates. Our sources report that right before the close of the year, the partners received a blistering message from Peter Kalis, the managing partner of the firm. Just 24 hours later, K&L Gates partners received an email from Kalis that was full of appreciation for the firm’s great 2010.

The two emails aren’t exactly contradictory in substance. But when it comes to tone, let’s just remember that partners have bosses too…

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If you talk to law firm partners who are in charge of collecting fees, they’ll tell you that getting clients to pay has become a real hassle ever since the recession started. Clients are trying to make their books look as palatable as possible, and if that means avoiding or delaying payments to their lawyers, well, then that’s what they are going to do. Collecting fees from clients is one of the top concerns of Biglaw managers.

And it should be a top concern for Biglaw associates. Nobody is going to be getting a bonus when the firm cannot realize its profits.

You’d think every practicing attorney would be on the same page with this by now. You’d think, at the very least, every person would be diligently putting in their time to give their firm the maximum opportunity to collect on their billable hours. But apparently some people haven’t gotten the memo that putting in your hours in a timely fashion is critical in this environment.

Well, at Simpson Thacher, they want to know your hours, now. And the firm is threatening to bring the hammer down on attorney timekeepers who are putting off this important paper work. Put in your hours, or STB will hit you where it hurts — the wallet…

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