Money Matters: One of our values says that money matters. We don’t shy away from this and pretend it is not true. We all love what we do but at the same time we all have a profit motive. And the Firm is run very intentionally to generate high salaries for all employees and high profits for our partners. Certainly, we cannot attract highly-talented people to the Firm, then underpay those persons, and expect any other result than that those people will leave us. With the degree of talent we have, we have to be economically successful.
PPP: We “hate” this statistic, since it results in so many poor decisions for a law firm; however, like it or not we do not set the market and have to pay respect to what others are saying. So we will disclose our PPP herewith:
Our Profits Per Partner (for all equity partners) in 2014 was $945,000
For equity partners having at least five years of equity partner experience (and excluding our tax exempt organizations practice), our Profits Per Partner in 2014 was $1,350,000.
Conservative management: Each year we take our profits, we put about 5% into our reserve, and then we pay out the rest – simple! No one has a guaranty of anything, and never do we rob next year to pay this year. We have a credit line if we need it but zero debt. We have no retirement obligations either. Finally, we have a reserve that by the end of 2015 will total roughly half a year’s expenditures. We are creative in many ways, but conservative in the management of our finances.
Low Overhead is Great: Our low overhead is a huge competitive advantage. It is one of our secret formulas for success. Our rallying cry: “Low Overhead is Great” is simple but strong. Our low overhead gives us roughly a $150,000 per lawyer economic competitive advantage over larger law firms.
We use this competitive advantage to benefit everyone:
Our lawyers and administrative personnel get paid very well
Our clients enjoy lower billing rates
We are able to be profitable in all markets
Our partners enjoy higher profits
Long-term lease with room to expand: Our lease currently has about 12 years left on it and the rent is comfortable under it. Most importantly, it gives us room to expand and grow without materially increasing our low overhead.
Competitive and flexible billing arrangements: Our billing rates are generally set to be about 75% to 80% of our major law firm competition. In addition, we can be quite flexible and creative in our billing arrangements should clients find thie beneficial. This means that one of the issues of concern at major law firms (high billing rates) is not a significant problem for us. Instead, due to our low overhead (noted above) we are able to have a pricing advantage over our competition.