Last week I was asked by the managing partner of a 16 attorney insurance defense firm about staffing and growth models for an insurance defense firm and I listed the following models and discussed the first model - grow your own associate staffing.
Attorney staffing/growth models include:
- Grow Your Own Associate Staffing
- Lateral Associate Staffing
- Contract - Staff Associate Staffing
- Lateral Partners (Equity or Non-Equity)
- Of Counsel (Various Approaches and Purposes)
- Mergers (Or Small Firm Acquisitions)
This week I will outline the pros and cons for number 2 and 3 - Lateral Associate Staffing and Contract - Staff Associate Staffing
Lateral Associate Staffing
- Less training and mentoring time
- Will become profitable more quickly - maybe a year sooner
- They will be more acceptable to clients than new untrained associates
- May be able to charge higher billing rates
- Tradeoff of higher salary vs. quicker profitability and cash flow - sooner profitability may pay for itself in the short term depending upon the salary differential.
- May generate new ideas and skill sets/approaches/insights that can benefit the firm.
- May have to de-train them. They may bring practices and approaches that are undesirable to the firm
- Higher salary initially and expectations for more
- Sooner expectations for non-equity and or equity partnership
- Clients may not allow you to charge any more for these associates than new young associates
- May not result in higher profitability and cash flow any sooner than new associates (probably will - but if not costs will be higher)
Contract - Staff Associate Staffing
- Allows the firm to staff up when needed using a project/matter staffing approach
- Allows the firm to better manage fixed costs and manage contract staffing as a variable cost and match costs to staffing needs
- Allows the firm to evaluate candidates before committing to full-time positions
- Can be experienced and seasoned or not
- Cost per hour will probably be higher
- Turnover due to uncertainty as to their future
Other models to be discussed in upcoming posts.
John W. Olmstead, MBA, Ph.D, CMC