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Managing Up

Hiring a New Person for Your Law Firm (Probably) Won’t Increase Your Revenues

By Erik Mazzone

In this episode of Practice Management Theatre, our protagonist makes a hasty decision about hiring a new person. Will it lead to growth and greatness … or to lost ground and regret?

hiring a new person

Practice Management Theatre: To Hire or Not to Hire?

Begin scene: You are sitting at your desk. Your inbox is bursting at the seams with unread emails. Firm management tasks are piling up in your to-do list app. Decisions are waiting to be made about next year’s health care plan, reducing your office space footprint and redesigning your website. And one of your long-term, loyal employees has been out for weeks dealing with a sick family member.

All of that is before you even think about the client work stacking up. Not just the brainy, smart, consequential work you imagined doing more of when you started your firm. But also the daily, boring, grinding little tasks that need to be done to move your matters forward.

And the phone calls, my god, the phone calls.

That’s when an idea takes hold in your mind, “Inception”-like:

The desk drawer opens. The trusty calculator comes out. Back of the napkin math ensues.

A voice rings in the back of your head from the little law firm manager angel on your shoulder:

“You should probably look at your financials. How much have you been billing and collecting? You should also dial in on some one-on-ones with your employees to find out who has a full plate of work and who has some extra capacity.”

And then the little law firm manager devil appears on the other shoulder:

Who has time to do any of that? You just did the math … with a calculator! What more can you do at this point? You know you will break even. Or come extremely close. Or pretty close, anyway. Doing all that financial and personnel management is the exact stuff you don’t have time to do. It’s the exact stuff that you will be freed up to do when you hire this next lawyer/paralegal/assistant/law firm manager.”

Poof. Angel and devil gone. Resolution reached. You will hire a lawyer/paralegal/assistant immediately. Prepare for greatness. The day is yours.

End scene.

When Hiring Decisions Lead to Regret and Lost Ground

Just like that, you’ve jumped right into the cart and lined up the horse behind it. And you have set yourself on the course not of FUD, but of RID: regret, irritation and dismay. Regret that you made a rash decision with long-term and expensive consequences. Irritation that there weren’t better guardrails in place to help you avoid this mistake. And dismay at the acknowledgment that if nothing changes, you will very likely repeat the problem in the future.

Confusing Capacity and Management in Your Law Firm

This narrative is incredibly common and plays out in law firms again and again.

Sometimes, everything works out fine. The person you hire turns out to be a gem and you break even just as your calculator math predicted. But sometimes it goes the other way. The person you hire first is not very good. Or is fine but then leaves quickly for whatever reason. You have to hire again. The second person is better but isn’t good at the same competencies as your first hire. So you now have to rethink which tasks and projects will be shifted to them. (Little voice in your head: “Maybe I should have written a position description for this job.”)

The key issue in this scenario is that, like the cart put in front of the horse, you have confused and misordered capacity and management. It’s totally understandable and natural; life in a small law firm means everybody wears multiple hats at times, especially the owner/managing partner.

But let’s unpack it just a bit to help the process go more smoothly next time.

Capacity

When you hire a new person, you have all kinds of ideas about the ways this new hire is going to transform your business. This is especially true in small law firms, where headcount is low and every new addition is a significant change.

But many of those ideas are never going to be realized. The only thing you reliably get when you hire a new person is a new person — or, to put it another way, increased capacity. That’s increased capacity to perform work that your firm needs to perform.

That’s it; it doesn’t guarantee that you will break even, make money, or even get that pile of tasks off your desk that started this whole thing in the first place. It just guarantees that you get a new person and that increases your firm’s capacity to get work done.

Management

Management is the set of processes by which you can use that excess capacity to get the right work done right. It’s also — speaking of financial management now — how you get the data and analysis you need to determine whether hiring a new person is a good idea to begin with.

If capacity is the engine in a car, management is the ability to drive.

Have a Plan, Preferably a One-Page Strategic Plan

The guardrail you needed to stop you from making an ill-considered decision about hiring in the first place was a plan. The kind of plan doesn’t matter much. You might call it a strategic plan or it might be the business plan you drafted when you started up. It could even just be the organizational chart of where you want your firm to go.

Personally, I am a fan of the one-page strategic plan format. Many of these are available on the internet; here’s a link to one I like. It’s not specifically for law firms, but it is easily adaptable.

The great thing about the one-page strategic plan is the limit the format imposes. I’ve seen and been a part of teams creating long, meticulously detailed strategic plans that are immediately placed in a folder and never looked at again.

The strategic plan is just Google Maps for your law firm.

It’s the destination you’re trying to get to, along with the key markers and turn-by-turn directions to get you there. It’s a tool to move your firm forward, not an end in itself.

Your Best Chance at Making a Great Hiring Decision

A strong one-page strategic plan, along with sound firm management, will help you decide whether to hire a new person. Or maybe the pile of client work and administrative tasks need some other fix. It’s not that hiring is a bad idea — it’s just that it is an important and far-reaching decision that will definitely change your firm. So, having a plan, following the plan, and managing your personnel and finances soundly will give you the best chance of making that hire a great decision.

Read These Recent “Managing Up” Articles

Image © iStockPhoto.com.

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Erik Mazzone Erik Mazzone

Erik Mazzone is a law practice management advisor, writer, speaker and adjunct law professor. As a consultant, he works with individuals and organizations to help them use technology and strategic business practices to reign in chaos, build systems, and grow their practices in smart, sustainable ways. Previously, Erik served as Senior Director of the North Carolina Bar Association Membership Experience and Director of the NCBA Center for Practice Management. He writes and speaks widely on legal technology and practice management, in North Carolina and throughout the country. Follow him on Twitter @ErikMazzone and on LinkedIn.

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