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Ed Poll
  Week of October 23, 2007

Is Profit Professional?

All lawyers today need to be fully sensitive to the financial needs and operation of their firm. The issue is one of business competency. The lawyer who has it understands the operation of the firm as a business (budget, collections, profit, loss), the firm's billing structure, how each attorney determines firm profitability, and the importance of clients and their own businesses. Years ago I registered the phrase, "The Business of Law®," because it is such an important truth that summarizes my consulting work—and because so many lawyers seemed to lack an understanding of the concept.
Running a law firm in a businesslike way improves the professionalism of the practice of law. The purpose is not simply to get more money for the lawyer; it also benefits the client. A profitable law practice is much more likely to avoid such ethical problems as dipping into client trust accounts, either as direct fraud or as a stopgap "loan." Moreover, a law firm run as a business will also approach client service more efficiently—returning phone calls promptly, creating and adhering to a budget, providing sufficient details on clients' invoices, etc. You can't truly be a professional service business until you understand The Business of Law®.
You also can't fulfill a broader social purpose of serving the public unless you have the profitability to devote time to pro bono work. I recently commented on a new book with the overwrought title Lawyers Gone Bad, which contended that lawyers have abandoned helping the poor and middle class in their pursuit of profits. In fact, the largest firms know (just as the largest corporations do) that profitability supports the provision of programs and services that benefit people who cannot otherwise afford them.
This is true even for sole practitioners. Not long ago I had the opportunity, through the American Bar Association's "Life Audit" program, to help a solo practitioner in Washington, DC. This lawyer had built a successful practice in just three years, but the practice was not nearly as profitable as it should be. We found that the lawyer was outsourcing too much work on a contract basis, in order to devote more time than was practical to non-billable community service projects and activities. I advised the lawyer to shift her business development and community service focus to activities where she would interact with businesspeople who would be potential sources of new business or referrals. She could do good while also doing well at the same time.
The moral: To be professional does not mean to be impoverished. Lawyers must do well financially before they can work for the good of the community.

Ed Poll

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Ed Poll
Ed Poll

Personal Commentary
I had the opportunity to speak before managing partners at the recently held Canadian Bar Association (CBA) conference in Montreal. The discussion was quite dynamic. It covered issues of profitability and what metrics to use to measure the elements that are most significant in enhancing profits. We measure what we value, and we value what we measure.
I was impressed with how similar Canadian law firms are to American law firms. We are all facing the same challenges...the difference may be based on locale or the size of the firm. Most Canadian law firms are dealing with international issues that only a few American firms must handle. I came to the conclusion that we are all brothers and sisters at the bar despite our different geography.
During the conference, I also listened to two former Canadian Ambassadors to the US. They expressed two major concerns in dealing with the US: 1) recent U.S. protectionist attitudes, and 2) border security and immigration issues.
For example, current US immigration policies have had at least one direct benefit to Canada. In reaction to this change, Microsoft has created 2000 jobs in Vancouver rather than increasing its labor force in California or in Washington.
On top of this, the strength of the Canadian dollar is allowing Canadian companies to buy American companies. This is being felt in many industries, especially that of banking.
All in all, I truly enjoyed my time with the CBA.
Best wishes,
Ed Poll

Ed Poll
Ed Poll

What Readers Are Saying...
"You don't see many stories about legal firms making change work! Help is on the way. Ed Poll's book is a must-read for any leader who wants to win at the great game of business!"
-Terry Paulson, PhD, columnist, business speaker, and author of They Shoot Managers Don't They?

Ed Poll
Ed Poll

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