Asked and Answered

By John W. Olmstead, MBA, Ph.D, CMC

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:

1. Grow Your Own Associate Staffing
2. Lateral Associate Staffing
3. Contract - Staff Associate Staffing
4. Lateral Partners (Equity or Non-Equity)
5. Of Counsel (Various Approaches and Purposes)
6. Mergers (Or Small Firm Acquisitions)
7. Branching

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

PROS

1. Less training and mentoring time
2. Will become profitable more quickly - maybe a year sooner
3. They will be more acceptable to clients than new untrained associates
4. May be able to charge higher billing rates
5. 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.
6. May generate new ideas and skill sets/approaches/insights that can benefit the firm.

CONS

1. May have to de-train them. They may bring practices and approaches that are undesirable to the firm
2. Higher salary initially and expectations for more
3. Sooner expectations for non-equity and or equity partnership
4. Clients may not allow you to charge any more for these associates than new young associates
5. 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

PROS

1.  Allows the firm to staff up when needed using a project/matter staffing approach
2. Allows the firm to better manage fixed costs and manage contract staffing as a variable cost and match costs to staffing needs
3. Allows the firm to evaluate candidates before committing to full-time positions
4. Can be experienced and seasoned or not

CONS

1. Cost per hour will probably be higher
2. Turnover due to uncertainty as to their future

Other models to be discussed in upcoming posts.

Click here for our article on hiring associate attorneys

Click here for our law firm management articles

John W. Olmstead, MBA, Ph.D, CMC,(www.olmsteadassoc.com) is a past chair and member of the ISBA Standing Committee on Law Office Management and Economics. For more information on law office management please direct questions to the ISBA listserver, which John and other committee members review, or view archived copies of The Bottom Line Newsletters. Contact John at jolmstead@olmsteadassoc.com.