![]() Understand the potentially severe consequences of leverage among partnersĭewey’s failure was largely caused by leverage within the partner ranks. Those firms not using this data to test profitability and revenue modeling will not be able to reasonably evaluate how "solid" their growth strategies are. Use analytics to assess the prospects of growing and retaining existing clients and targeting new ones.Īccording to Yancey, business and competitive intelligence are widely used by firms today to assess client risk and growth opportunities. This, says Yancey, causes the less productive rainmakers to hoard work which decreases the profitable use of associates whose rates are high but pay low in comparison to under-producing partners. Though Yancey agrees that this structure is “no news to any law firm,” he cautions that too many continue to reward partners for their own billings and collections rather than for their ability to spread their work strategically thoughout the firm. When the new Dewey partners didn't produce as anticipated, the guarantees given to them became fixed costs, negatively affecting both profitability and firm morale, causing defections in the ranks and the move of profitable partners to safer shores.Īlign partner compensation to relevant business performance metrics – including profitabilityīigLaw earnings rest on an inverted pyramid structure, with business generators spreading profitable work throughout the ranks, assigning tasks to the lowest level lawyer capable of competently handling them and sending the profits from that work upward to the partners. "With large multi-year guarantees to lateral partners in place," said Yancey, "the stakes were even higher than normal." More importantly, that intelligence, properly applied, provides the best insurance available for the other 199 AmLaw200 firms against Dewey's fate.Īccording to Yancey, Dewey failed to model (or poorly modeled) the financial results that could reasonably be anticipated from the recent additions of lateral partners to the firm. Life continues uninterrupted for the winners, while the losers sink with the ship.īo Yancey, Director of Professional Services at LexisNexis Redwood Analytics says the application of business intelligence to Dewey's lateral partner additions could have avoided the terrible trouble it now finds itself in. When a large enough percentage of anticipated billings fail to materialize (let alone the collections) the productive partners take their clients and run to the nearest door, which just happens to be the entrance to another BigLaw firm. Just as the bank does not own its depositors' money, the firm doesn't own the partners' clients. Head hunters are among the first to smell blood in the water and start circling the firm for fresh meat.Fear spreads and you get something like a run on the bank. Below that rung, led by Ethiopia, “frontier fifteen” markets are countries with consumer class populations ranging from two to 10 million. The rest of the continent, consisting mainly of smaller countries, is home to just 17 million of the continent’s consumer class and “offer much more limited opportunities for consumer facing companies and investors given their small and fragmented markets,” the report says.When hunger comes knocking at the door, the firm's trophy partners start looking for new homes. Owning a refrigerator, for instance, allows household purchase larger volumes of food thus spending more while automobiles can increase frequency of consumption.įryam’s analysis identifies a middle class population of 330 million people unevenly distributed across the continent. Egypt, Nigeria, South Africa, Algeria and Morocco -referred to as the “power five” markets -are home to two-thirds of the continent’s consumer class with 219 million people. Shifts in consuming and spending trends rooted in local nuances like harvest and planting seasons make “a purely monetary-based segmentation susceptible to higher error rates,” the report argues. Assets measured include refrigerators, mobile phones, televisions, automobiles and computers with each influencing consumption patterns differently. In a recent report, Fraym, a data consulting firm, has opted for a different tack and defines Africa’s consumer class based mainly upon asset ownership and educational levels “since these measures are less vulnerable to seasonal income fluctuations.” ![]()
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