Professionals don’t need PAs and partners who blow profits on employing them lack business acumen, says the CEO of Knights plc
David Beech, CEO at Knights, thinks that many professional services firms are out of date. He believes the partnership model leads to self-interest, toxic office politics and armies of unnecessary support staff whose main role is to stroke the egos of entitled partners. He also regards the focus on partner fees as unbusinesslike – emphasis should always be on firm-wide cash generation and profit. “Partnerships lack owner focus and so do not concentrate on generating profit and cash. Instead, partners think: what can I earn out of this?” says David, whose law firm Knights recently floated on the stock market for £103.5m – the UK’s highest ever legal listing. “This leads to individualism and then office politics sets in when partners fight each other for income.”
David has a simple solution, which he believes would increase the efficiency of all firms. His remedy is to calculate two numbers and focus on raising one and lowering the other. The first – which must be raised – is the number of fee earners for each member of support staff. “In the legal sector, the average number of fee earners per member of support staff is 1.5,” says David. “At Knights, it’s 4.5.” The second number – which needs lowering – is the amount of days it takes to generate cash from client work. On average, it takes 161 days for law firms to get paid after starting client work [according to PwC’s Top 100 Law Firm Survey]. At Knights, the average is 85.
If partnerships swapped their obsession with fees with a desire to reduce overheads, they would be much healthier and more efficient, argues David. And, David is putting his money where his mouth is. The Knights’ CEO has done away with PAs at his firm, operating a lean, centralised admin team instead. “I don’t have a PA and nor do my colleagues,” he says. “If you need a meeting with me, call my mobile and I’ll check my diary.”
To those who question whether it’s possible for partners to focus on their clients effectively without the support of PAs, David says: “Of course. It’s rubbish to think otherwise. It’s actually much easier. Clients love being able to talk directly to their advisors. And by using modern technology to manage your own schedule rather than asking someone to do it for you, you can be much faster and more responsive. Managing other people to do it for you simply slows you down.” He continues: “The legal profession is often criticised for offering poor value for money. And when lawyers hide behind their secretaries it only reinforces that belief.”
Knights has also done away with their credit control department. Instead, its lawyers create invoices, send them to clients and chase payments. As a result, lock-up (the amount of time it takes to get paid after starting a piece of work)has gone down dramatically, along with their credit control overheads. “It takes our lawyers less than five minutes to create and send an invoice,” says David. “It’s easy. There is no excuse not to do it.”
By focusing on two simple things – reducing staff overheads and speeding up the time it takes to get paid – Knights’ has achieved market-leading levels of efficiency. By being lean, organisations can deliver the very best value to their clients. Therefore, professional firms that genuinely want to provide the much-promised “outstanding client value” may want to take a good look at those two all-important numbers…