13. Do Efficient Lawyers Make Firms Profitable or Unprofitable?

Now that building has become optional in the definition of a law firm, we can see the real essence of a law firm — people creating profit. That’s it. So let’s examine the relationship between people and profit.

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What is a law firm? The short definition used to be “a building containing people to create profit.” Now that the building has become optional, we can see the real essence of a law firm — people creating profit. That’s it. So let’s examine the relationship between people and profit. To understand this, we need to examine the single key ingredient. It’s not management, motivation or money. It’s efficiency, and we ask the question: Do efficient lawyers make firms profitable or unprofitable?

Let’s start by bursting the idea that professional service firms are different. They’re not. In a conventional business, the key to profitability is efficiency. The formula goes like this: “use resources efficiently to satisfy customer demand with minimal wasted effort.” Meanwhile law firms have people to keep busy and time-recording targets to meet. Over the years law firms have tried a variety of inefficiencies aimed at boosting profit, such as:

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