Recent Articles

Some Thoughts on Realization

Jim Cotterman
September 29, 2008 20:24

Realization is one of the five factors that affect profitability.  The others are utilization, pricing, margin and leverage.  Unfortunately the five factors are interconnected so discussing one in isolation is a bit difficult.  For example, I had a client who was thrilled with their 98% overall re...

Law School Graduates — Should They Apprentice?

Jim Cotterman
August 28, 2008 19:05

What ever happened to the concept of an apprenticeship?  An apprentice is defined in Webster’s Collegiate dictionary as “one who is learning by practical experience under skilled workers a trade, art , or calling.”  This is an essential element to progress from book knowledge to pr...

Spending Those Retirement Savings

Jim Cotterman
August 15, 2008 16:44

Much effort is made to encourage a work career of disciplined retirement saving using proper investment techniques.  Now that Boomers are approaching retirement it might be a good time to think about how to make those savings last a lifetime or two.  This is the central concern of many retirees and ...

A Discussion On Partner Capital

Jim Cotterman
August 07, 2008 12:26

A law firm recently inquired about its capital structure after its bank indicated that it considered the firm’s debt high and its capital low.  A review of the year-end balance sheet indicated the following: Debt to Net PP&E                60%             Good is 50% - 75%; 85% is acceptab...

Likelihood of Making Partner Affected by Economy

Jim Cotterman
May 29, 2008 12:06

In an earlier post I talked about what to do if you find that prior promotion decisions have left the firm with some very hard choices in difficult times.  This post discusses how firms are grappling with promotion decisions during those same economic downturns. US firms have raised the bar for p...

Mandatory Retirement — Ongoing Discussion

Jim Cotterman
April 21, 2008 12:55

Premise:  You are on the Executive Committee of a large law firm with a mandatory decompression and retirement provision and the authority to grant waivers (although that authority has never been used).  A senior partner two years out from mandatory retirement requests a waiver. ...

More on Non-Equity Partner Tiers

Jim Cotterman
March 18, 2008 13:18

I mentioned in my last post that creating a non-equity tier as a place to put your under-performers is a bad use of a tiered structure.  Other similarly weak reasons to create a tiered structure include managing earnings (profits per equity partner) to appear more profitable in the published...

Difficult Decisions in Down Cycles

Jim Cotterman
March 12, 2008 19:13

It is interesting to observe how law firms cycle in tune to the economy.  In robust years, law firms are apt to be more generous in both promotions and pay increases.  The sentiments behind those actions are good, but the unintended consequences are usually not.  This is the...

World Beaters

Jim Cotterman
February 21, 2008 19:10

This was the title of an interesting piece on The Lawyer.com (2/18/08).  It speaks of the the possible emergence of a global elite — two firms who have surpassed the $2 billion dollar annual revenue threshold.  While this is a major milestone and could very well be the early signs...

How Much Debt?

Jim Cotterman
February 08, 2008 13:31

We are often asked how much debt a law firm should carry.  The precise answer varies based on the collective financial leverage tolerance of the partners and the capital needs of the firm.  However, here are two simple rules for a fiscally prudent answer. 1. Total debt...