In any professional service there are three key benefits that clients seek: expertise, experience, and efficiency. However, even within the same practice area, the relative priority that a given client places on these elements can vary dramatically. A client with a large, complex, high-risk, and unusual problem will appropriately seek out the most creative, talented, … Read more

There is no necessary relation between growth and profits. Why is this so? If a firm grows subject to two conditions whereby: (a) the mix of client projects (and hence fee levels) remains the same; and (b) the project staffing (or leverage) is such that the same proportion of senior or partner time is required … Read more

In most professions, one or more firms can be identified that have clearly chosen a high target rate of turnover. Partners (or shareholders) can routinely earn a surplus value from the juniors without having to “repay” them in the form of promotion. This high turnover rate also allows a significant degree of screening so that … Read more

A professional service firm’s leverage is also central to its economics. The “rewards of partnership” (the high levels of compensation attained by senior partners) come only in part from the high hourly (or daily) rates that the top professionals can charge for their own time. Profits also come, in large part, from the firm’s ability, … Read more

The professional service firm may be viewed as the modern embodiment of the medieval craftsman’s shop, with its apprentices, journey men, and master craftsmen. The early years of an individual’s association with a professional service firm are, indeed, usually viewed as an apprenticeship, and the relation between juniors and seniors the same: The senior craftsmen … Read more