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February 05, 2006

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David Maister

I think you are entirely correct in your analysis, Michelle. It makes all the senmse in the world.

I await your conclusions with bated breath. I worry that you "give in" too easily on the topic of delegation and leverage (partners just won't, you seem to imply.) It deserves a LOT more attention, as well as the price topic you are going to address. (I hope you will address desrving higher prices, not just playing with pricing schemes!)

Thom Singer

Michelle-

Congrats on the 100th post. Keep up the good work.

And you are right, times are changing for professional services firms, and someone will figure out a new business model. Once they succeed, all others will follow them. But there will be some pain associated with the changes for partners, associates, staff, etc...

HART

I think in the short-term the ones to suffer will be the upper level group of partners, stuck in their ways of spending money, with vacation properties, or summer houses, and keeping up with the 'Jones' with their partner drawing level .. (taking the draw to equalize because another partner needs the cash and is taking it). Soon there won't be enough cash to divvy up. You can't just keep doubling the rates to charge the clients.

The new associates and junior partners aren't yet used to the downsizing issues and they will not suffer too much, being that their school debt has been lowered. They will survive will lesser pay once their debt is lesser.

Yup .. Early retirement and bankruptcy is what I think will face a growing sector of the aging lawyers and accountants out there .. (i.m.o.). You're right - with this vacancy to come, rates will probably double for these entry level associates, who would now be gaining in their experience, and still be cheaper than the bunch they are replacing.

But how will that fare for the smaller businesses and individuals needing these services? A vicious cycle indeed.

PS: Has it only been 100 posts? Seems like a lot more! Good stuff.

Nicholas golden

Congrats on your 100th post, and and a thought provoking milestone at that. Hey,I think I smell dinner burning. Your loving husband.

Michelle

David, thanks so much for your kind remarks. Your point about leverage/delegation is a great one and it does deserve much more attention. As such, I will address it in yet another post on profitability. In the meantime, I hope you'll find the pricing post to have been worth the wait and not too superficial on "schemes." I'll look forward to your feedback whether you agree with my thoughts or not!

Thom, thanks for the congrats and for your readership. I think you are absolutely right. And the next business model is something I give much thought to. While some firms are experimenting with a more corporate model, the approach isn't without its pitfalls. I do think it's a step in a better direction, but there is an even better way out there...we all just haven't figured it out yet. Any ideas? :-)

Hart, I appreciate your post. Interesting thoughts, indeed. I hadn't actually thought of bankruptcy in firms, but I suppose it could happen. Seems like owners would much sooner sell or merge than file bankruptcy, though, wouldn't they? Well, either way, certainly the first steps would be pink-slipping excess people, partners and non...

Nick, you're funny! It's a good thing YOU are the chef in the family. If dinner's burning it's 'cause your spending too much time reading my blog!

Christine Mefferd

Michelle - I was listening to the Diane Rehm show yesterday and one of her guests was Tamara Draut, author of Strapped. She lends perspective to the 20- and 30-something’s financial situation. I wanted to pass along the link to you because I thought you’d find it interesting. Some of it leans towards the social/political side, but I think you’ll appreciate the commentary regarding the entry-level salaries/school loan debt/talent pool, etc. I personally like learning about generational differences, and I’m especially curious to see how these types of issues will affect business – A topic that is part of your bigger discussion here….

You can listen to it here:
http://wamu.org/programs/dr/06/02/07.php

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