Spoiler alert: If you’re looking for a hard-hitting expose of everything that’s wrong with RPL, look elsewhere.

I’m on record as saying that RPL is the most telling metric we have, and I stand by that with permission to amend, or permission to put all the stress on the last phrase: “The most telling metric we have.

That one of its core virtues needs to even be mentioned is an embarrassment to our industry, but it’s that RPL is hard to play games with. Revenue is, with the rarest and typically most disastrous of consequences, a real hard number for calendar year fiscal, cash basis reporting firms: Cash receipts from midnight January 1 through midnight December 31. The exceptions are not worth dwelling on, save to share with you the remark of a partner fleeing a firm flagrantly cooking its books who, when asked when the firm closed the year out, replied, “January 45th.”

Similarly, the number of lawyers at your firm is, or ought to be, trivial to determine. If anyone wants to quibble about part-time, flex, contract, or otherwise, can we just all be adults and stipulate FTE’s?

As I said, an embarrassment to have to mention, but there you have it. Now to substance.

For simplicity, let’s diagram this:

Pros Cons
Roughly represents what clients are willing to pay for a year to rent one of your lawyers, or put more directly, how much they value what you provide Different practice areas have intrinsically different rate structures and hence RPL’s
Fairly directly corresponds to span of your firm’s rate structure (high, medium, low) and rates roughly reflect sophistication/degree of difficulty of work performed Firms with higher leverage, all else equal, will have lower RPL—but leverage ratios are randomly correlated with quality of work
If your firm’s RPL is higher as against your peer group, may reflect how clients assess relative quality Rates vary notoriously by geography, and firms’ geographic center of gravity has nothing to do with sophistication or quality

I wonder if you discern the same pattern here that I do: It strikes me that RPL is much more significant in the context of any given firm from year to year than it is in service of trying to make cross-firm comparisons.

Here are the general characteristics of firms with low RPL:

  • geographic center of gravity outside of the top global capital markets or leading metropolitan areas;
  • higher leverage; and/or
  • a preponderance of rate-sensitive practice areas.

Let’s visualize such a hypothetical firm. It’s based in the US South, Midwest, or Great Plains—pretty much anywhere except the Northeast Corridor, California, or major financial/commercial centers of gravity like Texas or Chicago—and it caters to price-sensitive clients, perhaps small and mid-sized privately held companies who tend not to have shockingly complex legal needs, and does so efficiently and effectively by deploying large numbers of associates per partner.

What, I ask you, is “wrong” with such a firm? It sounds like a very stable business, a sane place to work, and one providing valuable services to its clients which they personally appreciate. Yet I guarantee you its RPL is well below average.

Should the Managing Partner or Executive Committee of this firm focus on how its RPL stacks up industry-wide? Well, of course they could, but suppose they did just that and chose to try to raise their standing in the averages? Their choices would be (1) to fundamentally change their office footprint, a project which could absorb a decade with no guarantee of a superior outcome on the other side; (2) try to move up-rate in their practice area mix, which could also absorb a decade, etc., while drastically disrupting the lawyer ranks in the process; or (3) deleverage when they have, by hypothesis, found a leverage ratio that’s close to optimal for their client list.

But there is one reason they might feel embarrassed or defensive about their RPL quotient, encapsulated in the doubts potential laterals might express about the low RPL figure. Why might a lateral raise that and why might the firm take it as a serious and substantive question?

Because we’re always and everywhere comparing ourselves to others. What we’ve achieved, the path we’ve chosen, is never sufficient; we seem to have a preternatural compulsion to always be looking over our shoulders at others. If you doubt this, I invite you to conduct this experiment on your own: Suggest a slightly new, different, and better way of doing things to a colleague and ask their reaction. I’ll lay odds the first words out of their mouth will be, “Who else is doing this?”

Among the rest of the population, the “non-lawyers,” I bet much of the time the reaction would be the reverse: “I hope no one else is doing this!”

True story: The COO of a firm with a large Boston office told us how the decision whether or not to close the office during a heavy snowstorm was arrived at. “Did we see whether the courts were closing? Whether clients were shutting their offices or cancelling meetings? If the mass transit authorities were warning that people ought to get home? No! None of that. What made the decision for us was simple: ‘Is Ropes & Gray closing?'”

Back to RPL: Do not look over your shoulder at “yours” vs. “theirs.” Spot yourself your own business model and strategy. If you’re an elite firm dealing with high stakes matters, then by all means a higher RPL is probably an index of health for you. If you’re like our hypothetical firm above, pay your RPL zero heed. If you’re moving from a general practice, full service, destination-for-nothing-in-particular “Hollow Middle” firm into one focused on a particular niche (a “Category Killer”), and if that niche comes with intrinsically lower rates, celebrate a declining RPL.

It all depends on who you are. Not who the other guys are.


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