You have been hired to manage the business aspects of a local legal firm with a staff of 6 attorneys, 10 paralegals, and 5 staff persons. Clients of the firm are billed a fixed amount per hour of attorney time. The fixed hourly charge is determined each year by dividing the total cost of the legal office for the preceding year by the total billed hours of attorney time for that year. A markup of 25% is then added to this average cost per hour of billed attorney time to provide for a profit and for inflation.
The firm's partners are concerned because the firm has been unprofitable for several years. The firm has been losing its smaller clients to other local firms-largely because the firm's fees have become uncompetitive. And the firm has been attracting larger clients with more complex legal problems from its competitors. To serve these demanding larger clients, the firm must subscribe to expensive online legal reference services, hire additional paralegals and staff persons, and lease additional office space.

What do you think might be the reason for the unprofitable operations in recent years? What might be done to improve the situation for the coming year?

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23-08-2022
Business

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You have been hired to manage the business aspects of a local legal firm with a staff of 6 attorneys, 10 paralegals, and 5 staff persons. Clients of the firm are billed a fixed amount per hour of attorney time. The fixed hourly charge is determined each year by dividing the total cost of the legal office for the preceding year by the total billed hours of attorney time for that year. A markup of 25% is then added to this average cost per hour of billed attorney time to provide for a profit and for inflation.
The firm's partners are concerned because the firm has been unprofitable for several years. The firm has been losing its smaller clients to other local firms-largely because the firm's fees have become uncompetitive. And the firm has been attracting larger clients with more complex legal problems from its competitors. To serve these demanding larger clients, the firm must subscribe to expensive online legal reference services, hire additional paralegals and staff persons, and lease additional office space.

What do you think might be the reason for the unprofitable operations in recent years? What might be done to improve the situation for the coming year?

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rafikiedu09 rafikiedu09 · Answer 1 · 2022-08-29T09:38:39+02:00

The company needs to pay for pricey online legal reference services, hire more paralegals and staff members, and lease more office space in order to serve these demanding larger clientele.

What is a firm?

A firm is a for-profit enterprise that typically takes the form of a partnership and offers professional services like accounting or legal counsel.
According to the philosophy of the firm, businesses exist to maximize profits.
A company, which is distinct from a firm and refers to all business forms and trades, is a company that sells goods and/or services for profit.
A company has one or more locations, all of which are owned by the same person and file their financial reports using the same EIN.

The partners of the company are worried because the company has been losing money for a while. Because of the firm's rising rates, it has been losing its smaller clients to other nearby businesses.

Additionally, the firm has been luring more sophisticated clients with bigger legal issues from its rivals. The company needs to pay for pricey online legal reference services, hire more paralegals and staff members, and lease more office space in order to serve these demanding larger clientele.

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