Partner billing rates

In an earlier blog I explained that in firms with more than one or two partners their earnings are likely to be directly affected by two factors. One of these is their level of chargeable time and I explained more about this in yesterday's blog. The other key factor is the aggregate level of the partner's billings.

This is the reason why partners in larger firms regularly try to pass work down the chain to managers and to more junior staff. The more work that is done by other people the greater will be the overall fees billed by the partner.

This is the power of leverage. If your accountant (let's call him Bill) does everything himself there is no leverage. If some work is done by a member of staff then Bill will charge his clients more than he pays the staff for their work. He makes a profit on the difference. If he has 2 staff he makes even more profit and so on.

Now it's also true that the staff may not be sufficiently experienced or competent to do the work without supervision. Where the work is not very complex such that junior staff can do it themselves your accountancy fees may be lower than they would be if Bill did everything himself.

So where am I heading with this?
If your affairs are very simple and you have chosen a specific accountant or firm of accountants, who is doing the work? Is it the person you chose or is it someone more junior? If the partner does very little for you other than sign letters, you are probably paying higher rates than you need to pay. Equally if the person you chose is 'only' a manager, this might suggest that you don't need a partner's input unless he/she can convince you of the added value that you will get from their input. If no one has addressed this yet, ask them to do so.