The Panel Survey undertaken by the Law Society each year indicates a wide range of profitability, with some firms achieving poor results, while others are doing very well.

The survey found that among firms with between two and four partners, the lowest quarter earned less than £33,000 per equity partner while the highest quarter earned more than £81,000.This variation will be caused by a number of factors, but several themes are often common to many of the most successful firms.

Some of these themes concern financial management, but most do not.Successful firms, regardless of size, are generally those t hat:-- Employ good people;-- Understand their markets very well - and give a good service;-- Have a hard-work ethos;-- Follow similar business formats and financial structures.In particular they have good gearing - the ratio of equity partners to other fee earners.

The panel survey showed that, among firms with two to four partners, gearing levels vary widely.

The lowest quarter had an average of half a fee earner per equity partner, while the highest quarter had three.These features are to be found in large regional and international firms and also in very small practices with just two or three partners.

Successful firms:-- Are also often specialists, with a high proportion of fees - perhaps in excess of 90% - coming from their main area of work;-- Generally have strong financial controls, for budgeting and monitoring figures, although these can often appear quite informal, particularly in newer, younger firms.

The partners are often more aware of the need to control spending and are better at obtaining good value for money than firms generally.

They are also keen to understand their firm's financial performance;-- Often have quite happy partnerships - the partners get on well and trust one another.By contrast, less successful firms:-- Are often more generalist;-- Often have poor gearing - indeed, in many firms earning lower levels of profit, the partners are often the main, and sometimes the only, fee earners, meaning that attracting and retaining good staff is a problem;-- Lack control, especially financial control and management;-- Often have a poor partner team spirit.

Low profits can fuel partner dissatisfaction and ill feeling, especially if it is perceived that some partners are working harder and contributing more to profits than others.In many successful firms these factors and themes seem to happen almost of their own accord.

These firms are places that attract good, highly motivated lawyers and have strong reputations in the markets they serve.

Because they are profitable they are able to pay the high salaries needed to attract good lawyers, and so it continues - in effect a virtuous circle.Firms which have not yet achieved this level of success often need to address a small number of core areas so as to begin to emulate these more successful practices.

The most effective way to do this is often to prepare a comprehensive business and marketing plan for the firm and its different departments.

Be prepared to challenge the status quo and to contemplate potentially radical options, and use someone from outside to make it happen and to make it more meaningful.

It can sometimes be virtually impossible critically to review your own firm - you are too close, you have worked there for too long, you were articled to the person who is now senior partner, and you may never have worked anywhere else.

You need someone from outside to bring objectivity.The first area to review is the basic vision of the partners and market focus of the firm.

What kind of firm is it? What work does it want to concentrate on? What does it want to be known for? Firms that are successful tend to be very good at specific areas of law or sectors.

They are often market leaders nationally or locally, and as such are often able to obtain higher fees.Next review the operational structure of your firm.

How are you to be organised, in terms of offices, departments and teams and how is the firm to be managed? Successful firms tend to have clear and effective leadership.

Increasingly, in particular in smaller firms, it is not the h eavy-handed leadership of the past.

Instead it is provided by people - and there is often more than one person with leadership ability - who have a clear future picture of their firm.

They keep thinking about the long term and are able to take an overview rather than getting bogged down in the detail.In essence management and leadership in the more successful firms involves a great deal of listening and time spent trying to stimulate new ideas and thinking.

It is time-consuming and often not particularly rewarding, and is sometimes best spread around a few people.

The end product is that people feel involved and if they feel involved they often feel highly motivated.As part of this review of the structure, also look at the physical offices you work in - which can have a big impact on communications, on efficiency and on morale.

There is often little you can do about the offices you occupy, but you should be vigilant in looking for better ways of utilising them.

Some of the most successful firms have areas of open plan and flexibility in how they can use their space.

They are often in one building, ideally on one floor, and are designed with good communications in mind.The third area to tackle is client service standards and client care.

Successful firms tend to give a high standard of service and they win a high proportion of their work through recommendation.

They often get few clients 'off the street' or through Yellow Pages.

Many of their clients come either through recommendation or as a result of targeted marketing.The final area is financial management, systems and effective use of IT.

The partners in successful firms want to know how the firm is doing - they act and feel very much like sole principals - unlike the corporate loss of identity that can affect any firm once you get to more than ten or 15 partners.And, perhaps above all factors, gearing is at the heart of most successful firms.

The partners are no longer the main fee earners; indeed, they may do relatively little fee earning.

They are, in effect, managers who supervise quality and provide technical back up.

They still have a caseload, but it is not large - otherwise they would not have the time to manage their staff effectively.LAW MANAGEMENT SECTION CONFERENCEThe Law Society's Law Management Section conference, 'Managing for Success: meeting the business challenges of the 21st century', will be held at the Cumberland Hotel in London on Thursday 25 November.Speakers include Professor Richard Susskind, IT adviser to the Lord Chief Justice; Brian Capstick, the senior partner of Capsticks; and international marketing and strategy consultant Allyson Stewart-Allen.Speakers at the conference will focus on the issues which delegates have identified as key challenges facing the profession.

These will be selected by delegates from:-- Client-focussed service delivery;-- Innovative use of IT (including structures for e-commerce);-- Management expertise to manage people, systems (including IT, marketing etc), finance and forward planning;-- How to attract and retain a team able to deliver that winning strategy;-- Conflict in time and priority between running a solicitors business and giving professional advice to clients;-- Conflict between the need to give general advice and the increasing need to be fluent in a wide range of specialist areas;-- International alliances;-- Multi-disciplinary practices;-- Getting to grips with the major changes affecting many of our markets (for example, legal aid changes and conditional fees).The conference is credited for five hours' CPD and the registration fee is £229.13 for Law Management Section members and £305.50 for non members.

For details of the conference, contact the registrar at Central Law Training on 0121 355 0900.

For details of the Law Management Section, contact Matthew Duggan; telephone: 0171 316 5572.