Managing Law Firms in Transition

Managing Law Firms in Transition

Distressed Law Firm Acquisitions-The Times May Be Perfect (Part One)

Posted in Law Firm Crisis, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

This is the first of two installments that examine the changing landscape of distressed law firm acquisitions and how recent developments may encourage healthy firms to pursue struggling firms like never before.

Last week, the long-anticipated Morgan Lewis acquisition of a core component of Bingham McCutchen’s practice was announced. Described as a mass lateral acquisition as opposed to a merger, reports indicate that somewhere around 70 Bingham partners were not invited to join in the move. It is also reported that Morgan Lewis drove a hard bargain with some requirements not commonly seen. But with the Bingham ship taking on water, its ownership had no choice but to go along.

Morgan Lewis’ proposed acquisition comes after the New York Court of Appeals rejected the unfinished business doctrine-a legal development that can provide comfort to acquisitive firms like Morgan Lewis.

A recent decision in In re Dewey & LeBoeuf LLP shows, however, that partners at failing law firms have more to worry about than any fallout from the unfinished business doctrine. As a result of the Dewey decision, owners from failed law firms may be subjected to strict liability for all monies paid to them while their failed law firms were insolvent or inadequately capitalized. Given the agonizing and lengthy path of some law firm failures, the dollar amount of the risk could be substantial. One might assume that when facing these risks, the owners of a distressed law firm might fight doubly hard to keep their law firm alive. But as we can observe from the Morgan/Bingham experience, embracing a deal, even an onerous one, may be a better alternative.

Indeed, the reduced vitality of the unfinished business doctrine (at least when New York law is involved) juxtaposed against the scary potential for owner strict liability, work together to create the ideal environment to stimulate distressed law firm acquisitions. Almost in the nature of a case study, the Morgan/Bingham transaction manifests the reasons why acquisitive and distressed law firms may be perfectly suited to join in a transaction that benefits most if not all parties. These reasons meld the interests of the healthy but acquisitive firm, the interests of the struggling distressed firm, and the desire of all parties, particularly the distressed firm’s owners, to avoid bankruptcy.

The next installment in this two-part blog will review the reasons, or dynamic circumstances, that can bring together such divergent interests to create a successful distressed law firm transaction.

 

A Strategy For Law Firm Survival (Even When The Market Pushes Back)

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition, Uncategorized

 

Recent reports on the legal profession reinforce what most realists already knew; market forces continue to apply significant Focuspressure on law firms.

Two forces at work in the marketplace show no signs of easing any time soon: the demand for legal services on one hand, and on the other, the (over) supply of lawyers to do the work. And while firms have attempted to adjust to these forces in a number of ways, the use of technology and a fresh look at strategic issues  are two specific responses worth a quick look.

Demand

The results of Altman Weils’ recent Survey of Chief Legal Officers is loaded with relevant information. Here are a few highlights:

  • 48% of respondents decreased their budgets for outside counsel with only 26% reporting an increase;
  • 26% intend to further reduce the use of outside counsel in 2015 while only 14% are projecting an increase; and finally,
  • 43% plan to increase their in-house staff in the next year.

These statistics in conjunction with a continuing shift of (for now) certain types of work to alternative service providers, and outsourcing of services constitute relentless pressure on the demand side of the equation.

Supply

Beginning in 2007/2008 through 2012 we saw an aggressive correction in the quantity of lawyers employed by US law firms (layoffs). But we should note that this trend has begun to shift.

According to a recent Thompson Reuters report

“In 2012, firms did a commendable job of pulling back headcount growth, bringing supply into better balance with demand. But since Q3 2013, headcount growth has been steadily rising, reaching its highest level since Q4 2012. Firms continue to add headcount ahead of demand. In fact, in recent quarters, headcount growth has more than cancelled out growth in demand, dampening productivity and profitability.”

The bottom line is that supply is growing again in a marketplace that never did return to a healthy supply/demand balance.

In other words, short of an unforeseen growth in demand, firms are going to be facing all of the tough questions that come with too much capacity — more lawyers than there is work.

Technology

In response to the continuing economic pressures some firms have turned to technology as a means of becoming more competitive.

A recent report (The Emergence of Tigers and Bears and Other Law Firm Trends) by Aderant provides some intriguing insights into this response. The report is based on responses from 227 firms with a good mix of small and large firms.

Two points stood out to me, and both draw a clear distinction between larger vs small to mid-sized firms.

Point 1. When asked what the number one business objective was, the majority (51%) of the small to mid-size firms said acquiring new clients. By contrast, only 21% of the larger firms cited this as their primary objective.

 Point 2. When asked where they were investing their IT dollars, the large firms indicated that 55% of their IT budget goes to automate processes and making service providers more efficient. Whereas only 12% of the small to mid-sized firm budget is invested in this area. Instead smaller firms are investing in better analysis of their operations and technology in order to capture more billable time.

As larger and more established “brand names” have wrestled with the demand problem one strategy has been to aggressively pursue the work being done by firms whose brand is not as strong. When combined with their investment in more efficient service delivery, the (typically) larger firms are creating increased pressure on the weaker firms.

Strategy

The strategy implications for small to mid-sized firms seems clear. With growing pressure from shrinking demand and larger firms pursuing their market, higher efficiencies and focus will win.

In other words, developing a brand around a capability or a small group of capabilities is the ticket to survival. With limited budgets, strategic investments to become known for something is simply more realistic than hoping to become known as a premier provider in an array of practice areas.

This is my observation as to how any firm, weaker firms in particular, have to respond.

How much focus does your firm have?

 

 

 

The Key to Law Firm Success in 2015-Focus

Posted in Law Firm Growth, Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

FocusFor years, a premise behind law firm growth was the recognition (or belief) that many clients required a broad range of services. Sensing a need, and wanting to meet it, law firm leaders sought to build not only bigger law firms, but also ones that offered many substantive specialties. As the thinking went, once a firm client was in the door a cross-selling culture would lead to the client’s every legal need being met under one roof.

In the case of most firms, this strategy has not been completely successful. Fundamentally, few clients want to be “under one roof” but would prefer to spread around their dollars if they must be spent at all. As one in-house lawyer noted last week, great firms may have some great lawyers, but many of those same firms’ lawyers are largely interchangeable with lawyers at other firms. In addition, since garden-variety work does not need a cuff-link popping lawyer leading an army of lawyers, a lot of legal work ends up a lower rate shops. And in the case of many clients, the perceived value of insourcing is reducing the business law firms can even hope to control.

Law firms are beginning to recognize that being all things for all people may not work. Above the Law’s recent article cites a report from Citi Private Bank Law Firm Group that notes that many of the law firms enjoying success in 2014 are engaged in transactional practices. While the dearth of dispute resolution matters could simply be cyclical, Wiley Rein has jettisoned its bankruptcy practice, apparently in the belief that narrowing its specialties will serve it better in the long run. And an increasing number of voices argue that reducing one’s specialties not only stimulates focus, but it also allows a firm to differentiate itself in the marketplace.

For 2015, successful law firms should focus on what they do well, try to improve on those areas of expertise and use that strength to grow their client base around that expertise. The same focus may cause them to consider eliminating distractions by narrowing the array of services offered. In examining whether to focus on a narrower practice, law firms should consider the following:

The Opportunity to Cross-Sell Does Not Justify Marginally Performing Practices. Too many practices are not at the top of their field. If they are not, leadership should consider their elimination. Play to win, not to show.

Clients Don’t See Much Value in Being Under One Roof. One-stop shopping is of little benefit to most clients, especially when the cross-sold practice is not any better than the same practice at 50 other firms. Many clients don’t see the need to aggregate matters at one firm, so stop acting like they all do.

All Things Being Equal, Price May Drive Business Away. A law firm’s non-premium practices are interchangeable with many other firms. That being the case, the only thing many law firms have to sell is price. If you have to reduce your margins to gain the cross-sold business, do you really need that practice?

Insourcing is a Message. Clients that insource a lot of legal work still use outside law firms for the premium matters-the stuff that is beyond routine. Even if you haven’t been hit hard by the insourcing trend, consider the fact that routine work is easy enough for clients to do themselves or your competitors to match at each step. Insourcing is telling you to focus on what is hard and what you do well. Ask yourself if you really need the rest.

Clients’ Buyer’s Market Will Continue. Don’t wait until 2016 to see how things turn out. Business may improve marginally but any improvement could prove illusory. All the dynamics exist to stimulate your focus on the future. Don’t wait.

Competition among law firms is growing at the same time law firms’ differentiation seems to be shrinking. For 2015, focus on what makes your law firm special and build from that strength.

 

Time for a Law Firm Tune-Up??

Posted in Law Firm Growth, Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition, Uncategorized

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The November edition of The American Lawyer includes an interesting article by Aric Press titled “Big Law’s Reality Check”. The article has implications for law firms of all sizes.

Press provides much fodder for thought; but these points, in particular, struck me as telling:

  • Since 2007, revenue per lawyer has been dropping for the average AMLAW 200 firm when adjusted for inflation;
  • However, not everyone in the AMLAW 200 is experiencing this inflation-adjusted drop. Those possessing a respected brand in distinct areas have seen a material uptick in their relative top line.
  • Legal spending by American business has been, and continues to be down.

It seems clear that the business consumer of legal services continues to redefine our marketplace. And there doesn’t appear to be a change in the offing anytime soon. Strategic purchasing combined with increasing the amount of work kept in-house, demanding discounts and alternative fee structures are forcing disruptive change inside firms.

A Few Take-Aways For Your Consideration

As the absolute volume of demand for outside law firms continues to shrink, the strongest firms will continue to adapt, and move “downstream” — infringing on market share once the purview of smaller firms.

Inflation adjusted costs for law firms (as is the case in almost any business) continue to increase at a slow but steady pace.

At the same time, alternative service providers continue to take a growing slice of what was the legal service pie.

The combined result of the above is that the pressure will continue to grow on all but the most valued, established and strategically managed law firms among us.

Without respect to successes of the past, the market is sending clear signals to any law firm not following a strategic path: it is time to stop and reassess how your firm fits into the competitive landscape — and tune-up appropriately.

 

 

 

Lateral Hiring In 2015-Preparing for the Upcoming Movement

Posted in Law Firm Growth, Law Firm Leadership, Law Firm Transition

As the last quarter of 2014 nears its end, the ingredients for the lateral hiring stew are being added. Firm and individual lawyer performance on the year, bonus expectations and realization, internal law firm management and politics-all will be factors in determining individual lawyer contentment. The same factors, viewed from management’s perspective, will drive an examination about the firm’s “keepers” for 2015 and its future. These respective points of view will flavor the free-agent recipe. Content lawyers seldom leave-dissatisfied lawyers are always potential departures. And money talks.

Two recent articles suggest that 2015 could be a year in which law firms see an uptick in lateral movement. Debra Cassens WeissHas the BigLaw Recovery Arrived? notes the widening gulf between the top 21 revenue producing law firms and the remaining AmLaw 200. Her view that the gap gives these top firms an advantage in the lateral market is hard to dispute.

Michael Allen’s The State of the Legal Job Market details expected lateral movement after the New Year and predicts, after years of mostly gradual movement, a much more active first quarter of 2015.  Mr. Allen’s study notes that some firms historically have been more active than others, but even if all the top 21 firms are not seeking lateral talent in the marketplace, he predicts a lot of movement in early 2015.

Regardless of a firm’s ranking in law firm revenue per lawyer metric, aggressive activity by the firms most able to pursue laterals will stimulate lateral hiring activity by the remaining firms in the AmLaw 200 and beyond. Faced with these predictions, and the dynamic that law firms are at their most active or vulnerable during the three months either side of New Year’s Day, law firm management should prepare for the upcoming lateral rush in at least five key ways:

Update or Develop a Growth Plan That Ties to Your Strategic Plan. Growth for growth’s sake is a losing proposition. Not many law firm leaders will admit to such a strategy, but if proposed lateral hiring is not in furtherance of an imperative in a firm’s strategic plan, it should not be pursued. A reactionary pursuit of lateral hires because a competitor might otherwise hire the target is mindless growth to be avoided. If your firm intends to pursue acquisitions, only target lawyers that further your strategic plan objectives.

Assess Your Vulnerabilities. Lateral movement is a two-way street. Just as you are identifying targets to hire, some of your most valuable attorneys may be checking out opportunities at other firms. Don’t be blind to what goes on around you. Analyze which of your lawyers may leave and then work on a retention strategy. Keep your key assets as you seek valuable lateral additions.

Work on Deferred Maintenance. If your firm is in danger of departures, it is probably because unresolved issues at the firm make some of your producers unhappy. Likewise, a sloppy firm will not impress lateral candidates. Get ahead of the game by curing deferred maintenance. It may help save someone nearly headed out the door and improve your ability to impress lateral candidates.

Build Firm Momentum Independent of Lateral Additions. It is critical to end every year on a positive note. Yet we all know that not all years end up with record profits and bonuses. While positive spin sometimes can be tough to generate, leadership must attempt to excite the firm’s lawyers about the future. They will help excite the outsiders looking in.

Be Disciplined. You can have a growth plan, a strategic plan, a retention plan and a profitability plan. But if discipline is lacking in implementation of any of the plans because leadership has the bug to hire a new lateral to create some buzz, the firm suffers. It is imperative that discipline guide leadership in the upcoming free-agent season.

Baseball has its seasonal “hot-stove league” when players get traded and teams seek improvement through building a new roster. The functional equivalent for law firms is getting ready to start. Is your law firm ready?

 

The Basic Blocking and Tackling of Successful Law Firm Management

Posted in Law Firm Transition

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There are hundreds of potential strategies for law firm leaders to consider as they evaluate how to compete in an increasingly crowded marketplace. In the process of wrestling with all the complexity and analyzing options, it is easy to lose sight of a few basic principals that go a long way when it comes to keeping almost any firm healthy. So here’s a quick refresher.

People

If you frequent this blog you know I am a big fan of Jim Collins — largely because of his ability to cut through all the noise and remind us of some basic principles. To borrow Collins phrase, getting the right people on the bus is key. Build (or grow) your firm with quality women and men, ensure that everyone is treated with dignity and respect, you’ve taken a giant leap toward stability and productive collegiality.

And, may we talk about laterals for a second? In particular, make sure that those that you bring aboard laterally share your basic values and aspirations. The same should be said with respect to those who have come up through the ranks for partnerhship consideration.

In the long run (and sometimes it is not a very long run at all) no one wins when you look for ways to short-cut the people part of the law firm equation.

Clients

Clients are getting smarter and demanding more. Central to success is ensuring that your firm interacts with its clients in a way that strengthens existing relationships, leads to additional work, and makes it easy for your clients to be a coveted source of recommendations and referrals.

Cost

It is news to no one that costs — and debt in particular — are law firm killers. Keeping costs at a low and manageable level has an amazing effect when it comes to minimizing the things threaten a firm’s existence.

The killers here are real estate costs,which are typically fixed, no matter the departures of lawyers or clients; and disproportionate (or just flat out-of-whak) partner compensation.

Minimize your reliance on external financing as a basic tenet of your management, and you’ll have fewer moments on the cusp of crisis.

Focus on basic blocking and tackling will lead to a healthy law firm

What are your thoughts?

Insourcing By Corporate Legal Departments-Some Lessons to Be Learned

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

The concept of insourcing by corporate legal departments has generated some press recently. Jennifer Smith’s Companies Curb the Use of Outside Law Firms highlighted the issue for law firms and judging by the reaction, it explained for some law firm leaders what has been happening to them. Other writers and commentators (here, here and here) added to the discourse with their own take on the issue. As Suzanne Edwards reported in her Houston Companies Hiring More In-House Lawyers to Save Money, even law firms in the very hot legal market of Houston appear vulnerable to large clients cutting back on the use of outside counsel in favor of insourcing. Various reasons are offered for the growing popularity of insourcing, but prominently among them are the views that the high cost of outside counsel, inside counsel’s better service orientation, and inside counsel’s deeper understanding of the client’s business make insourcing a no-brainer. As reported, however, not everything will go in house as big ticket items outside a company’s legal talent base will still go to outside counsel.

Unrelated to that reporting but nonetheless relevant, a recent meeting of general counsel generated some raw viewpoints on how some GC’s see their relationship with outside counsel. A long list of problems, concerns and irritants was compiled by Pam Woldow in her Straight From the Horse’s Mouth-GC’s Say What They Want From Outside Firms-law firms would be wise to take note. Without repeating the list verbatim, and without assessing the fairness of all the points expressed by the GC’s, it helps explain the trend toward insourcing. Law firms that don’t react to insourcing or hope to survive on the “bet the company matters,” will be disappointed.

So what’s a law firm leader to do? Fundamentally, the rise of insourcing is telling law firms to:

Keep Costs Down. No small factor in driving companies to insourcing is the high cost of outside legal services. It does not take a rocket scientist to realize that one response to insourcing is for outside law firms to keep costs down. Alternative fee arrangements, success fees in lieu of some hourly fees must be considered as a way to reverse the GC’s aversion to hiring outside counsel. High legal costs truly have to be tackled-lip service to the problem is not only inadequate it is insulting. Major changes are required. Become financially lean and streamlined so the GC begins looking at the in-house team as bloated.

Become a Business Partner. Time and again, reports about insourcing cite the fact that for clients, the in-house lawyers “get it.” Consider seconding some of your lawyers, but even if that is not a great option, make it your business to know everything about your client’s business. And then show them, at no cost to the client (blogging, invites to panel discussions/seminars, and the sending of “business clippings” instead of just case clippings is a start), how much you know. Of course, you may find it necessary to specialize as a firm since it is difficult to be expert at everything. But since specialization may be key factor in law firm success in the future, becoming a business partner may just work.

Don’t Wait for the Big Ticket Items. Sure, all firms will want the big-ticket items (the proverbial “bet the company case”) but relying on a steady or even sufficient diet of such engagements could be a fool’s errand. The competition for the big ticket items will be fierce, it will include firms far outside your market, and given what typically is at stake in such cases, you may not even be considered much less make the “short list.”

Insourcing is a message to today’s law firm leaders. It tells law firms that clients are fed up with the status quo. To address this fundamental change in client perception of outside counsel, leaders should build law firms around a dedication to lowering costs and providing better service. Is that going to be your reaction to insourcing?

 

Investing More Capital at the Law Firm-Five Thoughts for Leadership

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

Invested capital at law firms varies widely and reflects the differing philosophies between firms. The amount invested says something about a law firm’s values, speaks to its fiscal approach and provides commentary about a law firm’s culture. Traditionally, the more capital in a given firm indicated a strong institution with the shared value of fiscal conservatism. Yet not all successful firms view it as vital that its owners make significant cash investments in the firm. For those firms, the adequacy of cash flow and the deferral of most distributions until year-end is viewed as more than adequate capitalization.

Law 360’s recent BigLaw Putting More Cash in Piggy Bank After Firm Failures reports a recent trend among some large law firms to increase permanent capital through a variety of measures, including requiring greater partner buy-in. As Law 360 reported,

“[I]n a recent firm survey, Wells Fargo found that the top 100 U.S. firms by size had 5 percent more permanent capital in the first half of 2014 compared with the same period of 2013.”

Yet the same article acknowledged that the push towards higher capital reserves is not universal and it can be difficult to convince law firm owners to invest more capital despite pressure from lenders and clients.

As a basic matter, a firm that increases its permanent capital has leadership that over-comes the common reticence among lawyers to part with their money. Experience shows that convincing partners to invest more permanent capital can be tough. Success or failure in cajoling ownership to invest more measures ownership’s confidence in their firm and confidence in firm leadership. It can be a telling if the effort is not successful. For that reason, the following facts should be understood prior to making a “capital call.”

The Timing is Never Perfect. Whether a law firm is riding high or struggling, any proposal to raise permanent capital will be met with arguments in opposition. If times are good, management will be met with “we’re fine, we don’t need to raise our capital.” If times are not so good, many owners will balk at investing more money in a firm that soon may be taking on water. There is never a perfect time to raise capital. But if additional capital is appropriate and all other things are equal, leadership should not refrain.

A Capital Raise Must Also Address the Return of Capital. A successful capital raise is not really successful if the capital raised can be quickly and easily redeemed. Most firms increasing capital also couple it with conservative redemption policies. Any firm adding to its permanent capital must not leave the barn door wide open or its “permanent capital” is not very permanent.

Make it Count. While a request to increase capital is never easy, the struggle that goes with the initiative militates in favor of raising an amount that is more than nominal. Inviting blowback for a small increase in permanent capital just is not worth the effort.

Departures May Result. Anytime a firm seeks to increase its permanent capital, fence sitters may decide that have had enough. So before you seek to raise capital, undertake an honest assessment about who might depart and prepare for that possibility. Many times departures are just part of the process.

Gradual is Easier. Many firms increase capital over a number of years instead of demanding that it all be contributed at once. The more a firm can phase in the increase by raising it from yearly distributions over a number of years, the more likely the initiative will be accepted and succeed.

Any program to increase a law firm’s permanent capital will invite controversy. Yet for firms seeking financial strength, as well as improving their standing with their banks and clients, an effort to raise permanent capital can be sound. Have you attempted to raise permanent capital recently? How have you fared?

 

Want To Project The Stability of Your Law Firm? Test Shared Aspirations

Posted in Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition

 

I am interested in the interaction of a group of people who have a common goal, or a common obsession, each contributing something unique to make something greater than the sum of its parts. I don’t know why, but from day one, that has interested me. – Steven Van Zandt, Bruce Springsteen’s E Street Band

 

I believe that today you can project the stability of your law firm.7382239368_ba418d5b73

The number one factor isn’t the economy. It isn’t even about how efficient your management team is in transitioning to the new normal.

The single greatest predictor of a law firm’s stability — through good as well as tough times — is the degree to which the partners share aspirations.

In fact, it is really pretty simple. The more disparate the aspirations in a partnership, the more difficult it is to maintain harmony.

If you find yourself in a less than harmonious firm, you’re not alone. The hiring priorities of most law firms exacerbate the issue. When it comes to hiring entry-level associates, little matters but grades. And when hiring partners laterally, the expected portable business trumps everything else (even though reality rarely measures up to those projections).

You might try conducting a blind survey in your firm to see the extent to which your partners or lawyers perspectives on 5 simple issues vary.

Pose these aspiration-based questions:

  • All partners should work at a minimum billable level of ________
  • All lawyers should commit a minimum of______ hours to pro-bono work.
  • Should the firm accommodate lawyer part-time schedules
  • What is a reasonable target for senior partner compensation.
  • How do you rank the following on a scale of 1-5, with 5 being most important:
    • Quality of client work;
    • Partner income;
    • Firm size;
    • Employee welfare;
    • Community reputation.

 

To the extent you find wide variation, you might consider reevaluate your hiring practices.

 

In a Time of Law Firm Transition, Executing on the Fundamentals is Key

Posted in Law Firm Leadership, Law Firm Transition

Interesting news about the legal industry in transition was reported over the last couple of weeks. Jacob Gershman of The Wall Street Journal wrote one of a number of articles that reported a drop in legal jobs. Jennifer Smith recently wrote that clients are gaining traction in tamping down the cost of legal services.  Robert Half reports that in Canada (will the US follow?) law firm salaries will fall behind some other professions in 2015. The ABA Journal provided a summary of law firms with the highest percentage of attorney losses. Forbes’ Basha Rubin theorized that mid-size law firms are at risk because of corporate trends towards insourcing. Another report about mid-size law firms had more positive news and concluded that the prospects for mid-size law firms had stabilized.  For large law firms, the news was not all bad as revenues were reported to be up.

The market turmoil currently being experienced will keep up for a while. For that reason, law firms today must have the resolve to tackle the problems that stem from market turmoil.  As formidable as these issues appear, many of these transitional issues can be addressed by sticking to sound law firm management fundamentals. To manage through transitional times, firm management should:

Review Performance Data Constantly. Smart law firm leaders stay on top of a law firm’s health by reviewing performance metrics frequently. A drop in a particular practice’s statistics is to be expected from time to time, but to keep it from getting out of control any substandard performance should be analyzed promptly. If the review suggests that a bigger problem is developing, an action plan to remedy the situation must be developed and executed without delay.

Increase Communication Efforts. At any law firm, keeping the lines of communication open is a must. In times of transition, a law firm leader should reach out to partners, associates and staff to keep them informed and gain feedback on their activities and concerns. Communication is a two-way street, so good intelligence on how your firm’s most valuable assets are feeling is best obtained by keeping your people informed. In times of transition, burrowing deep into your bunker is the worst thing a leader can do.

Keep Attuned to the Marketplace. Law firms do not operate in a vacuum-they compete in a robust legal marketplace that can be very informative. Law firm leaders should make it their business to know what is happening to their competitors. If a leader is well informed with the latest market intelligence, he or she will be more nimble to react to developments within his or her own firm.

Review and Re-Assess the Firm Strategic Plan. All firms should have a well thought out strategic plan. A law firm leader should frequently review the firm’s strategic plan and make small and large decisions that are consistent with a furtherance of that plan. If, due to the passage of time, the plan is dated or losing some of its relevance, re-think the plan and assess the firm’s next steps. Whether it simply needs tweaking (a common solution) or a radical change (generally not the case) will only be known if the plan undergoes a rigorous review by management.

Avoid Being Reactionary. Change experienced by a law firm can be gradual or immediate. Depending on the nature of the change, a response may be required. While circumstances may compel a prompt response, it should be measured and take into account its impact on the firm’s future. A reactionary response, in which management takes action because it “feels right” or the rank and file is clamoring for “action” is seldom wise. A misstep can be difficult to reverse.  Whatever the speed of a response, it must be thoughtful and aware of its potential consequences.

A market in transition manifests itself in change and often creates concern. Managing through that change does not require a change in management principles. Indeed, sticking to management fundamentals most often works best. Are there other approaches that you think work better?

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