Managing Law Firms in Transition

Managing Law Firms in Transition

Adapting and Law Firm Survival

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

The measure of intelligence is the ability to change – Einstein


Adapting to change – At first blush the need to adapt is so obvious there would seem to be no need to discuss it. Then we see firm after firm, small to large, fail because of their failure to adapt. So, lets discuss it.




In our experience there are 4 steps to adapting:

Planning, and
Step 1 -Acceptance

It has been long understood that all species, human, animals and businesses of all types, operate in an environment of constant change. There are two choices, adapt or die.

In slowly changing environments, like the legal market during most of its history; responding to change doesn’t need to be hurried. In an environment like the legal market of the last several years, where change is rapid and accelerating, an appropriate response must be developed with a sense of urgency.

This short and insightful post by Eric Fletcher provides a great example.

So, if the constant nature of change is an absolute, why do so many firms fail to adapt. I suggest that it can only be one of two things, 1) a lack of understanding of the effect on their firm, or 2) a lack of the knowledge/capability necessary to do anything about it.

Step 2 – Evaluating Impact

There are numerous ways in which change may impact a law firm;

  • New competitors – this might include new law firms as well as a growing list of non-traditional service providers,
  • Changing methods of service delivery fueled in large part by innovations in technology and/or process,
  • Shrinking demand for certain types of services, and
  • Increasing experience and expertise among clients, in particular General Counsel, who are utilizing their power of choice — resulting in pricing pressure, and in some cases the loss of an important client.

Law firms must regularly engage in an evaluation process that attempts to understand the specific nature and ultimate impact of the changes their firms are facing.

Step 3 – Planning for adaptation

This step includes discussing options for how a firm will respond to the primary changes it is facing. Often this is a difficult step because the plan will almost always include the reallocation of resources in a way that improves the odds of success. A third party participant in the process can be very helpful in maintaining a level of objectivity.

Step 4 – Execution of the Plan

As is so often the case, execution can be the point of failure. A firm can expend all the resources — time and money – and end up with a killer-strategy that addresses change and scopes new opportunities. But we’ve all seen great plans fall victim to the pressures of daily realities. The plan winds up collecting dust in a desk drawer.

Meanwhile, change continues its march.

Firms that beat the “desk-drawer” fate typically do three things well:

  • Set up “short fuse” milestones for the implementation of the change plan,
  • Include a process designed to build consensus, and
  • Put the right people in charge of driving the plan.

It all begins with a full acceptance that our choices are to adapt or die.

Is your firm adapting?

Managing Excess Law Firm Growth-Spinning Off the Struggling Office

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

200px-For_Sale_by_Owner_Sign.svgLaw firm growth is a popular strategy or tactic among law firms seeking to compete in today’s ultra competitive legal services market.  Growth often is achieved through mergers, practice group acquisitions and lateral hiring.  And in some cases, the growth initiatives result in new offices being opened in markets previously not served.  New offices create excitement and usually generate visions of success on account of expected synergies, anticipated new opportunities and the adding of a roster of respected lawyers.  Over time however, the excitement can wane and in some cases is replaced with the realization that the new office is more of a burden than a benefit.  The malady is not confined to new offices-long standing offices can become burdensome over time as well.

Fixing the problem office, whether traceable to financial performance or other issue(s), is critical to the health of the firm at large.  Substandard financial performance can not only undermine the larger firm’s bottom line, but it can foment morale and cultural issues system wide.  Finances aside, problems with practice quality risk a firm’s reputation and must be addressed to avoid tarnishing the brand.  Inconsistent cultures can likewise be disconcerting.  Whatever the basis for the problem, prompt action is required.

Unfortunately, not all problems associated with a distant office can be solved easily.  When the solution is too complicated, requires the investment of too much capital or is too formidable due to market dynamics in the city the office calls home, the drastic option of office closure is presented.  But the better approach may be to “spin off” the office and depart the market.  If law firm leadership finds itself dealing with a struggling office that does not seem to be easily fixed, the following thoughts are worth considering:

A Spin Off Should be Done for the Right Reasons.  Just because a distant office struggles does not mean that it should be closed.  Hard work and basic blocking and tackling can correct many a problem.  But if substandard financial performance appears uncorrectable, strategic incompatibility exists, or the culture is not in harmony with the rest of the firm, finding a new home for the office may be a good alternative.

One Man’s Trash is Another Man’s Treasure.   While not all spin offs need to be described so pejoratively, the point is that just because an office is not valuable to one firm does not mean it won’t have great value to another firm.  A large firm deciding to spin off an office can often find suitors for the office if it tries.  Alternatively, sometimes the smaller office is a good candidate to become a stand-alone law firm.   In any event, a struggling office may just need to be put in a position to succeed and a new home may be the right solution.

Timing is Important.   Ignoring the opportunity to affect a timely spin off can subject a smaller office to eventual defections, terminations and an inability to recruit.  A crippled office will end up being unattractive and leave the larger firm with many headaches, including unwanted lingering liabilities.

For Clients and Personnel, It May Be the Best Thing.   A planned and controlled disassociation may be far better for clients and personnel than a painful stream of departures, defections and terminations.  With foresight and planning, the transition of an existing office to a new firm or the creation of a stand-alone firm can be seamless for clients and personnel.  Not only are their interests supported, but also the remaining firm can lessen its malpractice risk and liabilities typically associated with closure.

Once Divested, the Leadership Can Focus on the Firm’s Future.  An office that is incompatible to the firm as a whole takes a lot of leadership’s time and energy and detracts from the efforts to run the rest of the firm.  Once disassociation occurs, however, time previously spent on the now departed office can be dedicated to implementing the strategic objectives of the firm as a whole.  By being able to focus on a unified strategy implemented in a consistent way, the firm optimizes its prospects for the future.  And by eliminating the incompatible competing interests presented by the troubled office, leadership’s message about the firm’s direction not only becomes more consistent, but more credible.

For many firms, a poorly performing office is ignored, bolstered with additional investment or closed.  Yet in some cases, a spin off may be a preferable alternative.  If your firm has a struggling office, would a spin off work be a possible solution?

Denial and Turning Around The Troubled Law Firm

Posted in Law Firm Crisis, Law Firm Leadership, Law Firm Repositioning/Turnaround/Restructuring, Law Firm Transition, Law Firm Warning Signs

Hope is the denial of reality – Margaret Weis




As a law firm in decline continues to struggle, there are two primary scenarios in which denial furthers the rate, or degree, of decline:

  • undervaluing the risk associated with a significant undertaking; or
  • disregarding mounting evidence of decline.

Denying the Risk Associated With Major Initiatives

Struggling law firms often entertain major changes (to the firm or in its culture) in order to “right the ship.” I define a major change as one that, if it were to go very wrong, could trigger the demise of the organization. Some examples include:

  • downsizing through the termination of individuals, groups or office closings;
  • the acquisition of another firm or practice;
  • being acquired;
  • restructuring management/governance; or,
  • modifying the compensation system.

Major changes are often necessary for a struggling firm, to be sure. However, a move from the frying pan into the fire is to be avoided. The overwhelming tendency is to undervalue the risk associated with major moves. To counter that tendency the prudent leader will seek to have the “worst case” scenario fully developed and discussed prior to decision-making. It is best to lead with caution and seek counsel.

Denial of the Evidence of Decline

By definition, struggling law firms are operating in variance to desired levels. In the most extreme case – a failed firm — it is typical to find that there was mounting evidence indicating a decline – evidence that was discounted or ignored. Examples of mounting decline include:

  • an increase in the level of undesired attrition/turnover;
  • an increase in debt;
  • a decline in margins;
  • falling revenue levels; or,
  • the loss of meaningful client relationships.

Law firm leaders must be vigilant in monitoring the performance of the organization. Steps should be taken to ensure that the firm doesn’t veer too far for too long from operating performance norms or targets. The longer the firm operates in variance, or the greater the degree of that variance, the stronger the corrective action needs to be. And the more frequently the performance needs to be monitored.

Often the leader of a law firm in decline becomes more insular, protecting the firm from “bad news” and trying to prevent alarm. The prudent leader will honestly communicate with confidence and conviction, while broadening the number of people from whom input and advice is solicited.

Is denial adversely impacting your firm?

Lexit: How to Respond to Lawyer Exodus from Your Law Firm

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

Modest attrition at law firms is to be expected-it happens continually and few firms are exempt. But when the lawyer departures spike, or the particular resignations are from your most important lawyers, management must respond quickly.

Lawyer departures don’t just happen for any reason. Unexpected and damaging departures often can be traced to problems a law firm is having but has failed to correct. Disappointing financial results, political infighting or declining confidence in the firm’s future can contribute to attorney losses that are particularly painful. When faced with crisis stimulated by loss of key contributors, law firm leadership should take action decisively. In addition to trying to stabilize the inevitable flagging firm morale, leadership should:

Determine the Short-term and Long-term Financial Impacts.  Leadership must take stock of the financial impact caused by departures.  For firms that have borrowed money under credit facilities, the departures may create a non-monetary default.  Assessing this possibility is very important.  The next step is to analyze the short-term financial impact of the departures.   In many cases, the departures actually provide a brief cash-flow respite since financial obligations to the former lawyers are reduced or eliminated.  From a long-term standpoint, the departures always have a financial impact.  Whether the outcome is positive or negative typically turns on the profitability of the practice that left with the attorneys.  Finally, if the firm has an obligation to return capital to the former owners, the impact may be short-term, long-term of both.

Be Alert to the Tsunami.  Like the first guest at a boring party announcing the need to leave only to be followed by the entire guest list, lawyer departures can create a Tsunami of defections.  When more than an isolated departure is experienced, wide spread discontent may be gurgling beneath the surface-ready to turn a slow trickle into a gargantuan wave.  The first departures could well be a signal.  See it as such and take steps to stem the potential for more.

Secure Your Information and Assets.  A firm’s assets can be many, including client relationships, ongoing legal matters and proprietary information.  At the same time you are putting on the full-court press to retain your clients and open matters, be sure to secure the firm’s information base.  As legally and contractually permitted, cut off the departed parties’ access to sensitive information.  It may be too late since most resignations are preceded by surreptitious preparations (including collecting data, work product and vital information), but sound management must act to minimize access once departures are announced.

Notify and Reassure Those That Matter.  While you are reacting to the crisis, leadership must avoid becoming so insular as to ignore other interests that need reassuring.  Staff, associates, owners, clients, banks (remember the possibility of a non-monetary default) and landlords all have an interest in the firm’s well being.  An information vacuum can cause these parties in interest to assume the worst.  Getting out in front of the news quells the possibility of overreaction.

Develop a Plan for the Long-term Health of the Firm.  By the time the foregoing steps have been taken, or at least started, designing a long-term plan for the health of the firm becomes paramount.  Things that are learned as the crisis is addressed (the financial impact, the risk of added departures, loss of clients and third party reaction) will be the guideposts for a plan.  Soliciting input from key players still at the firm, from important clients and, in some cases, outside parties, can be very important to not only create a sound plan, but also one that has good prospects for “buy-in.”

For many firms, an unexpected but significant departure hits at the worst possible moment. Reacting quickly and effectively can be huge in the success or survival of any law firm. If Lexit happens at your firm, will it be able to respond?

Is Your Law Firm Slipping Into Trouble

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

One ought never to turn one’s back on a threatened danger and try to run away from it. If you do that, you will double the danger. But if you meet it promptly and without flinching, you will reduce the danger by half. Never run away from anything. Never!

Winston Churchill


The first key to managing the transition of any law firm to a more productive and stable position is the early recognition of a potential problem. In an earlier post, What Caused the Pain, we discussed the fact that a declining market position is almost always indicative of underperformance. The challenge for leadership is to recognize the condition early enough so that decisive action is able to turn the tide.

This begs the question — What are the most common signs that a firm’s position is beginning to slip? Consider these nine.

1. A sudden unanticipated loss of lawyers – We’re not talking about normal “comings-and-goings” here. The propensity for frequent movement of individuals is the topic for another post. This is about a greater-than-normal degree of movement. During a measured period, the greater the percentage of lawyers lost, or the more prominent those departures, the stronger the signal.

2. The loss of key clients (or increased difficulty in winning new business). Continuity of critical relationships is one of the greatest assets of any firm. While savvy management works hard to avoid the too-many-eggs-in-one-basket syndrome, a portfolio of clients central to success almost always exists. The loss of one or two key clients, or the departure of a large number of clients from any group should set off an alarm.

3. The absence of strategic organic growth. If you are increasingly unable to win the new business targeted in your firm’s strategic plan, take heed. Either the competitive landscape may be shifting in a way that directly impacts your position, or your planning needs some scrutiny. Either is an early warning sign.

4. Increasing turnover in key positions in the firm. I often refer to Jim Collins’ principle of having the right people on the bus. If you begin to lose significant non-attorney personnel, this can be much more than an inconvenient (and costly) loss of continuity. See Judy Capco’s article on causes of employee turnover.

5. Flattening or declining profits. On one hand, this seems simplistic, if not painfully obvious; on the other, the degree to which profit can, at the same time, be the source of consternation and ignored as a signal of issues is baffling. If profits are flat or declining, it is almost always time for action.

6. Falling revenues. Often declining profit is preceded by shrinking revenue…but not always. Whether profits decline or not, falling revenue is an early reason for concern.

7. A worsening relative debt position. Debt, in and of itself, does not spell trouble. Most law firms rely on debt to some extent to finance growth and manage cash flow. That said, an increase in a firm’s relative debt position should be closely monitored. Absent alignment with strategic moves, this is often a sign of impending decline in market position.

8. Negative external visibility. Many firms receive some degree of bad press; loss of a case, a high-profile departure, or litigation filed against the firm. But leadership must resist the temptation to ignore what can be viewed as uninformed voices. An increase in negative visibility via local, regional or internet distribution channels is an early indicator, and cause for concern.

9. Difficulty in attracting talent. When your firm finds it increasingly difficult to attract lawyers to the firm it is either the sign of a declining market position or an increase in the perception that the firm is in decline. And this perception is, itself, an early indicator of decline. If strategic talent believes your firm may be in decline, each day brings increased danger that the perception will become reality.

All well-run firms recognize benchmarks and maintain performance data. The best routinely evaluate performance in critical areas – carefully looking for any sign or signal that the landscape is shifting.

The more comprehensive our list of early warning signs, the more accurate our assessment of existing and future market position. What would you add or take away from our list? Does your firm monitor the early warning signs?

Moving Laterally? – Being Careful is More Important Than Ever

Posted in Law Firm Growth, Law Firm Transition

 Movement of attorneys between law firms is as robust as ever with today’s lateral hiring not just focusing on the hiring of individuals. Firms seeking to fill out capabilities often hire away groups of lawyers in an effort to gain some velocity from their expansion strategy. True mergers, especially when a large firm is eyeing the practice of a smaller firm, are increasingly being replaced by large lateral transactions.

As the recent article Firms Increasingly Making Partners Pay to Leave points out, however, departing a law firm is becoming increasingly painful. More and more law firms are seeking to stem attrition by requiring sign-on bonus paybacks, reducing or eliminating participation in profits, requiring pay back of compensation “not earned” early in the year, stretching out capital repayment terms and modifying financial benefits even after a firm has been joined. For a workforce used to unfettered free agency, these new obstructions are unwelcome if not surprising.

For any attorney, group of attorneys or small law firm thinking about moving to a new firm, these trends suggest that prior to saying “I do” it is vital to know how the new firm treats its departing lawyers. In particular:

What Are the Terms of Any Financial Inducement? Without a financial inducement to leave, many attorneys will not bolt from their present firm to a new one. So it is not surprising that “sign on” bonuses or other benefits are offered to attract lateral hires. But as the article notes, more and more of these financial lures come with conditions that trigger a repayment obligation whenever the attorney departs again for a new firm. Before being swayed by the up front “easy money,” the details, especially any obligation to repay, need to be understood.

How Does the Partnership Agreement Deal with Departure? Being excited about the opportunity presented by a new firm is great, but a calm and detached reading of the firm’s partnership agreement is essential. Increasingly such agreements contain provisions that delay the repayment of capital, impose specific procedures and deadlines connected with resignation and speak to repayment of cash related to “sign on” bonuses. To many a departing attorney’s surprise, the dense provisions may also deprive a leaving attorney of year-end distributions or even require repayment of “unearned compensation” which is directly tied to the firm’s profitability on a partner’s departure date. Understanding the nuances of a partnership agreement should occur prior to joining a firm, not once the firm has already been joined, or worse yet, after the resignation letter has been signed.

Is Any Penalty for Leaving Commensurate with Inducement for Coming? If there is a penalty associated with leaving, that penalty should be compared to the benefits to be enjoyed when joining. A new home that will effectively have you in debt on departure had better be worth the cost. If the new firm provides guaranteed compensation, a cost/benefit analysis may ameliorate the negatives of a departure penalty. Or it may not. In any event, careful analysis is required.

Can the Departure of Others Create an Adverse Financial Impact? As true mergers become less common, especially when a large firm swallows a small firm by taking its talent in a mass lateral transfer, the terms of that addition should be understood. If after you join colleagues of yours decide to move on, be sure that their decision to leave does not adversely impact you even though you are happily staying.

How Easily Can the Partnership Agreement Be Amended? Even if your new firm’s partnership agreement seems acceptable respecting your treatment should you ultimately decide to depart, consider whether the partnership agreement can be easily amended. More than one firm has recently adopted more draconian provisions respect the treatment of departing partners in an effort to stabilize the institution. For a new partner faced with a proposed partnership amendment designed to strengthen the institution, speaking out against the new measure many not be the easiest thing in the world.

It is nice to be wanted but when another law firm comes calling some level of caution is a good idea. Besides considering the traditional questions of culture, conflicts and compensation, it is wise to understand how difficult it will be to depart if things don’t work out. With today’s law firms trying to shut the revolving door, will your new home try to bar your exit?

What To Do To Manage Law Firm Turnover

Posted in Law Firm Leadership, Law Firm Transition



revolving doorThis post was spurred by two recent articles/posts — Biglaw Firms Must Conduct More Layoffs, Before It’s Too Late, and A Law Firm Structure that Avoids Layoffs.

I have written before about the horrific performance of law firms when it comes to retention. Previous posts have discussed the enormous direct cost, indirect cost and human cost associated with attorney turnover.

Fortune 500 companies can maintain turnover rates of 2-3%. Meanwhile, law firms as a whole have averaged around 20% turnover a year for the last several decades.

Think about that. We’re not looking at a single blip on the radar over an extended period of time. For an industry to consistently experience turnover of 1/5th of the talent something must be broken in the hiring process, the management systems or both.

As is implied by the above articles, as law firms see a fluctuation in demand the knee-jerk reaction seems to almost always be to downsize. Then when things pick up we can always re-load.

All businesses — including every one of the Fortune 500 — experience demand fluctuations; but in every sector outside of legal they somehow seem to be able to weather the storm with significantly better retention rates

How And Why?

I believe there are five key reasons for the superior retention in the Fortune 500 vs. law firms. Consider the impact these 5 areas have on turnover:

  1. Companies on Fortune’s list, by and large, know what it takes to be successful in their environment, and they recruit to those characteristics.

The culture of every organization is different; service and production means and standards vary widely. But the organization that knows with specificity what characteristics are reflected in individuals that are successful is in a much better position to do a better job of hiring

As Jim Collins says “First…Get the Right People on the Bus.”

If you aren’t recruiting people that are a great fit to start, odds greatly increase that these individuals will rotate out in the midst of any high-consequence change.

  1. The Fortune list is, for the most part, made up of companies that are run by professional managers

The people that run large non-law firm businesses are seasoned executives. They have come up through the ranks, and developed the ability to make sound long-term decisions…knowing how to count costs (hard and soft), factor ups-and-downs, and manage through volatility.

There has been a bit of an increased focus on management and leadership skills in law firms, but we have a long way to go. It is still fairly common for a Managing Partner’s first management role to be the one she was just elected to.

The impact quality and experienced management could have is still seriously under valued in most law firms.

  1. The well-run business (on or off the Fortune list) invests in retention.

More specifically, the successful business invests significantly in developing and understanding its workforce.

  1. Well-run businesses utilize creative means to staff for peak periods.

The seasoned business executive knows that an “uptick” in demand isn’t necessarily permanent. In order to avoid the myriad costs associated with hiring as if it is, successful businesses make much more extensive use of temporary staffing, seasonal players, outsourcing, and par- time to potential full-time arrangement.

In many situations, law firms would be better served to under-hire permanent attorneys until the demand is demonstrated over a longer period of time.

  1. The “best places to work” know why people leave. . and they build around why people stay.

Exit interviews are essential to understanding why you are losing the people you are losing. A common business practice is to conduct two exit interviews; one while the person is on their way out, and a second as a follow-up exit interview after the person has been gone a few weeks or even a few months.

The follow-up exit interview is valuable for a couple of reasons. One, there is a greater willingness to be frank after a physical separation; and second, it sends a message that you do really care about losing the individual as a member of your team.

I am not saying that downsizing is never the answer. The fact is that , some firms find themselves in a position where there are no other viable options for survival. But, surely we can do much better.


Addressing Your Law Firm’s Declining Demand Through Change-Five Considerations

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

Action Changes Things AcronymAlthough pockets of law firms are enjoying increased demand, revenues and profitability, the general news about the industry as a whole is tepid. A recent article by Chris Mondics about law firm financial performance cites a common problem these days of law firms lacking enough work to keep their lawyers busy. The article (drawing on a survey recently completed by Altman Weil) notes an obvious cause of overcapacity by reporting that for many firms pre-Great Recession client demand as not returned.

The annual American Lawyer rankings were published last month and while some elite firms in the Am Law 100 are enjoying top-level performance, most of the firms in the Am Law 200 are less fortunate. To top it all off, the stories of lawyers jumping from one firm to another in search of a “better platform” has contributed to a feeding frenzy that for many firms amounts to a revolving door; in some cases solving few problems but leaving behind challenges to confront.

For the firms seeing a sustained slackening of demand, there is no shortage of ideas on how to combat the problem. More than a few experts question the long-term vitality of the hourly rate model due to waning client interest in perpetuating its perceived inefficiencies. In the face of such questioning, some advisors recommend that firms respond with fixed fees or hybrid rate structures where some payment is conditioned on success. These creative ideas, however, are not for all firms.

Before a law firm replaces its hourly rate model in favor of something new, it is imperative that it introspectively takes stock of its culture, its clients, its people and its short-term and long-term commitments. As it contemplates a new model, it should be inquisitive and ask at least the following five questions:

How engrained is the hourly rate model in your firm? A firm that historically has been completely an hourly rate shop will have the biggest adjustment. In contrast, a firm that has experience with alternative fee structures will adapt more easily. If your firm is more like the former than the latter, the adjustment period will be longer and potentially more difficult. Consider taking it slow.

How well do your attorneys deal with change? Attorneys often do not do well with change. Taking away the hourly model can take away a lawyer’s security blanket. It is important to recognize the difficulty that many attorneys will experience and develop ways to assuage their discomfort.

Can your attorneys deal with a little (or a lot of) income volatility? In a firm traditionally using the hourly rate model, gross revenue variability often was a function of billable hours booked and bills collected. Aggressive expense management and rate increases often addressed any softness in those numbers. Some of these tools may be unavailable if alternative models are adopted. Until a firm gains experience with new models, revenue volatility gets translated to income volatility. Can your attorneys and your firm weather that kind of uncertainty?

Is the proposed change something your clients will embrace? Presumably, many of the firm’s clients will gladly accept an approach that provides greater fee certainty and aligns the law firm’s interests with theirs. But whenever fundamental change is contemplated, it is important to be certain that the proposed change is something clients will embrace. Doing your client centered research is critical.

How strong and deep is your firm’s expertise? In the end, a firm’s reputation and expertise is what will help it weather radical change. A strong reputation and renowned expertise will attract clients regardless of the fee model, but a fee model attuned to clients’ interests will convert that attraction into greater client demand. If the lure of your firm’s reputation and expertise is slight, the conversion from one model to another may not be a panacea.

If demand is down at your law firm, it is a problem in search of a solution. One solution is to move away from the hourly rate model. But finding a solution is more than adopting the latest trend. The right remedy depends on your culture, your people, your clients and your areas of strength. If you are tackling the decline in demand, are you asking the right questions?

Practicality and Law Firm Strategy

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

business-strategyI was very encouraged by a recent Bloomberg article regarding Katten Muchin Rosenman. The piece describes the strategic priorities of Roger Furey, the newly-named chair of the firm. The three top priorities are:

  • Getting the word out regarding the firm’s reputation. Reportedly, the firm has an excellent reputation with existing clients and the goal is to make the broader market more aware of this.
  • Determine what the firm’s clients view as their needs. As is the case with all firms (or for that matter, any service related business), understanding the needs of clients —   learning directly from them about what they are thinking and what they need — will allow the firm to better serve them (and when done properly, almost always result in organic growth).
  • Attorney development. The firm intends to better use its more senior lawyers to enhance the capabilities of its more junior lawyers.


There is a lot to like about what this new managing partner is doing; but there are four things in particular that  I love about this strategy.


  • It is Achievable – Exotic, industry conquering objectives can be exciting but are often unrealistic. Goals that aren’t achievable can be more destructive than no goals at all. Outlining a series of objectives that are realized helps build a foundation of confidence and trust. And from here more aggressive objectives can be addressed.
  • It engages clients and attorneys – Attorneys and clients are the obvious life blood of any law firm. Strategic priorities that get both involved in advancing the firm’s strength is a recipe for success.
  • It provides clear direction – The Katten priorities provide guidance as to where the firm will focus and where it intends to invest resources. The priorities say the firm is going to be about enhancing its reputation through deeper service relationships with clients; and that it intends to accomplish this by listening to the clients, understanding their needs, and developing enhanced capabilities aligned with these needs.
  • It is Positive – This simple set of priorities creates a strategy that is easy to rally around. It is easily understood, easy to believe in and feel good about.


During these times where reports of law firm struggles continue to dominate the news, I found this article encouraging.


Does your firm’s strategy provide positive direction and is it achievable?


Hiring Ross As Your New Associate-Five Additional Steps for Law Firm Innovation

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

Business as usualThe march of change and innovation in the legal services industry continues.  Last week it was reported that Baker Hostetler has licensed “Ross” for its bankruptcy group. Baker Hostetler’s decision to use the Ross Intelligence artificial intelligence product to perform some of the basic functions traditionally the role of associates is innovative and signals change.

Some of the industry’s change and innovation is even slaying a few sacred cows.  A recent article/post by Scott Forman about “unbundling” legal services notes the dramatic change to the “one-stop shopping” model that so many firms have sworn by for years.  Unbundling means giving up inefficient elements of a law firm’s practice or innovating that practice to obtain efficiency-all in the name of client service.

Change and innovation, whether by adopting artificial intelligence or unbundling services, should no longer be viewed as groundbreaking but as a must.  The 2016 report from the Georgetown Law Center for the Study of the Legal Profession notes the systemic change being experienced in today’s legal services market.  The report observes that clients control legal services like never before, law firms’ share of the legal services market is declining and clients are keeping more legal work and doing it in house.  Responding through innovation, whether by turning to artificial intelligence, an unbundling legal service, or taking other action, is essential to remaining relevant.

For law firms seeking to avoid obsolescence through innovation and change, at least five steps should be considered:

Make Innovation a Firm Wide Mandate.  Change at law firms is hard.  Many new timers and old timers alike will bristle at abandoning the tried and true approach to law in favor of a new way.  So before new ideas are proposed or change threatened, law firm leadership should spend significant time changing the culture through educating the ownership about the new normal and the dangers faced.  An educated ownership becomes an ally, a font of ideas and drives the firm towards a more client-centered approach to law practice.  Make the owners own the change.

Rethink the Economics.  In the future legal work will be less labor intensive and clients will expect results based on an economic model other than the billable hour.  Building a non-billable hour economic model that is client responsive yet profitable should not only be a goal but also an imperative.  Creatively pricing legal services will become more important.

Reallocate Firm Investment.  The march of technology has been felt for a long time.  In the future, firms will need to allocate budgets not only for more advanced systems, but also for personnel that will fill a quasi-legal role to generate data and analysis that lawyers can use.  An incoming associate class may give way, at least partially, to an incoming tech class of which only some may be trained as lawyers.  Young lawyers with a start up mentality motivated to think about better or more efficient ways to do things could prove very beneficial.

Change the Human Resource Management.  Even in a world that includes Ross, good people will still be needed to deliver good legal services.  But human resource management will rely more heavily on contract lawyers (or their equivalent) and short-term outside services.  Whether the legal profession becomes truly “uberized” is subject to debate, but the underpinnings of the Uber model and client expectations will move the profession away from long-term personnel decisions and towards managing fluctuating demand by short-term hires.

Diversify.  If alternative legal service providers are making inroads and taking market share, think about joining the trend. More than a few firms have taken this approach by segregating into other business units labor intensive activities like document production.  By doing so they have delivered lower cost services on commoditized work rather than see that work or the client go elsewhere.  For the most part, there is no reason a regular law firm cannot provide alternative legal services if well thought out.

Ross joining Baker Hostetler is not as revolutionary as it may seem.  For some time now client expectations of better value and efficiency from its lawyers has furthered innovation in a profession generally slow to change.  Is your firm keeping pace?