Managing Law Firms in Transition

Managing Law Firms in Transition

Unwanted Law Firm Departures While Negotiating a Merger-A Test of Leadership

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

Law firm mergers seemingly are announced weekly and continue a trend as to which most observers are accustomed.  Just last week Locke Lord and Edwards Wildman Palmer jointly announced the signing of a letter of intent to combine their two firms. Not all law firm mergers are marriages of equals, or instances when the strategic visions align into making a combination a “no-brainer.” More than a few mergers stem from one of the merger parties needing to combine to avoid a potential collapse.  Unfortunately, for the law firm “needing” to do a merger, pursuit of a combination presents a “double-edged sword.”

Going down the merger route, under any situation, can be unsettling to a firm’s personnel, including its key contributors. Uncertainty abounds and producers, non-producers, associates, and staff wonder whether a combined firm, from a personal standpoint, will be good or bad. Indeed, uncertainty can result in unanticipated departures that can tarnish a firm’s appearance and attractiveness. Without adequate advance preparation, departures can adversely affect the merger discussions and, in some instances, spell their doom.

Preparing to pursue a merger takes more than addressing some deferred maintenance, polishing some dulled surfaces and identifying prime merger prospects. Because merger discussions can foment anxiety at all levels, attention to dealing with that anxiety is a must. Most particularly, it is important to prepare for potential departures prior to diving deep into the merger waters. To do so, law firm leaders must:

Recognize that Turmoil May Arise. Before any merger discussions get started, leadership must understand that anxiety at the firm will increase in a multi-fold way. Contributors of all degrees will wonder whether a merged firm is a place they want to work. Once merger is in play, normally calm people can become skittish. Leadership must be sensitive to this potential and act to provide a calming influence.

Understand that Intangibles Matter.   Merger preparation means that data will be assembled to identify a firm’s strengths and explain its weaknesses. These analyses, especially regarding the firm’s producers, will focus on their economic contributions and downplay or explain away the negatives associated with some of the more challenged firm segments. Yet the firm’s real weakness can be the lack of glue or adhesion in its component parts. Leadership must identify where fissures might erupt and take steps to bond around them.

Negotiate Knowing that Departures are a Possibility. Nothing can hamper merger discussions more than experiencing lawyer departures after having touted those same lawyers as key pieces of the proposed combination. For that reason, no one component of your firm can be oversold. Negotiations should emphasize that the firm is greater than the sum of its parts and is an institution of great value.

Confront Departure Issues Head-on. If you have an idea that a departure is possible, deal with that risk directly. Visit the potential expat to address any disaffection that is fueling those thoughts. While this is where persuasive powers are critical, it is also critical that leadership address with other attorneys any fallout if departures do occur. For those that remain, a departure of one or more lawyers may create panic. Eliminate their concerns with a factually backed analysis of the firm’s remaining strength.

Provide Comfort to the Merger Partner. In instances when the departure cannot be averted, inform your prospective merger partner about the departure quickly with an analysis that emphasizes the remaining value of the institution. If you have been successful in tamping down any panic, consider informing your potential merger partner that additional departures are not expected and why. Finally, if your firm’s original pitch presented the firm as an institution more valuable than the sum of its parts, a leader’s ability to comfort a potential merger partner is enhanced greatly.

Pursuing merger is a high risk/high reward proposition.  It should not be pursued without understanding that lawyers may leave the firm in the midst of the initiative.  Can you firm withstand departures and make a merger work?  Can you firm continue if merger discussions cause departures and no merger is consummated?

 

For Law Firms Everywhere, These Are Transitional Times

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

Times of transition are strenuous, but I love them. They are an opportunity to purge, rethink priorities, and be intentional about new habits. We can make our new normal any way we want. – Kristin Armstrong

Business as usual

The recent closing of the Toledo, Ohio law firm of Cooper and Kowalski provides another reminder of the nature of competition in today’s marketplace.

The law firm, once one of Toledo’s largest, faced three obstacles that make competing an uphill battle:

  • Increasing difficulty recruiting top law school talent;
  • The departure of lawyers; and,
  • Fixed infrastructure cost.

Sound familiar?

For Cooper and Kowalski the challenges and the additional issues they precipitate eventually left the firm with few options other than dissolution.

It is not breaking news to any law firm leader that the evolution of competition within the profession is growing daily. A firm is either gaining on the competition or facing increasing risk of its own demise.

What is your firm doing to ensure its survival?

Law Firms and Big Ten Football-Leadership and Disruption

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

The Big Ten had a tough go of it last weekend in college football. Both Michigan and Michigan State failed to step up to challenges against non-Big Ten teams. In the Horseshoe, Ohio State lost to Virginia Tech in a contest pitting the Big Ten against the Atlantic Coast Conference. The weekend’s results again raise doubts about the strength and quality of Big Ten football. If today’s business concepts are applied to what is going on in the Big Ten, one might say that the storied conference is feeling the effects of “disruption.”

The disruption in college football has similarities to the disruption being experienced in the legal industry. While there is debate about disruption in the legal industry, many law firm leaders, like Big Ten coaches and athletic directors, are dealing with the impact of change. Smart law firm leaders, like Big Ten football leadership, will take pro-active steps to deal with disruption. And while tailgating and marching bands are as unique to football as billable hours and lateral hiring are to law, capable leadership in college football and at law firms will deal with disruption in similar ways. The Big Ten leaders and law firm managing partners will:

Think Short-Term and Long-Term.  Big Ten coaches and athletic directors, being among the best in the business, know that nothing gets fixed overnight. Most will develop short-term strategies for success (get some wins) while pursuing a long-term strategy to assure excellence in the years ahead. Astute law firm leaders will do the same. The short-term goal to deliver steady financial success will be joined with long-term preparations for “new law.”

Focus on Financial Issues.  Most people don’t feel sorry for the Big Ten when it comes to financial issues because its stadiums, boosters, and sponsors create a financial strength most schools only dream about (okay, the SEC doesn’t have those dreams). Yet you can be sure that member school’s current financial fortunes will not result in complacency. Ideas and strategies on how to maintain and improve upon the present financial girth will dominate leadership’s thinking. Similarly, any competent law firm leader knows that one good year does not guaranty another, and great attention will be dedicated to achieving future financial performance.

Invest.  Big Ten schools invest in talent and infrastructure and already have among the best of both. As for talent, university presidents will push to retain or hire the best athletic directors, the athletic directors will strive to retain or hire the best coaches, and the coaches will pound the pavement to find and recruit the best players. But that is not all. The competition for superior talent will motivate schools to build state of the art facilities (locker rooms, weight rooms, indoor practice facilities, booster reception areas). Law firms seeking to compete and survive will do likewise. Hiring the best associates, hiring the most desirable laterals and retaining the firm’s best producers will be a focus of any committed law firm. Leaders at those firms will also promote or hire the best management minds available. And while spending lavishly on dramatic offices has less utility than ever before, smart firms will invest in infrastructure that aids the efficient delivery of legal services.

Communicate.  When performance is down, communicating with anyone having a discernible impact on success is vital. Sharing the current status, future initiatives and hoped for results keeps people engaged. Simply “giving hope” won’t cut it long-term, but nonetheless contributes to keeping the people engaged. Big Ten leadership will inundate alumni, boosters and the public with information about the “good” in the present and the “great” expected in the future. A law firm leader dealing with or implementing change likewise will communicate to the firm’s lawyers and non-lawyers about the firms’ solid present and exciting future.

Remain Faithful to Core Values.  In the turnaround effort, Big Ten leadership will consider the best practices of other successful programs but only with alumni and boosters constantly in mind. Smart leadership will remain true to core values that go to the heart of a school’s identity. A law firm facing change should do likewise. Law firm leaders can learn from the best practices of others, but should never lose sight of the firm’s strengths and core values. Whether in football or law, the “latest and greatest” may not be for everybody.

Big Ten football’s stumble will not continue forever. Focused steps like those above will lead to its resurgence. Challenged law firms can use the same steps to arrest a decline and turn things around. Can the Big Ten and law firms facing disruption do more?

 

Vision and the Law Firm Leader

Posted in Law Firm Leadership

There’s nothing more demoralizing than a leader who can’t clearly articulate why we’re doing what we’re doing. –James Kouzes and Barry Posner

 

If conditions were always ideal, if the road ahead was completely predictable, leading would be a piece of cake.iStock_000016325121Small

But we all know things are never perfect. Every organization needs that individual (or team) who has a crystal clear idea of what it will take to navigate the turns and detours, and engineer an ultimately successful journey.

This kind of leadership isn’t about politics. Or charisma. And the well-run law firm doesn’t leave it to chance. A few basic questions form cornerstones for critical decision making – by an individual leader, as well as a governing body.

Are the firm’s make-up, market position, operational capabilities and profitability consistent with what success will require? Or are changes necessary?  And if so, how will this be accomplished?

Answer these questions, and you have the guidelines for where the owners of a firm want it to go.

A well-articulated vision is the compass for growth, resource allocation and investments in the future.

Real law firm leaders take steps to insure all strategic initiatives align with the shared aspirations of the law firm’s owners. In so doing, the firm’s vision becomes clear.

Forming the Law Firm Vision

Establishing a law firm’s vision is largely a matter of discovering the collective ambitions of the firm’s owners. The effort is a discovery process, seeking the common threads of values and aspirations.

This discovery may be structured around a formal planning process, or be informally executed through semi-formal individual and group conversations. The law firm executive who has limited experience with this process is well served in seeking additional perspective and support for the effort.

Articulating the Vision

Once the vision discovery process is complete, the next step is to describe it in a way that drives consistent action.

The vision must be articulated in a way that it inspires practical application across the firm. A well-communicated vision will not only be understood; it is a definitive call-to-action. And, it will inspire all members to greater levels of participation and commitment.

Reinforcing the Vision

Once communicated, for a vision to be effective it must be reinforced. It should be the frequent topic of the leader’s narrative, and the fabric of all internal communication.

The vision should be the basis for decision-making, and at the heart of all visible and material actions the firm takes. Budgetary, hiring, expansion, investment and client decisions should be openly anchored in and aligned with the firm’s vision.

Frequent communication regarding success (and disappointments) in the firm’s pursuit of its vision is essential. Transparency will further strengthen the vision, and improve future decision-making.

Is your firm’s vision inspiring the decisions you make, and the directions you take?

 

Law Firm Leadership and Merger-Finding the Right Fit

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

Although this year’s transactions generally are smaller deals, the robust law firm merger market of 2013 has been continued into 2014. Mergers grab headlines, create excitement and almost always provide the merged firm a little boost from the afterglow of positive publicity. Unfortunately, any positive vibe from a merger will not last forever. And more importantly, the merger itself ultimately can prove to be a big negative because only half of the mergers consummated turn out successfully. For a merger to end up on the “success” side of the ledger, today’s law firm leaders should proceed carefully to assure that in any merger the two firms fit together well.

Numerous reasons propel firms towards merger but for many firms the significant step of merger is worth considering because (i) it solves succession plan issues, (ii) client needs dictate a broader platform, and/or (iii) financial or market dynamics demand change. Getting from the step of being “receptive to merger” to the step of “closing a merger” is a long process that requires careful and in-depth analysis. While due diligence, merger term negotiations, who is included and internal selling can occupy firm management for weeks if not months, the analytics ultimately come down to five areas of compatibility. If the fit is right, or reasonable measures can be taken over a reasonable period of time to assure a good fit, the merger has a much greater chance of success.

Cultural Compatibility. Culture is more than being comfortable with your new partners. Culture involves many things that you may take for granted, including employment arrangements and practices with legal and non-legal personnel. How one firm hires or fires an employee matters. Promotion practices, performance evaluations and decision-making processes say a lot. These everyday interactive things define a law firm’s DNA and its personality. Understanding the two personalities avoids a schizophrenic result.

Financial Compatibility. Seldom do two law firms display the exact same financial metrics. Firms with a wide gulf in metrics like profits per partner, revenue per lawyer, productivity per lawyer, capital, and realization are not likely to mesh. Metrics that are more closely aligned nonetheless need to be scrutinized to avoid a false positive based on apples being compared to oranges. Disparity in billing rates, firm debt, unfunded pension obligations and space utilization undermine financial compatibility.

Client Compatibility. Clients make a firm. Besides the all-important question of legal conflicts, a firm needs to know the philosophical and strategic approach of its betrothed to business conflicts, client profiles and the proposed billing rates. While it is easy to see the incompatibility of a law firm with a huge union clientele trying to merge with a firm that represents management, other more subtle problems can lurk beneath the surface. These subtleties need to be studied. The respective firms’ clients that are “competing to the death” in the marketplace may not see the benefit of being represented by the single firm the merger creates.

Compensation Compatibility. The setting and paying of compensation is tough in any circumstance. But trying to blend two systems in which one firm’s lawyer behavior is different than the other firm’s due to compensation system induced motivations is even tougher. Moreover, if one firm’s lawyers are used to being paid a larger draw every month than the other firm’s lawyers, something will have to give. An otherwise compelling merger may be saved with phasing in the two systems, or better yet, a new system that utilizes compatible best practices.

Operational Compatibility. No firm can succeed if it does not operate smoothly. Technology or other operational concerns need to be understood and dealt with up front lest they create undue frustration post merger. Not all these issues can be resolved as of the merger’s effective date, but understanding the issues, developing a plan for dealing with them and communicating about them and their planned resolution helps greatly.

Merger’s can be risky, but they also can propel a firm to places not realistically possible if left to organic change. Prior to getting too deep in the merger discussions, strong law firm leadership will study the two firms’ compatibility in these five areas. When considering a potential merger, is there anything more important than making sure the fit is right?

 

Successfully Leading a Law Firm

Posted in Law Firm Leadership
     About twelve months ago, in the wake of a number of law firm failures,  I reflected on the challenges associated with leadership in an increasingly volatile marketplace. Today not much is different.  Our industry continues to experience transitional issues that signal a substantive shift in the way we organize, interact with clients in many instances, and even deliver counsel. With additional experiences under our belt, and mounting evidence that a new normal is, indeed, taking shape, I offer a slightly updated version of that reflection from one year ago. ——————————————————————————————————————————————————————–

 Leaders aren’t born, they are made. And they are made just like anything else, through hard work. And that’s the price we’ll have to pay to achieve that goal, or any goal. —Vince LombardiiStock_000017722659XSmall

 

As law firms, big and small, fail at alarming rates, it begs the question, what is going on; and (more to the point) what can be done to improve a firm’s odds of thriving in this emerging market place.

The answer to this question is one of those good-news/bad-news occurrences.

The good news is that, for most firms, the answer is simple and straightforward.  The number one determinant of the success of any enterprise is the quality of leadership. This is underscored by a Dun & Bradstreet (“D&B”) study describing the three top reasons for business failure as;

  • Lack of access to capital;
  • Poor or no marketing plan; and,
  • Number one, poor or lack of leadership

Though troubles often begin with an external event, it is the response (or lack thereof) that comes with long-term ramifications…  D&B shockingly attributes 87.8% of failures to leadership. Wow!

Leading The Law Firm

We mentioned good-news/bad-news.  And the bad news is leadership is something law firms struggle with mightily.  If almost 90% of all business failures are a direct commentary on leadership, consider the implication of these law firm realities:

  • Most law firm managing partners get their first experience leading an organization when elected as the leader of their firm;
  • The criteria most often used to select a law firm leader are success in building a practice versus success in leading an office, practice group or another organization.

The training most successful lawyers receive rarely focuses on the skills essential for success as a group, team or firm leader. Much has been written on the difference between what it takes to be a successful business leader and the career experience of most successful lawyers. Deborah Rhode’s paperWhat Lawyers Lack: Leadership — is particularly good.

McBassi & Company conducted an interesting study regarding law firms and leadership. The conclusion — that the top three factors in predicting a law firm’s profitability are:

  • Leadership skills – setting direction, building consensus and reinforcing values
  • Inclusiveness
  • Managerial skills – seeing that work product is prepared and delivered in a manner that the client expects

Two of these — leadership and management — receive little to no focus in most law firms.  If you question this, consider how many practice or committee leadership positions are near afterthoughts, having little to do with the ability to build consensus or engender collaboration.

Patrick McKenna conducted a survey of law firm leaders that is full of quality information; but, relevant to this conversation, the survey reveals that:

  • Approximately half of the law firm leaders surveyed had been in their position 0-5 years;
  • 72% had no job description;
  • 76% had no formal means of evaluating their performance.

In other words, the typical law firm leader is relatively new to a job that isn’t defined and has no feedback or accountability mechanism.

As David Maister said, “the number one thing lawyers (and in this case law firm leaders) have going for them is that they are competing against lawyers.” Unfortunately, as the market is evolving there is an increasing number of non-lawyer competitors taking a bigger and better piece of the pie.

What To Do

The essential role of leadership is nothing new. The increase in pivotal moments in the life of a law firm, however, may be.  A number of realities differentiate today’s market from the 90’s and 2000’s when quality lawyers could insure a thriving practice. Among the changes,

  •  A rapid number of developing alternatives;
  •  Competition has become global;
  •  Technology is replacing services (and people);
  •  Outsourcing is more than a passing fad;
  •  Clients expect more for less;
  • Consolidation is running rampant

In the context of today’s turbulent market, the shortage of effective leadership in law firms is a real and growing issue.   What every partnership should be seeking is measurable increase in the:

  • Leadership and management capability at all levels of the organization
  • Percent of decisions made by those with proven management and/or leadership experience;
  • Commitment to find specific expertise in areas where internal competence is lacking

Healthy, Stable and Strong Firms

If this describes your firm you have the luxury of time, and the opportunity to develop capability organically. Some of the strategies to target include:

  • Development through experience. Experience is the best teacher. Building experience among younger lawyers in a structured manner where mistakes can be comfortably made is ideal. One firm that is taking an impressive and progressive approach in this area is Bingham McCutchen.
  •  Development through education. There are numerous excellent formal leadership programs. A few to consider include

◦                     Harvard’s Leading the Professional Services Firm;

◦                     Local MBA and EMBA programs;

◦                     Any one of the numerous seminars on the subject offered through the AMA (provide link) – typically excellent and cost effective;

◦                     Development through mentoring. Resist the temptation to write this off as touchy-feely stuff. Quality mentoring programs can be incredibly effective. This is an area where outside assistance is typically the cost effective way to go.

◦                     Development through feedback. Feedback and self-awareness are critically important to the development of leadership and management capabilities. The formal programs noted above make extensive use of feedback, and it is part of any serious on-going focus. Investigate the options, select an approach that is right for your firm, but don’t skip this critical step to improving leadership skills.

Firms That Are In a State of Transition or Stress

If this describes your firm, time is not your friend. Implementing the above will serve you in the long term, but you likely do not have enough time to nurture the needed skills organically. The prudent leader of a firm in transition considers:

  • An outside perspective. Seek out an advisor that can help the firm through the transitional period, and then focus on hiring and developing in-house management and leadership talent.
  • Lateral Leadership Acquisition. Though an approach that is used frequently and successfully in the corporate arena, laterally hiring a Managing Partner is rarely considered by law firms. One large law firm that has shown amazing openness to this concept is DLA with their hiring of (link  ) co-global Chairman, a bold and innovative move.
  • Employing non-lawyer CEO/COO. Although the role of non-lawyers as COOs has been steadily growing, some farsighted firms are now hiring business leaders as CEOs. Time will tell how this trend develops; but my bet is that in 20 years it will be the norm.

Conclusion

The serious partnership does more than talk about leadership. The law firms that thrive in the context of high-consequence change will be those that find a way to focus the same energy here as is invested in the development of legal expertise.

Firms that choose to believe every rainmaker is a leader, or every partner should lead a committee, or the way to silence a strident voice is to bestow token leadership – these will be the firms caught in the most extreme forms of transition in the months ahead.

The Law Firm As A Business-Five Thoughts

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

For some time, the idea that law firms should be run like businesses has been accepted. While lawyers and law firms still benefit from the ideals that underpin the place our legal system has in our society, keeping a law firm’s doors open today requires a proper dose of business principles.

In attempting to apply these principles law firms are deficient in one particular respect. Their approach to management is relatively insular because ideas, perspectives and contrary views generally are harvested only from internal sources. Many managing partners, often not formally trained as businessmen, guide their law firms as best they know how, sometimes through imitation that gets sprinkled with a little common sense.  As Kevin McKeown in Leadership Close Up accurately notes, being a lawyer does not guarantee the ability to lead.

Those same law firm leaders are elected or appointed by lawyers from within the firm, many of whom likewise are not formally schooled in matters of business. And although non-lawyer executive directors today are accepted more readily than ever before, a non-lawyer executive director typically serves at the pleasure of lawyers whose collective skill set weighs heavily towards the law. For an industry that frequently is admonished to “run like a business,” its bench strength in the business arts is light.

Methods to remedy this deficiency, some available now and others requiring industry reform, are worth thinking about. Some ideas include:

Accept the Idea of Executive Directors and Other Non Lawyer Contributors. Many firms have seen the value of executive directors but some circles remain wary. Notably, the State of Texas recently determined that law firms in Texas can’t give their non-lawyer business employees the title of “director.” Tim Corcoran, in his Blog post Bar Associations: Protecting Consumers or the Status Quo?  criticized the Texas opinion and argues that it represents an anachronistic view towards the idea that law firms should run like a business. Is the Texas ruling simply a matter of semantics or does it represent a rejection of law firm progress towards business principles? Hopefully, the former.  And no matter the title, hiring other skilled business people to aid in the law firm’s operations, pursuit of business and delivery of good service also makes sense.

Hire Outside Consultants When Approaching an Out of the Ordinary Course Initiative or Transaction. Appointing a real estate partner to find and negotiate a new 10-year office lease may provide short-term savings, but at a long-term cost. Using the experience and market knowledge of the best lease broker in your city may deliver a more sound business result. As was recently noted by Roger Hayse, lawyers that manage with the aid of outside perspectives delivered by experts or consultants tend to make more informed decisions.

Create a Plan for Law Firm Leader Business Training. Some law firm leaders have business experience, whether by training or through a previous endeavor. But many do not. Creating a plan to educate current and future leaders in business principles would be huge step towards institutionalizing a business-like commitment to management. To avoid a narrow-minded approach to management, the training should teach leaders to solicit and welcome outside views.

Add Outside Non-Lawyer Directors.  Presently, this option generally is not available in the US. But industry reform in the United Kingdom has allowed UK law firms to appoint outside non-executive directors to their governing boards. According to data tracked since 2010, the firms that have added non-executive directors have, as a class, enjoyed revenue growth of over one-third better than firms that don’t have non-executive directors. The added outside perspective is credited for the improvement. Is similar reform in the US overdue?

Bring in Outside Investment.  As shown by the UK experience; having a non-executive director could be helpful. Having an interested director whose interest is premised on his investment could drive a distinctly more business focus at a law firm. While outside investment into law firms is discussed from time to time in the US, the Canadian Bar Association’s recent endorsement of outside investment represents a far more significant commitment to changing the way things are done. The CBA’s decision has spawned a lot of comment, including some from the south.  In the US, is this reform inevitable? Should it be?

Most people accept the idea that law firms should follow business principles and be managed like a business.  It is easy to say, but harder to do.  Is the legal industry doing all that it can to further the goal of having law firms run more like businesses?  Are law firms, on the whole, ready?

How a Law Firm Leader Earns Trust and Respect

Posted in Law Firm Leadership

Trust is the glue of life. It’s the most essential ingredient in effective communication. It’s the foundational principle that holds all relationships. – Stephen Covey

 'Assured reliance' highlighted, under 'Trust'

A number of things can land one in a law firm leadership position; success in building a legal practice, ability to build consensus and advance initiatives, even political acumen.

But two factors are essential if one is to seize the role, and provide real leadership: trust, and respect.

Neither is an automatic byproduct of the position.

Trust is earned when you do what you say you are going to do – when deeds match rhetoric, and align with the values of your organization.

At a practical level, this means a few things must be accomplished.

  1. A leader must be prepared to put a stake in the ground, defining goals, timetables and specific actions;
  2. These goals and action steps must be communicated (and re-communicated) to the firm; and,
  3. The leader must maintain focus, and follow through on promised action, and then be certain the organization is aware of critical benchmarks and accomplishments.

To conduct ones self in a manner consistent with firm values presumes a crystal clear understanding of said values, and the commitment to conduct of business in a manner consistent with these cultural cornerstones.

Gaining respect is an incremental process.

It requires consistency as well as a measure of success in moving the organization forward.

Practically speaking, this means establishing realistic as well as measurable objectives that are consistent with the aspirations of the firm.

When it comes to trust and respect, what should leaders be doing to build equity and earn a greater measure?

Law Firm Industry Lists-What Are They Good For?

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

Lawyers love lists, especially checklists. They love having a specified list of elements that need to be proven or followed. Lists fit into the way they were trained in law school. It is likely that many of today’s lawyers were list driven even before going to law school.

It is no wonder that lists that rank law firms by any number of criteria are popular. Rankings of law firms based on their profits per partner, revenue per lawyer, or gross revenues get the attention of lawyers and law firm management alike. “League Tables” recognizing the noteworthy practices in a given substantive area are frequently followed, certainly by the law firms that have a place in or desire to make it to a League Table.

Sometimes law firm industry lists prove useful in marketing and recruitment; somewhat in the same way that a shiny car ad helps sell a car regardless of its quality. But evaluated in a vacuum, these lists or League Tables really don’t do much-they don’t determine whether a law firm serves its clients, pays its lawyers or observes its lawyer’s satisfaction grow. For one, as Roger Hayse has written, the lists often are based on logic that is unsound, data that can be misreported, manipulated or misinterpreted, or calculations that are skewed away from any probative conclusion. And the rankings or tables don’t last long-today’s lists or rankings are rendered obsolete as the calendar progresses and new ones are published.

So other than general amusement, do any of these lists or League Tables provide any lasting benefit to a law firm and its management? Although tempted to disclaim their utility in toto, in a very basic way these lists are valuable to law firms of any size in one simple respect-they make management think about its firm, its place in an industry that is ultra competitive, and ask about how its own firm’s performance can be improved.

When industry lists or tables prompt this introspection, good things can happen, including:

Internal Performance Is Assessed. Firms that make it to the top of the lists or tables get there because they perform well on the basis of some criteria. Their performance can be a function of many things, including a constant assessment of its attorneys, practice groups, internal business practices, culture and everything else that makes up a firm. Taking the time to internally look at your own house is good.

Industry Best Practices Are Studied. Imitation can be the highest form of flattery. It also can deliver results for the imitator. Other law firm’s best practices can be worth emulating. If something, such as an industry list, prompts management to look at how the best firms gain their advantage, the firm can be improved.

The Firm’s Strategic Vision Is Reviewed. Most firms that make the rankings are resolute in the pursuit of their overall strategy. While each firm has to find the strategy that suits it best, periodically taking stock of your firm’s strategy, its tactics in fulfilling the strategy, and the possible need to make adjustments, is positive. A newly published list or table can cause a firm to reassess its own strategy-clearly a helpful exercise.

Deferred Maintenance Is Addressed. From time to time most firms fall behind in dealing with lingering issues or problems. Firms that are reported high in the rankings tend to be better than others in minimizing the deferred maintenance. If a list or ranking acts as a call to action, the interests of the firm can be served.

Law firm industry lists can be interesting to read, fun to talk about and useful in marketing and recruiting. But they can also compel an internal examination that otherwise would go undone. For the typical law firm, which outcome is better?

Law Firm Leaders – Value of Outside Perspective

Posted in Law Firm Leadership

The best way a mentor can prepare another leader is to expose him or her to other great people.    John Maxwell

 

Expert Advice on Multicolor Puzzle.Quality decision-making has a great deal to do with shaping the fate of all law firms.  Today’s post focuses on the value of today’s law firm leader engaging the insight and decision-making acumen of seasoned outside business professionals.

Think about it. When we engage in a personal activity that is important to us but for which our experience is lacking, we call on the services of a coach, mentor or guide.

  • On vacation, we often employ a guide to help insure we get the most out of the experience;
  • If you hike in an unknown area, you likely tap the knowledge and experience of one who knows the terrain;
  • An advisor is hired to assist with the creation and monitoring of our financial plan.
  • The guidance and direction of a fitness expert insures we get the most out of time invested in the gym, and ultimately realize objectives.

But what about the often new and unfamiliar challenges that come with the responsibilities of leading a law firm? Unfortunately for most law firms, the senior members of the firm or the leadership body rely solely on their own judgment and relatively limited experience.

In virtually every other business arena, executive leadership has long recognized the value in tapping seasoned and diverse perspectives — especially when facing key decisions related to their organization’s future. That is why so many corporations have a board of directors dominated by professionals from outside their organization.

When you compare the difference in business leadership experience of the typical non-law firm with that of almost every law firm it is startling. And I would argue that the need for outside perspectives for law firms is even greater than other businesses.

Edward Drummond is a UK based executive search firm that recently released the results of a study of the top 100 UK law firms over the last four years. It is telling that this study reports that about a quarter of the UK top 100 use a non-firm member to assist with decision making; and that the firms that utilized this approach realized a growth rate of about a third more than other firms.

The author of the study suggests “To get someone in just for a few days a year often works well for both parties. Having someone with strong commercial experience – sometimes within the FTSE 100 – can really drive growth through commercial experience.”

Tapping the perspective and experience of outside advisors can help design a winning strategy, and accelerate a “leadership orientation” for the law firm management team. The risk is extremely low and the upside is limitless.

Do your firm’s strategic decisions benefit from the wisdom of a seasoned business professional(s)?

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