Managing Law Firms in Transition

Managing Law Firms in Transition

How Healthy is Your Law Firm

Posted in Uncategorized

As we conclude the first quarter of 2015 it occurs to me that now is a great time for law firms to conduct a quick self-assessment. Here are 5 areas that, ifHealth carefully analyzed, provide a preview of what the future may hold for your firm.

  • Turnover, any unexpected turnover is a sign of potential trouble. Law firm leaders should regularly monitor turnover levels with a process that quickly identifies any material uptick. Rapid change is destabilizing, even when there is an excellent business explanation. When spotted, decisive action in one form or another is likely in order.  What does your turnover pattern look like over the past 36-months?
  • Dissatisfaction, this metric is a key indicator of business risk.A growing number of law firms find significant management value in systematically monitoring the satisfaction of their lawyer and non-lawyer employee base. And with good reason, growing dissatisfaction is an indicator of future trouble. Do you have growing dissatisfaction in your firm?
  • Falling profitability, can quickly lead to stress for any business. I am not a believer in the Profits Per Partner (PPP) metric as a be-all-end-all; but if your law firm is paying progressively less for the same performance, it is at risk.

There are a number indicators of declining profitability besides the exalted PPP metric. These include:

  • Falling productivity
  • Loss of a key client(s)
  • Increased aging of payables
  • Increased aging of receivables
  • Falling client billing

How is your firm’s profitability holding up?

  • Debt, an increased use for operations is a clear sign of stress. Most law firms use some amount of debt, whether to smooth out collections cycles with a line of credit, or to finance growth and fixed asset purchases.  Any firm increasing its use of debt to cover basic operating cost has embarked on a treacherous path.
  • Litigation, of any type, against the firm can be enough to create instability for a law firm. Monitoring the frequency and size of claims against the firm is a must. If your firm has seen an uptick in claims activity, careful examination by leadership is essential.

The thing about organizational risk is that the sooner potential trouble is identified the greater the probability that a viable solution can be identified and implemented. The more serious the trouble, the greater the need for outside support, which can bring an unbiased perspective.

Do you know if your law firm is at risk?

There is a Lot More to Law Firm Succession Planning Than Just Planning

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

A recent ABA Journal article reported on the demise of a successful law firm that had been in business for 60 years. The story about Harding & Shultz of Lincoln, Nebraska noted comments from one of the senior partners whose departure from the firm allegedly contributed to its demise. Seems that the senior partner, still full of desire to work as he always had, left because the firm’s mandatory retirement policy gave him no choice but to leave and work elsewhere. His departure, as well of that of another senior partner, generated other departures, and the firm could not keep going.

Law firms close for many reasons, including because inadequate planning for succession leaves a firm unable to continue once its founders retire, die or simply move on. No doubt a lot of things contributed to Harding & Shultz’s closing, but the mandatory retirement policy may have sparked the fire that burned its house down.   If so, there is a little irony in the Harding & Shultz end because its inability to manage succession was, at least in part, triggered by the mandatory retirement initiative that was probably originally designed to stimulate future succession. Typically, mandatory retirement marks an effort to institutionalize opportunity for the next generation so that succession is more likely. In the case of Harding & Shultz, however, it looks like all the planning for succession failed because the next generation did not or could not step forward. When a law firm’s plan for the next generation fails, what is the reason?

In most cases, failure gets traced to a lack of execution. With utmost deference to the poet Robert Burns, the best-laid plans of law firms (and men) are not a solution but merely a step towards a solution. A law firm with an eye to the future must not only plan for the future, but it must consistently work to build for the future. In his Consistency of Execution, David Brock argues that effective execution in sales has three elements: knowing the right thing to do to drive expected results; doing those things consistently, day after day; and, continually sharpening the execution.   For a law firm wanting the next generation to take over, a similar focus means that law firms must:

Hire Talent With Long-Term Promise. Law firms seeking long-term sustainability hire the top talent they can find. Every associate hired or lateral added should possess skills, personality and drive that show leadership potential. Settling for less will dilute the premium prospects in a firm’s talent pool and will dummy-down its future. Hiring to this standard should be disciplined-every candidate should be viewed through this lens. While not every person hired will work out, settling for a lesser hiring standard reduces a firm’s long-term chance for success.

Develop the Talent Hired Day-in-Day-out. Even athletes with the best natural ability need to be coached and challenged to realize the All-Star dream. After a firm has hired its promising talent, it should not assume that he or she would develop in due course. Every day should be a day in which the talent pool is nurtured, stimulated and grown. Remember, a firm never knows which stars will disappoint it by leaving-so all must be trained with a daily dedication. Doing so provides greater protection against an inevitable attrition. No firm wants to be left with talent that no one else wants.

Reward the Talent While Continually Raising the Bar. Talented people leave if not rewarded. Rewards can take many forms: money, professional development, conferring responsibility and valuing institutional contributions. To have talent truly grow, rewards cannot be expected or a given. If they are, rewards have morphed into entitlements and the future is undermined. Constant challenge that raises the bar builds a reward system and culture that maximizes personal and professional development. Everybody wins and the prospect for effective succession is enhanced.

In preparing for succession, law firms can plan all day long. But all the planning in the world won’t do much good if no one is around to take over when the time comes. Effective succession is not just a question of planning, but it owes a lot to dedicated execution. How well is your firm executing on its succession plan?

Establishing Standards For Growth – A Key to Building a Better Law Firm

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

 

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The number one factor in determining the day-to-day joy in one’s work life is the culture of the organization of which you are a part.

Savvy law firm leaders know this; and they apply serious standards to increase the probability that everyone that becomes part of the organization makes a positive contribution to its culture.

Weaker leaders tend to operate as if an increase in the number of lawyers is indicative of growth. As a result, far fewer and much less stringent standards are employed in pursuit of “bigger” — incrementally fracturing their firm’s culture in the process.

Some Standards of Success

It is instructive to look at a few of the standards employed by three successful individuals/firms.

Wachtell Lipton, perhaps the most consistently successful law firm over the last 50 years, is also the most difficult when it comes to landing a position. The firm’s unique culture has been aided, if not preserved, by a consistent approach to growth, the recruitment of talent, and its leadership.

Lateral growth, let alone the increasingly popular tactic of combining firms, is almost unheard of at Wachtell Lipton. A slower, perhaps less glamorous but much less volatile approach, is fostered by hiring the best young talent, and then proactively helping them develop and mature within the firm’s culture.

Even though a few laterals have been brought into Wachtell Lipton over the years, the firm has a demonstrated strong preference for recruiting new attorney candidates from premier law schools. Consistent with its pursuit of only the most challenging work, they consider only those students whose academic record demonstrates the ability to excel at the highest level.

But Wachtelll’s recruitment process doesn’t stop there. Candidates are put through a rigorous internship in order to assess the mental strength, work ethic and collegial personality. Even when an intern passes those tests, only individuals who project as future partners at the firm will be hired.

Mark Zuckerberg, the enormously successful founder of Facebook, in a recent interview in Barcelona made headlines when he spoke of his standard for hiring someone. Zuckerbrg said “I will only hire someone to work directly for me if I would work for that person.” He continued, “business owners should resist the urge to settle for lesser candidates in the name of manpower. Over the long term, you’re only going to be better if you get someone really good.”

Jim Collins, the author of the classic Good to Great, says “leaders of companies that go from good to great start not with the where but the who…by getting the right people on the bus, the wrong people off…They stick with that discipline –first the people, then the direction—no matter how dire the circumstances.”

Contrast this long-term philosophy with an approach that revolves around filling spots…getting bodies at desks…all the while expecting (and settling for) a turn-over rate that prevents any continuity or real cultural fabric.

Building an enduring organization — one that brings long-term joy and career satisfaction — is a choice. One cornerstone of this choice is to do all one can do to ensure that those on the bus will strengthen the firm’s culture.

The other choice is to simply add bodies that make the firm bigger.

 

Law Firm Departures: A Likely Source of Disputes

Posted in Law Firm Crisis, Law Firm Leadership, Law Firm Transition

Most law firms approach their practices optimistically-with a kind of “glass is half-full” outlook.  Getting business, building client relationships and creating a brand typically are a firm’s focus rather than thinking about failure or disaster.  That is especially so when law firms form.  Future developments like mass departures or dissolution usually do not enter into the discussions at inception.  Inevitably, when those transitional events occur the thorny issues that can arise, some of which could never have been predicted, finally receive the attention required.

A recent law firm dispute in the news was sparked when a group of lawyers from Nelson Brown Hamilton & Krekstein of Pennsylvania picked up and left.  The controversy surrounding their departures demonstrates that disputes can take any form.  As is usually the case, a number of the lawyers leaving took with them various client matters.  While there is nothing particularly remarkable about lawyers leaving and clients following, the dispute has focused on the fact that the departing lawyers left with laptops and their former firm cried foul.  The dispute touches on numerous issues, including the possible violation of the Computer Fraud and Abuse ActTransition-Planning-Sign, and even though resolution by mediation was been attempted, it remains unresolved.

As the dispute involving Nelson Brown shows, predicting and/or pre-planning for every kind of controversy is an impossible task.  Nonetheless, history has shown that in many cases disputes arising from transition have common origins or are traceable to things that are present in every law firm.  How a law firm and its departed attorneys deal with these things can be the difference between a smooth transition for all concerned, or a dispute that distracts both sides from the goals of getting business, building client relationships and maintaining or building a brand.  Any law firm facing transition caused by departure will experience a favorable or unfavorable outcome depending on how it fares in these four key areas:

Partnership Rights and Obligations.  Clarity in a partnership agreement (or shareholder’s agreement) can be critical to a smooth transition.  Moreover, if the agreement philosophically seeks to minimize partner claims against the law firm, disputes that arise tend to resolve quickly.  Experience tells us that the more recent an agreement has been drafted, the more likely its provisions will follow state-of-the-art trends designed to favor the law firm.  If your applicable agreement is simply basic or dated, a revision may be in order.

Client Obligations.  Because clients are the life-blood of all law firms and their lawyers, it is not surprising that departing lawyers try to take clients and their former firms try to keep them.  Because clients almost always have absolute discretion regarding who will be their lawyer, client retention is mostly a matter of client choice.  If a client leaves after having made a reasonable attempt at retention, move on or try to win it back when the next opportunity arises.  But don’t put the client in the middle of any dispute.

Ethical Considerations.  Fighting with a former attorney over obligations may be justified-after all being a lawyer does not immunize one from fulfilling contractual or fiduciary duties.  But disputes can get out of control when the combatants lose sight of their respective ethical obligations, especially when fighting over a client.  Many disputes are prolonged because ethical concerns are forgotten.

Emotions.       Too many disputes are fueled by emotion and start out or grow to be irrational.  In many instances, far too much money and human capital is spent in the controversy before a sense of proportion prevails.  Enlisting someone early in the fight to objectively assess or mediate the dispute can save the parties not only a lot of money, but a lot of angst as well.

Law firm departures can conjure up many reactions.  In far too many instances the reactions lead to disputes that seldom end with total victory for one side.  Firms with foresight and sound judgment tackle the key areas that foment ill will, seek to resolve them quickly and then try to move on.  Do you think there is a better approach?

Is Your Law Firm Choosing Bigger Over Better?

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

 

As an interested observer of the legal landscape, there are three baseline realities that are especially interesting to explore:Quality_not_quantity

• The rapid rate of law firm growth through mergers and lateral additions;
• The rate of law firm failures; and,
• A continuing level of unhappiness in the profession.

Given these three somewhat extreme data points, one wonders the extent to which the leadership of law firms proactively evaluate the choice of better versus bigger.

I have been reading a new book by Bo Burlingham – Small Giants: Companies That Choose To Be Great Instead of Big. The book is an in-depth review of companies that have confronted the issues of getting bigger or better.

The book is describes as an examination of “extraordinary, privately owned companies that made strategic decisionos to forgo revenue or geographic growth, in order to achieve other remarkable ends.”

I recently ran into an interesting example of the type of company Burlingham wrote about. Cousins Kevin and Chad Brown grew up working in their dad’s construction businesses. By the time they reached their early 20s they decided to start their own construction company, Brown Construction in NE Texas, focusing on framing new and remodeled homes. The guys had two goals: to establish a new level of quality for their type of work; and to have fun together.

As often happens when quality and competence come together, success followed. The guys experienced the typical new business challenges including wondering where the next project would come from; but as the growing pains subsided, the duo realized they had more business than they could handle.

After talking about it, Kevin and Chad decided to split their group in two and add a few more crewmembers and further grow their business.

What the cousins found was that their work product, when working separately, wasn’t as high as when they were working as a team. They also found that they weren’t having nearly as much fun.

Kevin and Chad did what few in their position have the clarity of vision to do; they decided to forgo the addition revenue and profits associated with a bigger business, and — instead — limit projects to those that they could handle while working together.

The result?

• The cousins’ reputation for high quality work continues to grow;
• They continue to land increasingly interesting (and profitable) projects; and,
• Their customers have beome raving fans.

Theirs is an all too rare example of choosing to get better instead of bigger.

Law firms, young or old, would be well served to stop and determine what is most important to them. And possessing that knowledge, routinely evaluate growth related opportunities.

Smart decisions are much more likely when framed in the context of what we care about.

I’m betting that if this simple process were followed we would see a lot fewer mergers, a lot less lateral movement, and many more lawyers who genuinely enjoy their work.

There is a lot to be learned from the cousins Brown, a law firm considering merger should not lose sight of what made it great and only pursue merger if those fundamentals can be preserved.

Succession Planning at the Smaller Law Firm-Getting it Done

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

It is no wonder why a lot is written about law firm succession planning.  Transferring a law firm onto the next generation so the institution endures is the ideal for most but unattainable for many.  Sue Remley’s Succession Planning:  How to Hand Your Law Firm to the Next Generation presents the issue clearly and provides some thoughtful ideas about how it is best accomplished.  But as I wrote in Succession Planning at the Smaller Law Firm-A Bigger Challenge, affecting a succession plan at a smaller law firm can be far from easy.

Even though succession planning at a smaller law firm can be difficult, by no means is it impossible.  Positioning a smaller law firm so that it thrives generationally is a matter of advance planning and discipline.  Dramatic steps are not necessarily required but there can be no substitute for approaching each day with the future in mind.

Think About Your Firm with a Long-Term View.  One of the difficulties faced by large law firms is that true long-term value may become secondary to short-term financial rewards to the owners.  A large law firm that sacrifices short-term profitability so that it can build for the future risks defections from owners possessing a short-term outlook.  For that reason, large law firms often find it difficult to dedicate current resources to long-term value creation.  In a small firm, however, where ownership is less dispersed, a true sense of ownership can exist and be convinced into building for the future.  In some respects, therefore, a smaller law firm may be more suited to preparing for succession planning than often thought.

Make Hiring Decisions Premised on Longevity.  Not all associate candidates or lateral hires aspire to work at an AmLaw 200 law firm.  Many young candidates eschew the BigLaw option because it offers little in career longevity-a point BigLaw may acknowledge based on its turnover statistics.  Smaller law firm desiring a multi-generational future should make young lawyer hiring decisions thinking about how each candidate may grow into a long-term contributor.  Just because a firm is small does not mean potential long-term contributors are not available in the marketplace.

Include a Leadership Assessment in Annual Reviews.  Most law firms review their young lawyers annually to assess economic contribution and to provide constructive feedback.  Smaller law firms thinking long-term will include an assessment about an attorney’s leadership qualities and efforts for the firm’s institutional benefit during the preceding year.  Law firms thinking about the future cannot think only about billable hours and substantive milestones if the future of the law firm is valued.

Assign Firm Projects and/or Responsibilities to Your Younger Lawyers.  Sue Remley identified the difficulty that senior lawyers have with letting go of control.  It won’t seem so much like letting go if the firm develops the practice of integrating young lawyers into important roles for firm projects or responsibilities.  Not only will doing so make the transition to succession easier in the future, but the training of the younger lawyers “by doing” will be individually invaluable as well as beneficial to senior management.  Moreover, early involvement in firm projects or activities can reduce the demands on senior level lawyers.

Contributions to the Firm Should Be Rewarded.  Financial reward for firm projects or responsibilities tackled, even if modest, is crucial to the development of the next generation.  Just as one should reward business development successes, rewards for successful efforts at strengthening the firm should likewise be granted.  Positive reinforcement will aid the firm in the present but also create leadership for the future.

The seeds for succession planning must be planted and watered if future leadership is to be harvested.  Is there any reason these simple steps should not be a part of a law firm’s long-term strategy?

Law Firm Restructuring for Long Term Health: Yesterday’s Success Is No Guarantee For Tomorrow

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

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The century plus old quote “success begets success” couldn’t be further from the truth. Today success only buys you the opportunity to survive to compete tomorrow.

Lest you think otherwise, the legal profession is no exception. The intensity of competition in our industry increases daily. The marketplace is littered with once highly successful law firms that awoke one morning to find themselves out of business. Scores of other firms wrestle with the realities of existence on the brink of, at best, enormous change; at worst extinction.

The good news is that survival need not be a mystery or matter of chance. Prudent law firms have found a way to constantly evaluate how they are performing, how their client’s needs are changing and what the competitive landscape looks like. Smart leaders find ways to set aside approaches grounded in we-have-always-done-it-this-way thinking, and critically assess ways in which they must change in order to compete.

One such law firm is 60+-year-old Dickstein Shapiro.

The firm had a long and successful history; but in 2014 it found itself at a crossroads. As is the case with so many firms, Dickstein Shapiro had been hiring lawyers year-in and year-out . . . and losing lawyers to the competition almost as regularly. They were experiencing the pressures that accompany a decline in revenue and profits.

The firm’s chairman, Jim Kelly, realized the firm’s old approach to business couldn’t continue if the firm was going to survive. The firm’s leadership embraced a significant change, and a new strategy marked by three critical cornerstones:

  • Hiring (and empowering) a chief operating officer;
  • Focusing the capabilities and practice of the firm — no longer would the firm try to be everything to everyone everywhere;
  • Empowering leadership of these focused areas of practice.

The story isn’t completely written; but the early results of Dickstein’s new approach to the business side of practicing law are impressive. 2014 revenue per lawyer is reportedly up 17 percent, and profitability is up 30 percent. This is pretty impressive for a firm that has shrunk by 20 percent.

The point of the story is not who and how, but the what. Too few firms routinely take the time to look at where they are and where they are headed. Even fewer take the steps that cause performance to improve.

If your firm doesn’t, implementation of an at lest annual self-assessment should be part of your approach to business. It is admittedly difficult for most of us to honestly and completely see our weaknesses or shortcomings. As a result, most firms find it helpful to enlist an outside advisor to facilitate a conversation and help frame an executable strategy. There are a few very simple and basic steps to significant improvement in the months ahead.

How is your firm performing?

Succession Planning at the Smaller Law Firm-A Bigger Challenge

Posted in Law Firm Leadership, Law Firm Transition

In a recent article in The National Law Review about law firm succession planning, Sue Remley offered some great analysis. Ms. Remley’s Succession Planning: How to Hand Your Law Firm to the Next Generation makes the important point that succession planning at law firms is vitally important and should not be ignored. She goes on to identify some key issues that come into play in law firm succession planning.

One key issue she identified is whether a firm can get the founding partners to relinquish control and power. A second issue is the flip side of the same coin-can you persuade younger partners with leadership abilities to take on and focus on that role? Swirling around these two key issues are a couple others-communication and timing. Because installing new leadership can create the most dramatic change that a law firm can experience, communication about the change is very important. In addition to the need for communication, there is the ever-important objective of starting and executing on the succession plan in a timely manner.

Ms. Remley’s observations concerning law firm succession planning are excellent. For a smaller law firm, however, the identified issues may prove daunting and make succession planning an even tougher task. For that reason, smaller firms must be proactive about succession planning or they may struggle when the time comes. For smaller law firms, the task can be tougher because:

Competing to Stay Ahead Causes Time to Slip By. All law firms compete to be successful. For many smaller law firms, the management function often is filled by a practicing lawyer or lawyers whose obligations to clients reduce the time that can be spent managing. The dual responsibility of practice and management can be all consuming, leaving little time to think about succession planning in a thoughtful way. For the smaller firm that has little time to spare, the opportune time to plan succession can escape needed attention.

Leadership is More Likely to be of the Alpha Variety. Smaller law firms managed by founding partners are more connected to the entrepreneurial beginnings than larger firms. That tends to mean that the smaller firms’ leadership has been in control, likes being in control, and has had his or her way for a long time. Unlike the larger firm where compromise and inclusion is more common, smaller firms usually have no tradition of succession or delegation. With succession being the ultimate form of delegation, succession planning can be a foreign way of thinking.

The Next Generation Pool is Smaller and May Be More Transient. Smaller firms will have a small sample size for finding the next leader. From this limited pool, many firms are finding the candidates unready due to a generational lack of interest in pursuing a management role. Additionally, in light of the high degree of lateral movement by lawyers some “prospects” in the next generation pool may have a transient history and only have been at the firm for a short period of time. Drawing a successor from a pool that may be limited in these ways can be discouraging.

Mentoring on Management Plays Second Fiddle to Other Mentoring. To prepare for succession, mentoring the next generation in management skills is advisable. But due to a combination of a lack of time and the priority often given young lawyer practice and business development skills, law firm management training tends to trail in institutional attention.

The Next Generation May See No Benefit from Being in Management. Many firms have a reward system that focuses on work productivity and business generation. Do those things right and a lawyer tends to not only be duly compensated by may also maximize the power he wields. A young lawyer that brings these elements to the table also provides more security for his future. Incentives to encourage a future role in management are not nearly as compelling and this can be especially so at a smaller firm.

Ms. Remley’s article in The National Law Review addresses succession-planning fundamentals. Although her advice is not limited to medium to large firms, our experience has shown that smaller firms have a disadvantage of scale that can make succession planning a more difficult task. If your firm is a smaller one, will you be able to overcome these impediments and find a new leader from the next generation?

 

Part 2 – Selling Your Law Practice – Succession Planning

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

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This is the second in a two part series addressing the idea of selling your law practice as part of a succession plan. Part one addressed
issues related to defining personal objectives, compliance with local bar rules, and practice valuation.

In this post we will look at three remaining considerations:

  • Finding a buyer,
  • Negotiating the transaction; and
  • Transitioning client relationships

Finding a buyer

There are a number of approaches to identifying the right buyer for your practice. At the outset we should emphasize that your local bar rule may influence your choice; so be certain to thoroughly explore them before proceeding.

Classic Advertising 

A simple advertisement in any of the bar journals or practice specific publications is a reasonably cost effective means of reaching potential targets. If you go down this road it pays to be aware that this is a bit of a shot-gun approach. Your plan will need to include an initial vetting process. Otherwise, depending on the size of your market and the practice you wish to sell, you could find yourself spending a lot of time fielding unproductive inquiries. The more targeted your advertising can be, the better.

Competitors Direct Approach

As is the case with most marketing efforts, the sooner you get face-to-face with a qualified target, the better. So your most fertile ground may be competitors, or those engaged in a complementary practice. Approaching these individuals or firms directly can expedite the process if interests and objectives are aligned. So some homework here can prove beneficial.

Search Firms

Just like in lateral attorney recruiting, search firms are a possible means of reaching potential buyers. Once again, you can streamline the process if you have clear objectives outlined.

Firm Members

Maybe the most overlooked and very frequently the best target for the sale of your practice is someone within your own firm. This greatly simplifies relationship transition.

Negotiating the Transaction

There a three keys to negotiating the transaction.

  • Valuing the practice in a fair and understandable manner.
  • Structuring a payout that is affordable for the buyer and acceptable to the seller and
  • Minimizing buyer risk through facilitating client retention

Like so many things, experience in negotiating these types of transactions is very valuable to both the buyer and seller. If you haven’t personally been involved in a law firm sale, get some experienced help.

Transitioning Client Relationships

The absolute key to making a sale transaction successful for both parties is the movement of client relationships to the new owner for the long term. A well thought out approach that begins with an introduction and eases the clients into working with the new owner is often most successful.

What are you doing to prepare for the ultimate transition of your practice?

 

 

 

Law Firm in Crisis-Five Things to Know and Remember

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

Law firm crisis can pop up at anytime during the year, but if it had a “season” it would be early on in the calendar. As I wrote in Like Divorce, Law Firm Crisis is More Likely as the New Year Starts, the beginning of each year is when key lawyers cut and run, disappointed partners complain loudly about a lousy year, optimism and morale plummet, pressure from the firm’s bank mounts, or a challenge to leadership consumes great attention. Crisis can take on other characteristics, as in many respects no two law firm crises are the alike.

When crisis occurs, it is absolutely vital that its presence be recognized immediately. Crisis can slide into disaster if leadership is slow to notice it and fails to take prompt action. If crisis is something your law firm is experiencing, there are five things to know and remember as crisis is tackled. They are:

Added Vulnerability Goes with Crisis. Whatever sparks the crisis in the first place may represent only the beginning. A child with a cold is susceptible to add illness-a law firm in crisis is vulnerable to added and unexpected problems. Because of this vulnerability, leadership must be aware that the other problems may arise and a game of “whack-a-mole” may ensure. There is no substitute to being aware and vigilant when crisis hits.

Control is Compromised. When a law firm is in distress, its ability to implement initiatives at a time of its choosing becomes limited. If a law firm is in crisis, leadership’s ability to control the firm’s destiny is compromised. Getting ahead of the crisis is critical because trouble at the firm will grow in severity the longer a solution is wanting. The risk of losing control grows with each passing day.

Time is Not on Your Side. Closely related to the potential loss of control is the issue of time. Any law firm leader that has faced crisis will tell you that solutions need to be found quickly. That does not mean that speed justifies “shooting from the hip,” but time is of the essence when solving crisis.

Getting it Right the First Time. In law firm crisis, there is little chance to experiment or launch trial balloons. Leadership’s solution to crisis needs to be right the first time. Don’t count on a do-over.

Rumors Can Undermine the Best Plans. When law firm leadership faces trouble, lawyers and staff not really “in-the-know” will think they are. They will sense that something is wrong and will talk about it, speculate and worry. Get ahead of the rumors by communicating clearly and precisely about the firm’s issues and your plan of action. Good communication skills can calm the troops and establish credibility. Keeping quiet or hunkering down in your bunker can kill your chance for success.Crisis at a law firm can be a watershed development that can threaten a firm’s future.

Crisis puts in motion at least five moving parts any law firm leader must know and remember. If your firm were in crisis, how would you handle them?

 

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