Managing Law Firms in Transition

Managing Law Firms in Transition

The Makings of an Exceptional Law Firm Leader

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

A few weeks ago I shared some thoughts on the pivotal role leaders play in a post titled, “The Role of Leadership in Law Firm Success or Failure.” In today’s post, in an effort specifically designed to help identify the quality leader, I want to point to what we believe to be clear leadership characteristics.

An April 2017 McKinsey & Company article titled “What Makes a CEO ‘Exceptional’?” provides a compelling foundation for our examination, suggesting three signposts of the exceptional business leader. The article examines and analyzes an extraordinary group — the top performing 5% of roughly 600 of the Fortune 500 CEOs. The analysis revealed that these top leaders:

  • Came from outside of their organization
  • Acted strategically
  • Took informed action

Let‘s look at these three characteristics, and apply them to our conversation about law firms.

Came from the outside

The analysis indicated that the top performers were twice as likely to have been brought in from another organization. But even in cases where new leadership was promoted from within, the best performers in this group adopted an outsider’s perspective, enabling the leader to examine the organization and its issues objectively.

The idea of going outside for leadership is virtually unheard of within the legal industry; but it is an option that should be considered — especially by a troubled law firm or a firm in crisis. Viewing issues through the same old lens — doing things one way because this is the way we‘ve always done them is the surest way to impede important and necessary change.

Acted strategically

The highly successful CEO’s in the study were 60% more likely than other CEOs to conduct a strategic review of the organization in the early days of a new position. Equipped with perspective gained from the strategic review the leaders were described as being in a position to move “boldly,” driving meaningful change that had beneficial results.

An unfortunately low number of law firm leaders operate with the benefit of the perspective gained from a strategic review of the organization — its strengths, weaknesses and opportunities for improvement. Wise (and extraordinary) leaders make such a review an early priority, not because strategic studies are easy or painless, but because the findings of an in depth study informs and shapes the path to productive transition.

Informed Action

This third characteristic naturally follows acting strategically. The most successful CEOs in the McKinsey study did not rush to change simply for the sake of shaking things up. Instead they sought to accumulate the necessary knowledge of the organization and had the benefit of a strategic view before undertaking major restructuring.

Unfortunately, too often we see new leadership in a firm taking precipitous action in order to put their imprint on things. This rush to act usually belies little more than an unsophisticated ready, fire, aim approach to leadership.

Today, perhaps more than ever in the legal industry, the prudent firm leader will make critical moves only after possessing a clear understanding of needed change, as well as the potential consequences of prescribed action.

As the article points out, studying the actions of proven winners in any endeavor can yield valuable knowledge. Our propensity for thinking that our situation is unique is not a precursor for learning from the successes (and failures) of others. Successful leaders have much in common, no matter how different the various enterprises.


For those interested in additional reading on law firm leadership, click here.


Five Leadership Steps for Confronting Law Firm Crisis

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

Law firm crisis can surface at any time.  Its roots can be deep within the firm, or can be the outcome of unforeseen developments. However, or whenever it arises, the affected law firm must react promptly and strategically. A tardy reaction, or a misstep in action, can leave a firm in great danger and on the ropes.

For most law firm leaders, having to manage through crisis is a new thing.  Their experience in guiding their firms in the good times is little preparation for the bad times.  On being faced with the new challenge many managing partners start by asking the loaded question of “what do I do now?”

Law firm crisis is sui generis as no two law firm crises are alike.  Sometimes the crisis emerges from financial stress, personnel issues like unanticipated departures, the untimely loss of a leader to death or incapacity, bad publicity, threatening litigation, or internal political unrest.  Finding the right response will depend on the nature of the crisis and action most suitable to the threat the crisis creates.  Despite each law firm crisis being unique, any law firm leader searching for a “to do” list should follow five tried and true steps to implementing a successful crisis response:

Show Calm and Resolve.  As the walls of the firm may seem to be crashing all around, a firm leader must display a sense of calm and belief that a path to resolution is available.  While demonstrating calm, the leader must show all that are watching that he or she is resolute and unbowed in tackling the mess.

Determine the Crisis and its Depth.  A calm and resolute leader must do more.  Immediately a leader must assess the nature and depth of the crisis.  As much as it may be tempting to close the circle and hunker down in this assessment phase, it is better to get out among the firm and its people as the crisis is being measured.  Getting out among the firm’s people as data, information and mood are judged will deliver the better intelligence.

Develop and Push a Stabilization Initiative.  Leadership must move quickly to remove the latent uncertainty and quell unrest – it must stabilize the firm.  The nature of the crisis will dictate the stabilization steps most likely to work.  But unless stability is restored to some degree it will be difficult for the firm to compose itself for a resurgence.

Present a Path Forward.  Not long after the crisis surfaces, the firm will look to leadership for a substantive solution.  Leadership must demonstrate an understanding of the issue(s) and offer a solution.  Without being able to do so, internal support within the firm will begin to slip away.  If an understanding of the issues impacting the firm is not expressed along with a solution based response, any recovery strategy will lack credibility and the crisis may consume the firm.

Strive for Some Quick Victories.  While short term solutions will not dispose of the bigger crisis, nothing breeds success like success.  And successes build confidence and improve morale.  For that reason, leadership should look for low hanging fruit and correct relevant unresolved issues that have been deferred for too long.  Visible victories can build confidence and stop if not slow any downward slide.  Boosting morale early in a crisis can be a lifesaver and early triumphs, of almost any size, help.

Crisis, being action of a bad kind, must be met by action of a good kind.  These five steps won’t alone solve a firm’s crisis as crisis is always a complicated challenge.  But addressing crisis by using these five steps delivers the foundation for a positive and comprehensive solution. What other leadership steps would you recommend?



The Role of Leadership in Law Firm Success or Failure

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

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 Lombardi


As law firms, big and small, continue to struggle, 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 marketplace.The answer to this question is one of those good-news/bad-news situations.The good news is that, for most firms, the answer is simple and straight forward.

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 development, it is the response (or lack thereof) that yields long-term results or consequences… D&B shockingly attributes 87.8% of business failures to leadership.

Leading The Law Firm

We mentioned good-news/bad-news. The bad news is leadership is something law firms struggle with mightily. If almost 90% of all business failures are directly tied to leadership, consider the implication of these law firm realities:

  • Most law firm managing partners get their first experience with 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, team or another organization

The training most successful lawyers receive rarely focuses on the skills essential for success as a 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 — 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 the work product is prepared and delivered in a manner that clients expect

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 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:

  • 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 the great 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. 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 to traditional law firms
  • 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 a 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. Strategies 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.
  • Development through education. There are numerous excellent leadership programs. A few to consider include:
    • Harvard’s Leading the Professional Services Firm
    • Local MBA and EMBA programs
    • Any one of the seminars on the subject offered by the AMA – 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. An approach that is used frequently and successfully in the corporate arena, laterally hiring a Managing Partner is rarely considered by law firms.
  • 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.


The serious partnership does more than talk about leadership. 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 and years ahead.

See more of our content on law firm leadership here.

Five Common Mistakes Law Firms Make When Entering a New Market

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

A dynamic law firm growth tactic involves opening an office in a new geographic market.  To move a firm into virgin territory requires careful thought about issues that go beyond simply hiring new lawyers.  Indeed, expanding a firm’s footprint requires many considerations, including good intelligence about the new market’s practice characteristics, bar personality and mores, prevailing rates, client expectations, and real estate location/economic issues.

No less important is finding the right pathfinding lawyer to open, manage and market the new office.  A lawyer’s lawyer may seem ideal, but if he or she tucks away into the new home’s bunker, the firm’s splash into the market will be more like a ripple. The best hiring decision lies in identifying a least one lawyer that brings the right blend of professionalism and front facing energy that advertises the firm’s new office as serious and formidable, and one that clients, lawyers and the business community will accept.

But even if good market intelligence is coupled with finding the perfect office leader, firms jumping into a new market should be wary of common pitfalls that can turn new office elation into old office despair.  Faltering in a new market can usually be tied to one or more of the following five mistakes:

Adopting a beachhead mentality.  The thrill of the chase makes some firms focus solely on getting the new office opened with good lawyers, an adequate stable of clients and a good lease.  The thinking goes that once a beachhead is established a natural progression inland will follow.  But it doesn’t work that way. A market entry without a long-range plan for post-opening initiatives will squander momentum and lead to atrophy.

Acting solely on opportunity.  Too often the notion of entering a new market is the outgrowth of an unsolicited opportunity that seems fortuitous.  If thinking about a new market is spawned by good fortune coming from somebody’s misfortune or wanderlust, the needed diligence and thoughtful examination likely is an afterthought.  An unforeseen opportunity and its momentum can endanger the making of a measured strategic decision.

Integrating one-way.  Kudos to the firm that enters a new market committed to integrating the new office into the rest of the firm. But many integration plans are too weighted towards acclimating the new office into the greater firm.  While there is logic in exposing the new lawyers to firm processes, procedures and culture, getting the larger firm platform to commit to the new market is equally important.  A plan integrating the entire firm into the new market will pay dividends.

Thinking that additional growth will be easy.  At the opening of most new offices the firm declares that it intends to expand and expects to be a multiple of its opening size within months.  It is not so easy. The new office, an interloper in the new market, has no record of performance, has not experienced success and is an unknown quantity.  Few great candidates will be willing to risk a move to such a nonentity.  Lawyers willing to join often have baggage that makes them generally. If a law firm thinking about a new market does not know how to solve the recruitment riddle, it should re-think its foray into the new market.

Treating the new market like a second-class citizen.  Except in the case of market openings that are specialized for a narrow purpose, no firm should go into a new market if it does not intend to compete at the highest levels of its selected niche.  To do so, the firm must invest in the new market with a plan to pervasively become known in the legal, civic and social community. A firm unwilling to make that investment should consider passing.

 Opening an office in a new market can be big news.  It can also lead to bad news if executed incorrectly.  Before your firm descends into a new market, will it guard against these five common mistakes?


Law Firm Survival and Succession Planning – 3 Steps

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

Succession and succession planning are hot topics in the legal profession. One statistic explains the focus on the topic – only about 30% of law firms make it beyond the first generation.

Why Do So Many Law Firms Fail?

Why do so few law firms make it to the second generation? Consider this progression of logic:

  • Few goals are realized by happenstance;
  • The greater the objective, the less likely it will be realized without serious intent;
  • A written succession plan is a reflection of serious intent;
  • 95% of law firms have no written succession plan;
  • For a majority of law firms, 25% or more of revenue is generated by or closely associated with lawyers that are 60 or older;
  • Few firms will survive the loss of 25% of revenue in a short period of time.

So What?

If you are a law firm leader, this reality does not surprise you. We regularly visit with managing partners and governing bodies that see the writing on the wall. With the exception of those who choose to bury their in the sand, most agree succession must be addressed. A comprehensive and workable succession plan is essential if a law firm hopes to survive beyond the current generation.

A 3-Step Path to Survival

Step 1Start now. As simplistic as this may sound, it may be the singles toughest part of developing a plan. The day-to-day demands of managing a practice make it difficult to step back and consider the future. This reality is one of the biggest reasons many firms find themselves in the current predicament — years of not having time to address relationship continuity and succession.   The first step is to be done with hand wringing and more talk.

To think too long about doing a thing often becomes its undoing” –Eva Young

Step 2Engage your colleagues in a series of discussions intended to yield a plan for succession. Inclusion is essential to obtaining the buy-in necessary for a plan to succeed. Conversations with those impacted (clients as well as lawyers) that focus on long-term benefits, continuity of representation for clients, and the value of legacy are critical pieces of the puzzle. Some of these conversations may not be easy; but without them you are reverting to a strategy of hope.

Step 3Execute and monitor the plan. Very few plans roll-out exactly as intended but the routine monitoring of performance to the plan provides a means of adjusting as necessary to achieve the objective. Succession is about the future — and any conversation about the future must be on-going. Inside a successful firm, a good plan must be able to evolve.

A successful succession plan doesn’t necessarily mean future leadership comes from within your firm. The plan may include the recruitment of new talent in the areas of leadership, and/or client generation and servicing. It may mean that the core of your firm survives a part of a bigger organization. The real key is that the result your firm ends up with is the result you desire. Without planning the desired result is highly unlikely.

One additional note that many firms miss when it comes to the issue of succession planning—-Succession is likely on the mind of your clients. The issues of experience and continuity are likely being dealt with inside your client’s organization. A thoughtful collaboration between relationship partner, the client and firm leadership is an opportunity to demonstrate that level of client-centeredness all law firms proudly tout.

Our experience is that most firms wait too long and suffer the consequence of fewer or no options. Don’t let that happen to your firm!

See here for additional reading on this topic.

Improving the Odds in Law Firm Merger

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

Law firm mergers remain popular as law firms everywhere seek an edge. Despite the high interest in merger as a difference maker, law firms considering merger need to be careful-merger can be fraught with risk.  Indeed, it is reported that only about half of all law firm mergers succeed.  So not only can a merger not be the panacea envisioned, but it can destabilize a firm in ways not envisioned.

For every firm thinking about merger, Identifying the pathways to success is essential.

What are some of the important considerations for a law firm that wants to improve its odds of having a successful merger?  What should be in a law firm’s plan as it embarks on the journey of merger?  A review of law firm merger successes and failures provides five important fundamentals:

Have a Rational Strategy that a Merger Will Advance.  Merger should be a tactic to further a clear-eyed strategy adopted in an atmosphere free of the pressure to grow.  A firm may perceive a need to improve its substantive capabilities, enhance a burgeoning expertise or grow market share in an area it is known or needs to be known. A firm may need to merge because declining performance augers in favor of a rescue. Or sometimes a need for leadership succession drives a decision to merge.  Whatever the impetus, merger as an option should be based on meeting a strategic imperative identified by the firm before it tactically begins moving on merger.

Establish Clear Requirements and Be Disciplined in Their Pursuit.  Once merger as a tactic towards the strategic goal is chosen, good leadership will pause to identify the important criteria for any prospective partner.  Only after being armed with an articulated set of criteria should a firm enter the market in pursuit of a match.  Even then, a firm should be disciplined to only kick the tires on potential candidates that meet the firm’s earlier identified criteria.  Remaining faithful to the criteria keeps a firm from allowing the thrill of the hunt cloud its judgment.  By staying true to the criteria throughout the process, a firm likely will be more disciplined, unemotional and not swayed by deal momentum.

Make Compatibility Non-negotiable.  Two firms should not be joined in marriage if they are not compatible on multiple dimensions.  How the two firms compare and match on culture, finances, clients, compensation and operations is very important.  A clash in any of these compatibility metrics should signal caution.  Although universal compatibility may be rare to achieve, divergent fits in these five metrics should be kept to a minimum.  A further comparison of leadership styles and an agreement on the blended leadership team are essential.  Finally, respective ideas about succession and a vision for the future should be compared.  Only by engaging in a thorough compatibility diligence process can a firm know whether it should move forward or walk away.

Avoid Thinking that One Plus One Equals Three.  “Synergy” can be code for thinking that an underperforming firm can be hoisted up to a colossus by its more robust merger partner.  The “one plus one equals three” syndrome can happen in the “fog of merger,” but it should be avoided.  Seldom does an underperforming law firm simply need the chance to be a part of a better organization to realize its potential.  If such a match is under consideration, a culling from the herd may be needed to avoid a drain on the merged organization.  If the looks of the prospective merger when a pruning is assumed are not as attractive, the merger may not be right.

Make Integration a Cornerstone of Any Merger.  Integration and assimilation must be part of the negotiating and planning taking place prior to the deal being sealed. Thinking about how groups look and function once joined is essential.  Both before and after the closing the two firms should work steadily to forge a common culture, blend systems, processes and procedures to gauge, motivate and reward the new firm’s valued behaviors.  Post-closing is not the time to relax-it is the time to double the efforts at molding a single firm having a unified purpose.

For law firms considering merger, following these five fundamentals helps avoid missteps.  What other “rules of the road” would you recommend for firms contemplating merger?

5 Keys to Resolving Law Firm Crisis

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

crisisRealizing that your law firm is in crisis can be unsettling, to put it mildly. Take heart, though crisis is a concerning condition, it need not be fatal.

Crisis can arrive in many different ways. At times it is the product of an extended period of underperforming. For other firms it can be brought on by events such as litigation, the departure of a group of lawyers or loss of a significant client relationship.

No matter the cause, here are five key areas to consider when addressing crisis.

  1. Calm leadership – Someone has to be in charge of addressing the crisis situation. This person may be the firm’s managing partner; it may be someone else — but someone must be on point. From day one this individual should demonstrate a calm confidence in the firm’s ability to address the crisis.
  2. Regular communication – Whether the point person or a designated spokesperson, someone must be accessible and provide routine communication. The absence of information creates anxiety that will certainly make a tough situation more difficult. The communication must provide needed information with confidence and complete honesty.
  3. Triage – Immediate attention must be given to the conditions that create the most immediate threat to the institution’s survival. In medical parlance, you must first stop the bleeding.
  4. Plan – A plan must be developed for working through the crisis. Sorting through the primary issues and the options available to address them is an immediate priority. Once the plan is developed, to the extent appropriate, the plan and progress on it become part of the routine communication to relevant parties.
  5. Help – Most law firm leaders have never addressed a crisis that may threaten a law firm’s viability. Learning to lead a firm through crisis is often best accomplished by tapping resources that have been there. Better to spend a few extra dollars and secure needed insights than save a few dollars and lose the firm.


If addressed properly, a crisis can be an experience that makes a law firm stronger!

Five Signs Your Law Firm Needs New Energy

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

Law firms that lack energy dim their prospects for the future.  Too often law firms pass over the issue of their own vibrancy (whether by a failure of recognition or simple indifference) and plod along without taking corrective action.  A becalmed law firm, especially in these times of legal industry disruption, is flirting with danger.

Allowing a firm’s malaise to continue can institutionalize a momentum towards decline.  It fosters a culture where expectations are lessened and acceptance of mediocrity metastasizes.  A lack of energy cannot go on for long or it will grow into a potentially irreversible condition.  If a firm finds its energy levels scaling down, it must take quick action.

Recognizing that an energy issue exists is the first step.  Is the firm’s vibrancy at levels that are below acceptable?  How can it know?  Five common signs of a law firm’s waning energy can include:

Substandard Economic Performance.  A great measure of a firm’s energy is the firm’s current economic performance.  But an energy assessment comes from much more than whether the past or current year has been or is a good one. Detailed economic reports can unlock data that reflects a declining energy level at the firm. Even under the glow of a “good year” declining production, a drop off in new matters opened, reduced marketing and business development activity, smaller number of clients coming to the firm are all markers indicative of an energy decline.  Sustained declines in performance measurements suggests strongly that a jolt of energy is in order.

Same Old, Same Old.  A firm satisfied with its practice “as is” and only seeking to replicate it from year to year is setting itself up to disappointment.  Continuing the status quo can mean that the client relationship building apparatus is in a rut.  Satisfaction of this nature is the mark of complacency and can cause a firm to be passed by its competitors or abandoned by the marketplace.  A firm with any vibrancy does not stand still.  It constantly looks for an edge to make itself more attractive to prospective clients and other attorneys.  A firm content to rock along as usual can need a shot in the arm.

Attrition.  Unwanted attrition at a firm often deprives a firm of some of its best assets.  Even attrition instigated by the firm can be a problem-it can signal that long-term planning inadequately positions the firm for the future.  Either way, the loss of attorneys can sap energy from a firm and can lead to a slow and unintended bleeding away of more talent.  When attrition occurs, inevitably a firm suffers energy loss.  It must counteract its negative impact by taking prompt action, including replacing its losses with better talent or a better strategy.

No Obvious Succession.  Succession planning aside, a firm must constantly ask itself whether young and dynamic lawyers are in the wings as a firm progresses towards a generational handoff.  A pool of young go-getters at a firm tends to provide a sense of energy.  But if scanning the firm’s roster fails to spotlight a pool of energetic potential successors, a lack of energy is imminent if it does not already exist.  When a firm’s demographic weighting is skewed towards older contributors, an influx of young talent can boost the firm’s energy and make it stronger.

Indifference to Disruption.  Today’s legal market is more competitive than ever.  Disruption is all around.  A law firm that ignores that fact either is profoundly unwise, lacks the energy to react, or both.  “Whistling past the graveyard” of disruption is not a sound strategy in today’s market.  In contrast, a law firm aware of the challenge posed by disruption and prepared to face it head-on is going to be, in most instances, a firm that possesses the energy needed to compete in today’s World.  If your firm is indifferent to the changing competitive legal landscape, it may need, among other things, some fire in its belly.

Being a successful law firm requires many characteristics, not the least of which is energy.  A lack of it suggests problems in the firm’s future.  What is your firm’s energy level?  How does it measure up when looking at these five signs?

5 Early Warning Signs of Law Firm Decline

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


Most problems are more easily resolved when addressed early. Pressures driving law firm instability and decline are no exception.

The likelihood of early detection is enhanced by incorporating a routine self-examination of the firm. This periodic checkup should focus on performance as well as the satisfaction of both personnel and clients.

Here are five specific areas that, when carefully examined and routinely monitored, combine to provide an assessment of what the future has in store for your firm.

  1. Client satisfaction and stability – Any significant decrease in the depth of relationships with key clients, or the loss of any material number of clients is reason for heightened attention. The percentage of revenue associated with key clients, as well as the quantity of clients served should be closely monitored. A substantial negative move in this area should be objectively reviewed to determine whether additional steps are advisable.
  2. Personnel unrest or disapproval – A serious negative shift in the way lawyer and staff feel about the firm is reason for further study and concern. Obviously in order to know if such a shift is occurring, the firm needs a means of benchmarking current satisfaction. This can be achieved through a network of engaged managers that stay in touch and are alert to growing dissatisfaction. Some firms routinely utilize satisfaction surveys. Whatever your approach, having a finger on the firm’s satisfaction pulse is critical to overall health.
  3. Economic stress – declining financial performance is an indication of a firm that must take steps to strengthen operations or face the prospects of very serious challenges to its survival. As obvious as this may seem, it is puzzling how often firm leadership manages to ignore economic issues. Several indicators to watch include:
    • Falling revenue per attorney
    • Declining productivity
    • Failure to meet monthly budget
    • Slower turnaround on payables and receivables
    • Decreased partner distributions

All of the above are signs of a potentially weaker financial platform. In the end, the impact of financial decline is the decreasing ability to pay partners for performance. As partners make less and less for the same work, dissatisfaction will be followed by departures.

  1. Increased risk exposureincreasing litigation and/or debt are often drivers of law firm instability and ultimate decline.An increased reliance on debt relative to firm revenue is a reason for concern. If not cautiously managed, debt can become a short-term substitute for revenue, creating further pressure related to future profits. Better to focus on fixing the operational issues that are driving the need for borrowing, than to continue to borrow.

Unfortunately many law firms are targets of litigation at some point – whether from former clients or employees. A single case of such litigation may not be cause for alarm; but an increase in frequency or the size of claims against the firm is reason for concern.

  1. Turnover – the loss of attorneys, staff or clients is reason for concern. Some degree of turnover is expected in all organizations. Client needs decline, and people experience life changes that result in turnover however, an uptick in turnover or turnover that is higher than industry norms should be investigated in order to determine the root cause.


In summary, the sooner potential challenges to law firm stability are identified, the more probable that damage can be limited and long-term fixes can be implemented.

Improving the Odds with Law Firm Expansion

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


Virtually every week brings news about law firm expansion.  The news is exciting and of great interest in and out of the legal services industry. Although the firms that report lateral hires, mergers and acquisitions and new office openings are pleased with their news to share, the passage of time proves that not all expansion moves are smart ones.  Bad moves typically become known later but are not from a lack of trying to get it right. No, the forays into expansion that go bad often are the result of common mistakes or a lack of discipline.

How can law firm leaders make good decisions when it comes to law firm growth and expansion?  How can mistakes that have an epidemic quality be avoided? How can discipline be assured?  There is no silver bullet or magic potion, but there are some fundamental steps to expansion that increase the odds that the outcome will be positive.

The approach to a better law firm expansion experience largely is a matter of process grounded on substance.  Every law firm thinking about expansion should adhere to the following five principles:

Start with the Firm’s Strategic Plan.  All law firm expansion should be securely tethered to a firm’s strategic plan.  Generally, a law firm strategic plan is birthed in the calm of visionary thought.  It is grounded holistically in the idea that the then current state of the firm will be strengthened by pursuing an articulated goal for the future.  Created at a time when expediency does not drive decisions, it can be a thoughtful assessment of where the firm needs to concentrate its efforts to succeed long-term.  When thoughts of expansion are spawned, it is essential to refer to the strategic plan.  In expansion, the strategic plan is the governor that keeps the firm from speeding out of control.

Only Expand to Further the Firm’s Strategic Plan.   Once leadership has honed-in on its strategic plan, it should test the expansion idea or opportunity against the strategic imperatives adopted previously. If the proposed expansion does not fit well within the confines of the strategic plan, caution should be exercised.  If the strategic plan is old and outdated, it behooves leadership to reassess the plan first prior to taking up expansion.  Finally, if the firm has no strategic plan, is should ask itself whether it is wise to skip the “strategy thing” in favor of expansion that may feel good but has no purpose.

Pay Heed to the Strategic Fit of the Practice or Market Expansion.  A disciplined approach to considering expansion examines the practice or market expansion as a possible component to advance the firm’s cited goals.  While the addition of a practice or an entry into a new market may seem exciting and positive, the addition may be ill fitting.  In the short term, it may not be burdensome, but over the long haul will it advance the objectives of the firm?  Looking at the potential practices or markets through the lens of the firm’s stated goals is the best way to keep the firm focused on sound expansion.

Consider the Firm’s Culture When Assessing the Proposed Practice or Market Expansion.  Adding new lawyers or jumping into a distant market may seem even right strategically, but a “good strategic fit” can undermine a firm if cultures clash.  Growth brings with it many challenges, but among the most difficult to overcome can be the task of melding professionals together that don’t see the working world in a compatible way.  A misfire on culture can be particularly insidious because while positive financial performance may cloak cultural incompatibility, discontent can spread like a contagious disease.

Assess Whether Expansion Will be Financially Accretive.  In the long run, it makes no sense to expand the firm if growth will not improve the firm’s bottom line.  Financial benefits may not occur instantly-it may be part of a long-term play.  But if expansion is not a net positive in dollars and cents, a strong case can be made to take a pass.

Improving a law firm’s odds on expansion often turns on making the correct decision before the knot is tied.  A process that is grounded on the firm’s previously adopted aspirations is the guide for success.  Will your firm have the needed discipline?