Managing Law Firms in Transition

Managing Law Firms in Transition

Getting a Bigger Piece of the Client Pie-Positioning Your Firm for More than a Sliver

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

To control costs and improve legal service, more client legal work has been brought in-house in recent years.  As clients have achieved those twin goals, the proximity of readily available legal services to business decision makers has spawned greater institutional reliance on the captive legal departments.  The increased access to legal services for company business units has imposed more demand on the in-house solution.

Meeting that demand by piling more work on the already strained company lawyers is not always possible.  Whether a lack of capacity or missing expertise, the increased demand for legal services has resulted in an increased use of outside lawyers.  This turn of events signals a bit of good news for law firms.  Indeed, in the effort to contain their legal spend clients ironically may have cracked the door open a little for outside law firms.

How should law firms react?  Based on the recent Legal Tracker LDO Index/Benchmarking and Trends Reportby the Legal Executive Institute, “pumping up the hustle” alone will not suffice.  Instead, the report indicates that the selection of outside counsel can be influenced greatly by whether the outside law firm is “proactive.”  Being “proactive” means different things to different people, but lessons learned from in-house legal departments suggest that a proactive firm is in front on such matters as:

Pricing its Services. The pricing of legal work is a sophisticated proposition that involves more than reducing rates, delivering budgets, or capping fees.  Clients are looking for cost certainty while simultaneously positioning for desired outcomes.  By proactively approaching pricing with a client, a law firm sends the message that client value matters to the firm.  If proposed by the law firm, the pricing inevitably postures it and the client towards a financial arrangement that works for both. Reactively waiting for the client to dictate terms or set the agenda on pricing shows little initiative to the client, tends to lead to the firm’s financial disappointment, and sets the firm poorly for grabbing more work.

Working Efficiently. Among the things that clients like about their in-house legal departments is the efficient delivery of legal service.  In presenting itself to land a client’s available legal work, firms should understand from the client the ways the in-house services are efficient.  With that knowledge, a firm can strategically design its services to meet or exceed that efficiency.  By having a plan for efficiency, the firm can explain to the client how it will replicate if not improve on the performance the client has come to expect and enjoy.

Achieving Results. In many instances, the important client legal work will consist of matters the client is used to managing. For that kind of legal work, the client will have an expectation of results premised on in-house attorneys’ past performance.  Understanding the client’s past experience with its in-house team is useful intelligence when seeking to be hired.  Any law firm pitching this work should demonstrate its understanding of the client’s expectations and its plan to meet or beat past performance.  Having a conversation in which the client shares its requirements serves two purposes.  It shows the client the firm will listen, and it guides the firm towards a successful strategy.

Understanding the Business.  A hallmark of many in-house legal departments is their ability to understand a business unit’s needs, expectations and objectives.  That insight typically is earned over an extended period of time in which the company lawyer’s presence in the company culture inculcates a recognition of business imperatives.  An outside firm seeking to be engaged should strive to understand the client’s business issues just as they are understood by the in-house lawyers.  Just as importantly, by engaging deeply with the client about its business needs, the firm shows its commitment to furthering business objectives through legal service.

Based ontheLegal Executive Institutereport, the opportunity for firms to gain more legal work from clients with legal departments does not reflect client unhappiness with the path chosen. Rather, client satisfaction with its in-house solution is here to stay.  As your firm pursues the newly available opportunities, is it keeping that in mind?

Succession and Law Firm Merger – 5 Key Considerations

Posted in Law Firm Merger, Law Firm Succession, Law Firm Transition

First generation law firm leaders find themselves confronted by a classic “good news-bad-news reality.” The good news is that they are nearing the end of what for most has been a rewarding career. The bad? Most have no clear path of succession— for client relationships or leadership responsibilities.

There are a host of reasons; but the reality for most is an unplanned career dilemma — remain active long enough to develop and execute a succession plan, or go ahead and step away and put equity (not to mention legacy) at risk  post departure.

Faced with the dilemma, many law firm leaders find themselves entertaining a merger as a succession solution.

For those considering merger as a succession strategy, there are five compatibility issues to consider.

Culture

There is a lot of confusion about what culture really is. Simply put culture is what work life is like inside a firm day to day. What characterizes behaviors…what do conversations sound like…what topics and issues capture attention and imagination.

There is a strong correlation between a firm’s culture and what the firm most values. Not what it says about these things on the website or in recruiting materials; but where investments are made and stakes put in the ground. Eloquent copy describing a shared commitment to client service, community, collegiality, and collaboration are common. Too often there is a world of difference between what the website says and what the law firm is.

When entertaining a merger, combining with a firm with a compatible culture is essential to continued happiness and long-term retention of personnel at all levels.

Client profile compatibility

In addition to the obvious issue of legal conflicts of interest, compatibility of client/work profile is critical to executing a merger that will meet a firm’s succession goals.  The more dissimilar the profile of clients in terms of sophistication of work, size of client companies and the related rate structure, the more difficult it is to achieve an effective integration of the two firms. Amerger between a firm that represent large multinational companies on “bet the company” matters and a firm that does more routine work that yields a lower rate structure is problematic from the word “go,” no matter how much both parties want to believe otherwise.

Compensation system

Differences in the cornerstones of each firm’s compensationsystem — the degree of subjectivity in the system, the level of draws, the balance between draws and catch-up distributions, open vs. confidential, broad based participation in compensation setting vs. a small controlling body — all of these factors provide an opportunity for conflict. Finding a merger partner with similar compensation system values and function will help in achieving succession objectives.

Financial ambitions

Every firm is different in terms of financial performance and objectives. A lack of similarity in what is valued will yield dissatisfaction, a sense of us versus them and, over the long haul, a combination that will drive attrition from one side or the other.

Leadership style

Finally, the issue of compatible leadership is a critical consideration when a merger is considered as a solution to succession issues. A group of partners that have existed in an environment with a leader that routinely engaged partners, allowing them to actively participate in the decision making and policy-setting process will be unhappy in a new environment that doesn’t include such involvement.

A merger can be a solid, even dynamic solution to issues of succession; but a critical success factor is the honest evaluation of leadership styles on both sides of the equation.

Conclusion

The market for mergers remains very hot. Law firm leaders looking to merger as a succession solution will likely find a number of options. It is easy to be seduced by the perceived upside. Leaders who devote appropriate attention to these five factors will be much more likely to engage in combinations that survive the test of time…and deliver succession solutions for clients and firm personnel alike.

Succession Planning as Financial Planning: Five Critical Components

Posted in Law Firm Leadership, Law Firm Succession, Law Firm Transition

Succession planning is an important issue for many law firms, especially as the Boomers and Generation Xers age and the human resource pyramid becomes an irregular shaped box.  When you add in the assault on the industry from client competition, alternative service providers, and artificial intelligence, the necessity of doing succession right is more critical than ever.

With all that has been written and discussed about law firm succession planning it is no wonder that firms are focusing on the challenge more than ever.  Early attention to the issue, training the next generation of leaders and business generators, and consulting with clients are among the tools used to position firms for the future.  All those initiatives are important to tackling succession, but too often these “soft” steps don’t sufficiently address the financial aspects of succession.  For a succession plan to work, it must recognize and address financial issues.  In sum, a good succession plan is also a good financial plan.

Any succession plan necessarily involves financial considerations that touch on client transition, senior attorney compensation, dealing with owner equity, maintaining working capital, and controlling the annual succession cost.  Experience has shown that financial modeling is important in addressing these five fundamental components of law firm succession.  Specifically:

Transitioning and Institutionalizing Clients Requires Incentives.  On the law firm side of things, transitioning a senior attorney managed client to a junior attorney involves those two plus the firm.  Without creating incentives that motivate all three to see transition accomplished, the important objective is merely aspirational.  Finding a financial arrangement that encourages the senior attorney to let go and the junior attorney to latch on is critical.  Without such a financial arrangement, institutionalized and managed by the firm, failure in client transition is likely.

A Senior Attorney’s Compensation Glidepath Must Be Fair to Everyone.  As many senior attorneys get on in age, they slow down and their productivity wanes.  Cutting the senior attorney off at the knees at compensation time generally is no more effective than allowing that attorney to be continually overpaid.  A firm realistically addressing succession confronts the declining productivity phenomenon and finds a middle ground that appropriately balances recognition of historical contribution and current contribution with the reasonable financial expectations of the other generations.

Old Capital, New Capital and the Value of Existing Owners’ Interests Must Be Addressed.  Whether a firm is small or large, the value of an equity owner’s interest in the firm must be addressed as part of succession.  Even firms that have a well-defined retirement of capital scheme, it is important that the firm retain sufficient paid-in capital as senior attorneys leave.  For firms without an established way to return or retain paid-in capital, especially smaller ones, the advent of senior partner retirement presents the additional issue of whether the remaining owners must pay the looming retiree for the value of his or her equity interest.  Solving the capital issues typically is an important financial consideration.

Succession Must Provide Sufficient Working Capital for the Future.  The whole idea behind succession is to assure an enduring institution.  Keeping an eye on the go-forward working capital needs of the firm is a must when preparing for succession.  Succession obligations can’t be allowed to drain a firm of adequate working capital.  Any succession strategy must meet the working capital needs of the firm (and its remaining owners) going forward.

The Annual Succession Obligation Must be Regulated.  Closely aligned with the need for working capital is the necessity to regulate or cap the payment of succession obligations.  This most often comes into play with a return of capital or equity buy-out obligation created as part of a succession plan.  Even the best planned succession strategies can impose obligations that outstrip a firm’s ability to pay in down years.  Establishing a cap on some of the obligations preserves the firm so that it can pay all the obligations, even if some are delayed.

If pursued thoughtfully, succession planning involves a heavy dose of financial planning.  When your firm works on its succession planning, it is sufficiently focused on the financial issues?

 

Will Your Law Firm Survive?

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

I have been thinking a lot about the state of change within the legal profession, and wondering what the ultimate consequence will be for firms as the pace of change continues to accelerate. A few weeks ago, Altman Weil released their 2018 survey of law firms; the survey, its results and commentary are excellent. In reviewing the document, I was struck by the extraordinary risk that so many law firms are operating with — the risk of obsolescence.

A friend and highly regarded marketing and strategy consultant, Eric Fletcher, published an article titled, Don’t Look Now, But Things May Be About To Change, which is exactly on today’s point. His observations regarding Eastman Kodak, Blockbuster and typesetters can be extended to law firms–they will either adapt or go the way of the dinosaur.

There are three quotes from the Altman Weil survey that provide focus for this post.

Quote 1
“The overall demand for legal services (billable hours) has decreased in the aggregate since the recession, and all of the dynamics that affect hours available to traditional law firms clearly indicate a continuing downward trend. Commoditization, new technology tools and ‘non-traditional competition are all permanent changes to a post-recession market. Demand for law firm services will not return to pre- recession levels–ever.”

Change is constant and non-traditional service providers have seized on a lucrative niche in the legal arena, one that has not evolved with the efficiencies that technology and creativity bring to so many other professions. According to the survey only a little more than one-third of the 800 plus law firms surveyed are proactively engaged in activities that will drive innovative change.

Bites of the traditional legal marketplace pie are being devoured by new non-legal competitors. To survive, law firm leaders will embrace this reality and take appropriate action. The others will ultimately find one path or another to extinction.

Quote 2
“In 69% of law firms, partners resist most change efforts.”

This quote aligns interestingly with one-third of law firms not engaging in innovative ways to serve their market.

Lack of interest in change among law firm partners is driven by a variety of factors. Some partners are reaching the end of their careers, many are tired and don’t need to change to reach the finish line. Some haven’t accepted the necessity of change and others don’t know how to change.

Leaders of tomorrow’s successful law firms will have found a means of making innovation a normal part of their firm’s culture. They will budget, recruit and promote with adaptive change in mind.

Quote 3
“Equity partners are not busy enough in 51% of law firms.”

The challenge of unproductive partners is not a new one. What is new is the margin of operational error firms can afford in this marketplace. Partners who are habitually unproductive and are not seeking to change–create viability problems for their firms.

Successful firms will have a declining percentage of under-performing partners, and even fewer partners who are both underperforming and resistant to change. I believe in treating everyone with compassion; however, compassion must be coupled with a drive for institutional stability and survival.

Conclusion
Massive change is afoot. The most successful firms will take advantage of change and come out winners. The others will ultimately find their way to a growing heap of “former” firms.

Is it Time? Five Developments That Demand Action from Law Firm Leaders

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

Running a law firm successfully is no easy task.  It is a multi-dimensional effort that requires leadership, discipline, vision, and some luck.  Getting all firm lawyers to row a boat in unison can be tough.  Even if some of the oars irregularly go into the water, progress is still possible.

When attentive leaders work hard to keep their firm headed in the right direction, unanticipated events are not part of their go-forward planning.  Why would they be?  But as history has shown, unforeseen watershed developments can occur that place firms in destabilizing states of transition.  When this occurs, it no longer is business as usual. Rather, leadership must recognize that the routine has given way to the unfamiliar.  When a firm leader is presented with such a defining moment, decisive action must be taken for the firm to find a safer place.

When transitional event arise, it is imperative that a firm act promptly and with resolve.  While such events can come in different forms, most fall into one of five categories.

Loss of a Foundational Leader.          Some firms are clearly identified with a single leader.  He or she contributes mightily to the firm’s success and despite others also furthering the collective goal, it is hard to imagine continued success when that leader is gone.  So, whether sudden retirement, illness, death, or a leader’s foray into public service, the loss of a foundational leader easily thrusts a firm into transition.  Business as usual will not be possible. Significant action out of the norm will be required.

Financial Setbacks.     Most firms experience an ebb and flow in their financial performance.  It can be expected as are the inevitable array of adjustments made to address the up and down.  But when a firm experiences a dramatic reduction in financial performance, especially if it represents evidence of a problematic trend, focused action is necessary.  Strong steps to arrest the financial setbacks and strategize for a recovery must happen.  Inattention or inadequate measures can spell the doom of a firm.

Excessive Attrition.     Blessed is the firm that avoids attrition.  Indeed, attrition at law firms is common and, within reason, can be helpful.  Not only can poor performers rotate out, but new blood can add to a vibrancy that law firms need.  When attrition grows to excessive levels, however, a firm can find itself adversely impacted by out of kilter overhead, loss of substantive skills, and declining morale.  When a firm experiences a rash of attrition, leadership must stem its continuation, identify the roots for its occurrence, and implement short-term and long-term remedies.

Loss of Vigor.  All law firms depend on a measure of enthusiasm to be successful.  Whether personnel are enjoying the teaming culture or exciting engagements, a law firm’s vibrancy through its people is a key component to its success.  When a law firm loses that energy, and simply goes through the motions in its day to day activity, something is wrong.  If not addressed, a firm can slide into irrelevance or indifference.  Leadership seeing intensity or potency drop should not accept such a state.  Action is required.

Collapse of Your Market.  Some law firms stake their success on being the very best at serving a particular niche of the legal market.  There is nothing wrong with a boutique strategy-it has resulted in success for a great many firms.  But sometimes business trends, legislative or regulatory changes, or client stumbles result in a firm losing its market.  Picture an environmental law firm when a government is cool to environmental concerns.  Whether expected or not, a loss of market means leadership should move beyond habitual planning and instead go a Defcon level of action.

When major unanticipated developments hit a law firm, leadership needs to step it up a notch.  In the face of challenges like the five discussed above, muddling through the customary approach to leadership simply won’t do.  Action, perhaps dramatic, is required.  Would your firm recognize these predicaments and take the initiatives needed?

Rethinking Law Firm Succession-Five Reasons to Focus Differently

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

Law firm succession is a top of mind issue for today’s law firms.  Making sure one generation of leadership can hand the reins off to the next generation is a key concern.  Of course, it is not just having the right people in place to develop and execute sound strategies, but it also requires transitioning to capable client relationship getters and managers.

A recent report highlights industry developments and suggests that finding the right successors at law firms is more important than ever.  Altman Weil’s 2018 Law Firms in Transition Survey sees law firms at a crossroads.  The data and analysis suggests that law firm gains since the Great Recession of 2008 are being countered by new challenges and challengers different than a collapsing economy.  Instead, client competition, alternative service providers, and a growing array of technology-based solutions undermine more than ever the position of the traditional law firm in the legal service market.  Smart law firms, ones that will thrive in the future, will aggressively respond.

So how does law firm succession fit in with this challenge? In essence, succession today is not just a matter of training and selecting the next leaders and business developers in the mold of the lions that built the firm into what it is.  Rather, similarity to the past may have less utility than previously thought.  The next law firm successors should possess forward-looking perspectives that rival the results-oriented thinking of clients, alternative service providers, and emerging technology platforms.  The next leader’s focus on the future is essential because:

Traditional Demand for Legal Services is Likely to Decline Over Time.  With clients bringing legal services in house, turning to alternative service providers, and technology-based solutions gaining traction each day, the assault on traditional law firm services is sure to increase.  Demand for traditional legal services is likely to fall. Creative solutions will be needed from the law firm leaders of tomorrow.

Legal Services Will be More Commoditized.  Industry trends suggest that legal services are becoming more commoditized.  The more that happens, the less clients will be willing to pay for those services.  Firm leaders will need to either move away from commoditized work or make it more value and result oriented.

Non-Traditional Competitors are More Innovative and Client Centered.  The competition is scary because it typically is more innovative, and client centered than traditional law firms.  Law firms that survive and thrive will be committed to innovation and client centered results, just as the non-traditional competitors are.  Any new leader must think like an innovator and drive results that focus on client satisfaction.

The Old Business Model Needs More Than Tweaking.  Since the Great Recession many successful firms have tweaked the law firm business model to enjoy modest gains.  Forward-looking leaders will think beyond short-term solutions but will think about new business models that drive client results and satisfaction.  The future will require more than tweaking, it will require new approaches.

The Next Downturn is Coming. Since the downturn of 2008 the legal services industry has operated in an improving financial world.   Even as the economy has expanded, the results for law firms have been only tepid.  The decent results have come without facing the burden of another financial downturn.  Forward thinking leaders will be prepared for the inevitable next downturn.

If your current succession plan has not taken on the new mindset, it needs to be changed so your next leader is not just like your traditional leaders, excellent he or she may be.  Similarly, if new leadership has been installed recently, and consensus for the coronation was premised on the successor’s “fit” within the firm’s traditions or historical approach, serious thought should be given to the idea that another change is needed.  A continuation of the status quo, or a moderate change from the status quo, may leave the firm behind in what promises to be an ultra-competitive and unforgiving future.

Leadership and Law Firm Success/Failure

Posted in Uncategorized

The most dangerous leadership myth is that leaders are born – that there is a genetic factor to leadership. This myth asserts that people simply either have certain charismatic qualities or not. That’s nonsense; in fact, the opposite is true. Leaders are made rather than born. – Warren G. Bennis

 

There is simply no single factor that has a greater impact on the success or failure of a business than the quality of its leadership. During this period of dramatic change in the legal services industry a well defined means of developing effective leadership is a must.

First, to debunk a myth – effective leaders are not born, they are made.  Much has been suggested about “natural born leaders” and there is no substance to the suggestion. This should be good news to members of law firms. With sufficient desire, dedication and effort, effective leaders are developed.

There are three primary steps to creating effective law firm leaders.

  1. Identify interested lawyers.  Routinely engage members of the firm including junior associates to determine who has interest in functioning in a leadership capacity.
  2. Develop the capability. Once identified, find opportunities to develop their leadership experience and knowledge. Opportunities include:
    1. Assign leadership positions,
    2. Provide leadership assignments,
    3. Connect the leader to be with a mentor (inside or out of the firm) and
    4. Direct them to educational programs intended to develop knowledge and build a network of other emerging leaders.
  3. Obtain feedback. All effective leaders are consciously or unconsciously committed to learning. They strive to become better leaders. Nothing provides a stronger learning experience than lessons learned on the job. A formal system of routine feedback, from all applicable personnel, provides an opportunity for that learning.

Maintaining an appropriate sized group of emerging leaders is critical to law firm success. Prudent firms proactively develop that leadership capability.

What is your firm doing to prepare tomorrow’s leaders?

Law Firm Merger-A Way to Solve the Succession Dilemma

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

For many law firms, succession to the next generation presents a formidable and daunting challenge.  Leadership may have been too busy to plan ahead for succession.  Turnover at the firm may have dealt a blow to the goal of grooming someone to step in as the next leader.  Sometimes the next generation’s business development abilities may not match the historical performance of the baby boomers now looking to kick back. And even if a thoroughly designed succession plan exists, the competitive legal market may now render it suspect or obsolete.

Unfortunately for law firms, in particular smaller ones, at some point succession can’t wait.  A solution is needed and the luxury of implementing a plan over the coming years is unrealistic.

Law firm merger can provide the perfect solution.  Although many reported mergers are explained as being done to further a larger law firm strategy, merger can serve many purposes.  As a succession tool, merger has proven effective when the option of turning the keys over to the next generation isn’t possible.  These “succession mergers” make sense for a number of reasons.

A firm facing succession often finds the following issues resolved by merger:

Leadership Vacuum.  For some firms, a future generation of leaders just never developed.  Law firm leadership at such firms face the uninviting prospect of turning the reins over to unqualified or uninspiring junior partners.  A merger into a firm with strong leadership can solve that problem.

Continuity.  Existing leadership may be concerned that a traditional succession plan (not involving merger) may not go well, and their firm may stumble and eventually wither away.  The problem with succession is that there are no “do-overs.”  Combining with a larger firm that enjoys a measure of stability may reduce numerous risks and promise continuity.  And that continuity may mean, at least in the mind of the firm’s founders, that the firm lives on.

Post-merger Opportunity.  Even if there is some confidence in the leadership readiness of the smaller firm’s lawyers, baby boomer leadership may believe that a new and larger firm will provide better opportunities for their people for whom fondness remains.    Leadership turning over the reins knowing that they have provided greater opportunities to their people may feel more content.

Good-bye Worry.  It is an overstatement to say that a merger removes worry for the former leaders of the absorbed firm.  But a well-negotiated merger with a strong firm certainly can provide some sense of security to law firm leaders that have fought the good fight for so long without an end in sight.  Leadership in the merged firm will take over the headaches that have long consumed boomer leadership ready to retire.

Benefits.  The merged firm may have a personnel benefit regime that is more generous for the absorbed law firm’s people, including former leadership, than the benefits currently extant at the smaller law firm.  And even if the benefits of both firms are generally similar, the merger still may make a lot of sense.  It is inescapable that a law firm that closes due to a lack of succession planning will not continue to provide its people with benefits they have come to expect.

Although a smaller firm’s leadership may be motivated to merge in order to solve its succession issues, it is not as if the acquiring firm does not benefit.  The existence of firms with succession issues presents to larger firms a market opportunity they may not otherwise have.  In addition to gaining access to skilled lawyers, new clients, and perhaps a new and desired market, the gains for the larger firm from market intelligence and credibility may exceed any that could be obtained by hiring a lateral or two to a de novo office.

These considerations already have been enough to propel some firms into merger.  What about your firm?

 

 

Merger and the Underperforming Law Firm

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

As firms consider their strategic position , a number of law firms are finding themselves underperforming relative to peer firms. For some, it is deja vu…for the second, third or fourth consecutive year.

You don’t need anyone to tell you that this is not a great way to navigate in this increasingly volatile environment. A firm that has experienced successive years of underperformance needs to consider whether they are going to be able to turn things around. Any firm can have an off year; but when underperformance turns into a trend, it is time to consider some broader questions.

The firm facing continuing problems may plan to turn things around by:

-Trying harder
-Becoming more “strategic”
-Seeking outside assistance to identify and address basic issues
-Considering a change in leadership/management, or
-Entering the merger arena.

Merger is often an overlooked strategic option for firms. Assuming a firm can find the right cultural fit, a combination can be an effective answer to underperformance.

But it is not a silver bullet. Caution should prevail. There is no worse strategic option than joining forces with another underperforming firm.

We have witnessed this approach many times. And it is destined for failure.

While the leaders of some underperforming groups seems to gain comfort through affiliation with firms in a similar position, weakness added to weakness spells failure.

On the other hand, a firm considering merger as a way to compensate for underperformance must proceed strategically in order to realize success. In the ideal scenario, firms entertaining a combination would make up for each other’s weaknesses in the context of cultural compatibility.

Areas where we have seen firm’s effectively seek a merger partner to compensate for issues effecting performance include:

-Technical capabilities
-Geographic presence
-Bench depth and broader expertise
-Technology infrastructure
-Leadership/management

There are countless nuances associated with successfully executing a merger with another firm. But with laser focus on the right issues, appropriate assistance, and enough time, merger may be a great solution for the underperforming firm.

If your firm is underperforming, have you considered a merger as a solution?

For those interested in additional readings on the topic of law firm mergers please see here.

Achieving Stability and Longevity for Your Law Firm-Five Fundamentals

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

Almost daily, lawyers come together and open new law firms.  High expectations accompany such births.  With owners committing to work hard, promising to exercise given and acquired skills, and counting on a little (but not too much) luck, the newly created institution teases with the prospect of success.

The positive vibes at inception may be tempered when reverberations from the occasional law firm closing resound.  But law firms can close for any number of reasons.  The ending of a firm by its owners may simply be desired, planned out, and then executed.  In other cases, a firm’s demise can result from factors never intended, frequently unanticipated, and often bemoaned.  Whatever the reason, a closing law firm’s record will be starkly different from the law firm that gets passed from one generation to the next.

With intentions among law firm founders not much different at the time of creation, what explains the dissimilar outcomes?  Why do some law firms last while others seem to blow away in the wind?  One word: focus.  A firm’s ability to enjoy stability and longevity, and avoid a premature end, frequently turns on leadership’s ability to focus on five key fundamentals.

Shared Aspirations.  Whether a firm is getting started, is seeking to grow, or is somewhere else on the continuum of law firm life, long-term success depends on shared aspirations among its owners.  Shared ideas about the values held dear and objectives sought creates a commonality of purpose.  When agreement about goals and the reasons to be practicing law together is shared, owners will be on the “same page” and stability and success becomes more likely.  For that reason, leadership should constantly assess the mood and outlook of its owners to test the continued uniformity of their aspirations.  When aspirations seem to be fracturing, leadership’s focus and corrective action is required.

Planning.  A focus on planning is essential.  Only through commitment to planning can the shared aspirations of a firm be realized.  But planning is not easy.  It requires time, discipline, and vision.  By focusing on planning, leadership can initiate strategies that help achieve articulated objectives.  Through planning the firm can adjust its blueprint for the future as needed and identify individual performance expectations for the firm’s attorneys.  A focused firm reviews its plans frequently, can assess the firm’s performance against the plan, and adjust its plan as it and the market evolves.

Leadership.  Almost all successful firms enjoy high quality leadership.  Leadership at law firms is a complex brew of ingredients including knowledge, personality, persuasiveness, vision, trust and support.  Effective leadership not only strives to earn the owners’ trust and respect but works hard to preserve it once gained.  Quality leadership pursues the firms articulated goals, follows through on promises and enlists others in the firm in meeting the firm’s objectives.  A firm’s focus on maintaining high quality leadership is essential.  But focusing on present leadership is not enough.  A firm committed to its future will work hard on identifying the firm’s future leaders and paving the way for their seamless succession.

Communication.  An important ingredient in law firm stability and longevity is communication-it is the multi-dimensional key to connecting, understanding, and fostering inclusiveness.  In a time of client and lawyer mobility, good communication protects a firm from potential instability.  Both external and internal communication should be a part of a firm’s focus.  But communication is not simply a one-way exercise.  Focused leadership listens carefully to its clients, its people, and its industry to make informed decisions.  Understanding what clients are thinking, and what the rank and file is feeling, is critical to building a stable service model that can evolve over time.

Awareness.  A stable firm that has enjoyed a good run is one that understands its place in the law firm industry, can see trends emerging, and understands the challenges ahead.  In sum, a stable firm is dedicated to understanding the world around it and its place in that world.  That awareness will be displayed by a deep curiosity in the prospects for clients, progress in the industry, competitors’ actions, and professional service firm best practices.   A law firm that keeps its head on a swivel seizes opportunity, avoids surprises, and solidifies its foundation while other firms struggle.

Giving these five elements frequent attention is a sure way to improve your firm’s chance at stability and longevity.  In this day when the stakes are high, is there any reason to not give your firm that needed focus?

 

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