I think there is a world market for maybe five computers. – – Thomas Watson, Chairman of IBM, 1943
Enough with Prognostication
More than enough has been written about the state of the legal profession. Forecasts vary from projections of a terminal change to the old law firm model (see two recent interesting examples), to more moderate assessments that foresee limited but still serious pain for most in the profession.
Rather than further the debate regarding the magnitude of pain that the industry is going to experience, we want to generate a dialogue centered on turning around a troubled law firm. Specifically, we are looking to discuss what can be done to move a law firm from being in danger of collapse to being a healthy organization pursuing its aspirations.
In the world of business types, there is a universe of difference between professional service organizations and other business enterprises. That difference is particularly profound when we start talking about planning and executing a turnaround strategy. Other businesses can restructure around products or service lines. With professional service firms the turnaround process starts with people and their commitment to the organization.
For the law firm seeking a successful turnaround, everything begins and ends with the people at the core of the organization and their commitment to its future. Stated simply the troubled law firm must first determine the extent and depth of commitment from key partners in order to move forward. Without that knowledge there is no foundation from which to restructure, it is the equivalent of trying to rebuild on quicksand.
In order to gain a partner’s commitment, the partner first needs to know two things relevant to his/her decision; where is the firm headed and how is it going to get there. These two issues are often categorized as:
As a partner is wrestling with a go/no-go commitment decision, he wants to know, at a minimum, what it is he is committing to, in other words, if we all stick together what is it we are investing in, what are we building or rebuilding. This critical step is missing from the creation of far too many law firms and is the source of the trouble for a high percentage of the troubled ones.
While seeking a commitment of core partners, the prudent law firm leader will seek to build a consensus around the nature of the firm they intend to rebuild.
If mission/purpose defines that nature of the organization being built, strategy and culture define the “how.” Agreement on a core set of operating principles on how the firm is going to be built provides a basis for smoother decision-making, greater harmony and a much greater probability of success.
Other thoughts -Obtaining the Commitment
After defining the firm of your future and how you are going to build it, it is time to seek the commitment of your partners. This commitment can take the shape of a verbal commitment to literally signing off on a “commitment to the future” document. Such documents are sometimes created to visibly reinforce the seriousness of the matter and to serve as a beacon for the path forward.
To further demonstrate the strength of commitment to the firm’s turnaround some firms uses additional demonstrations of commitment such as:
• Payment of additional capital into the firm
• Signing of a new office lease
• Personally committing to firm debt
However commitment is obtained and demonstrated, the second key to a successful turnaround is sizing the firm’s cost structure to the organization’s size, a topic we will cover in in our next segment.
We are seriously driven to create a dialogue related to turning around troubled law firms. What are your thoughts regarding “Commitment” as being key?