The media reports about Canadian law firm Heenan Blaikie present a classic case of a law firm facing transition. The well-known and regarded Canadian law firm has seen its foundation shake as lawyers depart, reports of dropping business abound and speculation mounts about merger or dissolution. Without being on the inside it is difficult to identify the reasons for its struggles. One report suggests that it has been caused largely by macro-economic factors that have reduced deal flow. Whether Heenan Blaikie can maintain control during transition remains to be seen.
Even though Heenan Blaikie is north of the border, its travails are worth thinking about. Law firm dynamics in Canada and the US are not that different. For the most part, both countries’ typical law firms are quiet about business affairs and only disclose good news. In both countries law firms compete for a limited amount of business and year in year out success can be subject to the ebb and flow of client engagements. The loss of business and attorneys is always a risk and management of law firms in each country tries to minimize non-strategic turnover. And in both countries, setbacks can get out of hand and accelerate with the loss of rainmakers, practice groups and offices—sending a law firm reeling.
Based on recent reports, Heenan Blaikie is deep in its restorative steps. It has been communicating with partners, has hired a law firm restructuring pro, and is looking at options including a merger if one is presented. Any law firm in transition like Heenan Blaikie must act quickly to maintain or regain control over its future. Certain basic steps to take include:
Solidify the Firm’s Relationship With Its Most Important Lawyers. A successful law firm enjoys its success only if its most valuable lawyers have a reason to stay. When finding itself in the midst of transition, law firm management should immediately meet with the most valuable lawyers in the firm (rainmakers, charismatic leaders and respected practitioners), seek their input and deliver a calming message. Not only does the overture reflect calm on the part of management, but also it shows the firm’s core that their presence is valued.
Seek Professional Help. Few law firms facing serious transition have been through such a crisis previously. Unfortunately, a law firm facing transition will not get a “do-over” if it succumbs after missteps. Experienced restructuring help with a track record of solving law firm problems is a must. General restructuring professionals, while usually versed in crisis management better than existing management, will still be unprepared for dealing with the nuances a law firm restructuring presents.
Understand the Underlying Reasons for the Crisis and Seek Stability. Communicating with your lawyers is critical. It is from your people that the reasons for the current challenge will be heard. You likely will also receive suggestions on how to arrest the slide. Listening is a great quality, but not every issue is going to be material and not every suggested solution will be effective. Consequently, management must triage the issues and focus on the steps that will stabilize the firm.
Develop a Plan that Remedies the Problems. Using what was learned, sound management should develop a restructuring plan that is realistic in terms of action steps. Trying to accomplish too much can destroy management’s ability to implement the most important goals. Because there may not be a second chance, energies should be focused on implementing a plan that has the greatest chance to succeed.
Rally the Troops to Support the Plan. At the outset, management met with the most valuable lawyers to convince them that the firm’s future was secure. Once a plan is developed, management should reconnect with those same people to get their feedback to the plan. Armed with the feedback, management should revise the plan if required to gain the needed buy-in. With the revised plan in hand, supported by the greatest number of people, management should execute the plan.
Whether a law firm effectively deals with transition turns on many things. Early recognition, decisiveness and communication are three keys that are important. What other keys have you seen as important?