Last week’s blog Law Firm Growth: Maintaining a Sensible Strategy (Part One) reviewed the uneven success from the non-organic growth tactics of lateral hiring and mergers. Also reviewed were some of the unspoken motivations behind lateral and merger growth. Despite noting these non-strategic reasons, last week’s blog concluded that these two popular means of growth continue to have relevance and value, but only if exercised with discipline. Through discipline, a firm maximizes the likelihood of success and minimizes attrition, the greatest challenge to an effective growth initiative. Such an approach requires a firm to:
Be True to the Firm’s Strategic Plan. Strategic plans typically are developed when thinking is clear, unhurried and after healthy considerations of a firm’s strengths, weaknesses, challenges and opportunities. Yet strategic plans lose their value if they are not followed. Thus, it is senseless to pursue lateral or merger acquisition tactics that ignore the firm’s strategic plan. For law firm management, it means confining the lateral and merger efforts to opportunities that are squarely consistent with the firm’s strategic plan.
Eschew “Opportunistic Growth” if it Veers From the Strategic Plan. From time to time a “great deal” arises because a group of lawyers or another firm’s office look for a new firm. These opportunistic transactions, attractive in isolation, should be avoided if they do not fit within the firm’s strategic plan. Excitement over hiring a “big name” should not cloud a firm’s judgment and cause it to turn away from its strategic plan. It may prove difficult, but a disciplined approach to growth will avoid hires that undermine the firm’s soundly developed strategy.
Do Not Hire Laterals or Consummate a Merger if An Integration Plan is Not Fully Developed. Doing deals that add lawyers can be fun, exciting and invigorating. Assuring that recently added lawyers fit within the firm and can thrive is harder to do and not as much fun. Even more difficult is making certain that existing lawyers are actually successful in creating leverage from the new additions. If a well thought out integration plan is not developed contemporaneously with the plan for consummating the transaction, consummating the lateral hire or merger opportunity is premature. If an integration plan is not developed prior to bringing in the laterals or merger candidate, the opportunity for effective integration will be lost. More importantly, because the integration planning process can test the suitability of the additions, a failure to develop the integration plan prior to agreeing to the additions may result in bad additions and/or unwanted legacy attrition.
Reject “Churn” as a Natural Consequence of Growth. So much of lateral hiring and merger activity is followed by attrition, either among additions or among legacy personnel. The high level of attrition generally signals one of three things.
- First, the attrition can suggest a view that many of a firm’s existing people were not “keepers” anyway and the new additions are not only good replacements but also upgrades.
- Second, the loss of people may suggest voluntary departures due to the failure to adequately integrate the new with the old, and elements among either group feel unwanted and leave.
- Finally, attrition can mean that the new additions were oversold.
Significant attrition for any one of these reasons is unacceptable. Circumstance one-the winnowing out of the “non-keepers” represents deferred maintenance and delaying the culling from the herd until after an acquisition squanders the opportunity for momentum. Losses due to reason two suggest a lack of attention to integration-an example of indifference or laziness. And losses because laterals or mergers don’t work out, a consequence reported by American Lawyer and others as common, simply demonstrates that diligence, discipline and wisdom were lacking with respect to the additions in the first place.
As much as one desires to turn back the clock to a time when organic growth was the norm, it won’t happen. Lateral hiring and mergers are here to stay. To make these tactics effective-far more effective than history has shown-firms need to be more sensible. The steps are not difficult, but require discipline. Do you have the kind of discipline to pursue non-organic growth sensibly?