Interesting news about the legal industry in transition was reported over the last couple of weeks. Jacob Gershman of The Wall Street Journal wrote one of a number of articles that reported a drop in legal jobs. Jennifer Smith recently wrote that clients are gaining traction in tamping down the cost of legal services. Robert Half reports that in Canada (will the US follow?) law firm salaries will fall behind some other professions in 2015. The ABA Journal provided a summary of law firms with the highest percentage of attorney losses. Forbes’ Basha Rubin theorized that mid-size law firms are at risk because of corporate trends towards insourcing. Another report about mid-size law firms had more positive news and concluded that the prospects for mid-size law firms had stabilized. For large law firms, the news was not all bad as revenues were reported to be up.
The market turmoil currently being experienced will keep up for a while. For that reason, law firms today must have the resolve to tackle the problems that stem from market turmoil. As formidable as these issues appear, many of these transitional issues can be addressed by sticking to sound law firm management fundamentals. To manage through transitional times, firm management should:
Review Performance Data Constantly. Smart law firm leaders stay on top of a law firm’s health by reviewing performance metrics frequently. A drop in a particular practice’s statistics is to be expected from time to time, but to keep it from getting out of control any substandard performance should be analyzed promptly. If the review suggests that a bigger problem is developing, an action plan to remedy the situation must be developed and executed without delay.
Increase Communication Efforts. At any law firm, keeping the lines of communication open is a must. In times of transition, a law firm leader should reach out to partners, associates and staff to keep them informed and gain feedback on their activities and concerns. Communication is a two-way street, so good intelligence on how your firm’s most valuable assets are feeling is best obtained by keeping your people informed. In times of transition, burrowing deep into your bunker is the worst thing a leader can do.
Keep Attuned to the Marketplace. Law firms do not operate in a vacuum-they compete in a robust legal marketplace that can be very informative. Law firm leaders should make it their business to know what is happening to their competitors. If a leader is well informed with the latest market intelligence, he or she will be more nimble to react to developments within his or her own firm.
Review and Re-Assess the Firm Strategic Plan. All firms should have a well thought out strategic plan. A law firm leader should frequently review the firm’s strategic plan and make small and large decisions that are consistent with a furtherance of that plan. If, due to the passage of time, the plan is dated or losing some of its relevance, re-think the plan and assess the firm’s next steps. Whether it simply needs tweaking (a common solution) or a radical change (generally not the case) will only be known if the plan undergoes a rigorous review by management.
Avoid Being Reactionary. Change experienced by a law firm can be gradual or immediate. Depending on the nature of the change, a response may be required. While circumstances may compel a prompt response, it should be measured and take into account its impact on the firm’s future. A reactionary response, in which management takes action because it “feels right” or the rank and file is clamoring for “action” is seldom wise. A misstep can be difficult to reverse. Whatever the speed of a response, it must be thoughtful and aware of its potential consequences.
A market in transition manifests itself in change and often creates concern. Managing through that change does not require a change in management principles. Indeed, sticking to management fundamentals most often works best. Are there other approaches that you think work better?