Law firms perpetually are in transition. In our changing legal environment, transition can arise when business strategy requires adjustment, merger is considered, layoffs are implemented, lateral hiring is pursued, leadership succession is at hand (see Cultivating the Next Generation), crisis arises or firm wind-up is decided and implemented.
In addressing any transitional event and the upheaval that comes with it, the timing of a leader’s decision making is important. Decision inflection points recognized early can allow a law firm leader greater control over available options and a law firm’s destiny. Failing to recognize timely an existing or impending transitional event can narrow a law firm’s alternatives and squander its legacy.
A disciplined approach to transition recognition can help a law firm leader identify areas of concern that need attention before it is too late. To exercise that discipline, a law firm leader should be mindful of four law firm related spheres that often signal impactful developments looming over a firm and its business. Remaining attentive to these areas of relevance can help a leader spot potentially harmful and disruptive events early. Forewarned, he or she is more likely able to design and implement solutions effectively and quickly.
To gain the advantage of time before transition is thrust on a firm, a conscientious leader should continually track:
Internal Performance. Most law firm leaders pay attention to internal law firm performance metrics. Tracking internal performance certainly is useful in making short-term decisions and assessing yearly firm and lawyer performance. But the metrics can do more. Often, it is that data that can identify impending matters of concern. Additionally, once analyzed the data can be used in long-term strategic planning and help leadership change the trajectory of the firm-for the better. Trends in that data also can be useful in forecasting the advent of business altering developments. Without question, internal performance reporting can be among the most helpful areas of focus when trying to stay in front of law firm transition (See How One Big Law Firm is Using Data).
Client Performance and Preferences. Without clients law firms can’t exist. Following the performance of clients and the challenges they face provides a good barometer on how your firm may fare in the future. If clients are undergoing changes, your firm should be prepared to react-whether it means finding new clients or serving your existing clients’ needs in a different way. Sometimes challenges a client confronts change its demands or expectations. It is imperative that those changes and challenges be recognized and, if appropriate, addressed by adjusting the approach to client service. Keeping abreast of your clients and their travails positions a firm leader for client driven transition.
Industry Trends and Challenges. Being informed about the initiatives and “best practices” of other law firms, especially your competitors, is always helpful. Whether your firm copies their initiatives is another matter, but being up to date on the newest strategies can, ironically, contribute to the recognition and adoption of a better law firm strategy. Further, surveying the marketplace for the “best practices” of the most successful firms also can be instructive. Thinking beyond law firm practices is useful as well (see Legal Innovation is not an Oxymoron). The ever-evolving challenges from non-traditional legal services providers, more efficient delivery systems and in some sectors, greater competition from clients taking work in-house must be followed and understood (see Are In-house Counsel Happy with their Outside Counsel?). Any leader directing his or her firm into the future must remain aware of these current industry challenges while trying to anticipate others.
Human Resources and the Generational Influence. As much as industry prognosticators suggest future law firms will be dominated by artificial intelligence applications or other cutting edge systems, processes and technology (see The De-lawyering of Law Firms), law firms will remain a people business. For that reason, an astute law firm leader will stay attuned to the firm’s changing human resources dynamic being influenced by a generation of younger, more involved and inquisitive lawyers (see Where Have All the Big Law Associates Gone?). These young lawyers may express a desire to “make an impact,” “understand the plan,” or “seek a better work/life balance (see Big Law Heads for Home-But Will it Work for You?).” Harnessing this HR animal helps a leader lessen the risk that personnel based transition often brings. A leader that understands the new human resources paradigm will be prepared for transition that is inevitable to follow.
A well-managed law firm law firm anticipates transition and avoids surprise and crisis by staying informed. Dodging the upheaval that transition threatens is not a matter of luck but a function of knowledge and awareness. Is your law firm’s management team sufficiently alert to head off the turmoil that transition can bring?