I don’t know where we should take this company, but I do know that if I start with the right people, ask them the right questions, and engage them in vigorous debate, we will find a way to make this company great. Jim Collins

 

So many law firms — big and small — continue to struggle in this increasingly competitive marketplace.. This might lead you to believe that building an enduring firm is a complex undertaking.

I don’t think it is.

Certainly, if a firm has a dominant personality in need of having the ego stroked, or engaged in acts of self-aggrandizement, there can be challenges. And those challenges will give rise to workshops, white papers, seminars and retreats hoping to address the issues.

But if a firm sticks to the following, stability, balance and longevity are not only possible; they are easily within reach.

Here are three keys to building a law firm that will last for the long haul.

  • Gather the right people – When it comes to individuals working together, the equation is straightforward: the greater the degree of shared values and aspirations between lawyers, the greater the probability of survival. If members of the firm have a similar perspective on what is important they will find a way to work through the challenges. Firms that include partners with great variance in basic beliefs and ambitions face a high risk of failure.
  • Deliver quality client service – Nothing is more fundamental to a business remaining viable than the ability to satisfy clients. The strongest firms have an absolute, unwavering commitment to serving clients in a manner that the clients value and appreciate.

Client centered firms routinely seek opportunities to listen to their clients – about what the client values, and how the service of the firm measures up. Client interviews and surveys are effective means of receiving feedback.

Great firms seek innovative ways to instigate on-going conversations. Imprudent firms become aware of problems in service quality through the loss of client relationships.

  • Operate conservatively – Building a firm around conservative principles helps mitigate the risks that cause pressure for so many firms. It is often a simple trade off between low risk and immediate rewards. Focus on these areas:
    • Cost structure – maintain a low cost structure by:
      • not hiring personnel materially in advance of the need;
      • not taking down space materially in excess of needs; and,
      • avoiding shiny new space.
  • Debt – any level of debt carries a degree of risk. Prudent firms maintain low to no debt, including operating lines of credit;
  • Draws – maintaining draws at a modest level minimizes pressure on cash flow and helps keep your firm out of debt;
  • Capital – invest in your firm for the long haul. Adequate capital levels provide stability, and help keep debt low;
  • Rate of growth – aggressive, fast and imprudent growth may have caused more law firm failures than any other single factor. Adopt a strategic and measured approach to growth.

It is simple. To give your firm the greatest opportunity for stability and longevity, focus on having the right people, meeting the clients’ needs with quality service, and operating in a generally conservative manner.

Nothing spectacular. But as is so often the case, the seduction of the spectacular is difficult to resist.

What are your thoughts on leading a law firm in today’s transitional market? Is the conservative approach and the long view passé?

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Photo of Roger Hayse Roger Hayse

Roger Hayse is a founding Director of Hayse LLC. For 30 years he has closely advised law firm management and legal industry service providers. His career is highlighted by consistently providing the counsel and leadership critical to successful law firm transitions. He is…

Roger Hayse is a founding Director of Hayse LLC. For 30 years he has closely advised law firm management and legal industry service providers. His career is highlighted by consistently providing the counsel and leadership critical to successful law firm transitions. He is a frequent writer and speaker, and authored the 2002 book “Law Firm Strategy”.