“For law firm leader, there is little room for error when crisis ensues. A mistake here, a misstep there, and lawyers at the firm begin to lose confidence in the firm and its leadership”
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".
I have been preparing for a managing partner leadership conference. One of the topics I am discussing is law firm Key Performance Indicators “KPI.” In reviewing recent articles and posts on the issue I was struck by two things:
- the disproportionate representation of relatively short-term performance snapshots; versus,
- the almost total absence of the two
Charles Darwin said so profoundly “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.”
Our practice is seeing an increasing number of firms tested by their ability to adapt. The news reflects a growing number of firms in obvious transition. From high-profile names to lesser-known partnerships, the leaders of each firm faces pivotal decisions. Some of these firms will restructure or otherwise embark on a turnaround strategy. Others opt for merging with another group or offering themselves as an acquisition target in an effort to avoid dissolution. History has shown far too many end in a messy liquidation.
Identifying The Path That Leads To Decline
The decline of a once vibrant partnership rarely has much to do with the quality of lawyers engaged in the practice. And though the marketplace is certainly tumultuous, what is at the heart of survival and success for some, and the dire straits of a struggle to survive for others?
In his book Corporate Turnaround, Dan Bibeault identifies four key mistakes that lead to organizational decline. These mistakes, paraphrased to the legal profession are:
- Failure to respond effectively to a changing competitive environment
- Poor control over operations
- Operating with excessive financial leverage
Let’s look at each one a bit more closely.…
I was very encouraged by a Bloomberg article regarding Katten Muchin Rosenman. The piece describes the strategic priorities of Roger Furey, the chair of the firm. The three top priorities are:
- Getting the word out regarding the firm’s reputation. Reportedly, the firm has an excellent reputation with existing clients and the goal is to make the broader market more aware of this.
- Determine what the firm’s clients view as their needs. As is the case with all firms (or for that matter, any service related business), understanding the needs of clients — learning directly from them about what they are thinking and what they need — will allow the firm to better serve them (and when done properly, almost always result in organic growth).
- Attorney development. The firm intends to better use its more senior lawyers to enhance the capabilities of its more junior lawyers.
I am interested in the interaction of a group of people who have a common goal, or a common obsession, each contributing something unique to make something greater than the sum of its parts. I don’t know why, but from day one, that has interested me. – Steven Van Zandt, Bruce Springsteen’s E Street Band
The recent news of departures from Carlton Fields Jorden Burt is most interesting. The firm, was the product of the 2014 merger of Tampa based Carlton Fields with DC based Jorden Burt. At the time of the merger the synergies between the two firms was promoted as one of the real selling points. Now, 5 years late, at least 30 of the 48 original Jorden Burt partners have left, including name partners Jorden and Burt.
Every institution is vulnerable, no matter how great. No matter how much you have achieved, no matter how far you have gone, no matter how much power you’ve garnered, you are vulnerable to decline. There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall and most eventually do. –Jim Collins
Jim Collins, the author best known for his positive and uplifting books Good to Great and Built to Last, wrote another provocative volume in 1999. How The Mighty Fallwhich looks at the causes and stages of organizational decline.
Most law partnerships begin with a sense of shared aspirations, enthusiasm and trust. The founding partners and those subsequently added presumably maintain a fiduciary commitment to conduct consistent with the welfare of the other partners, as well as clients.
The fact is that this is often not the case.
I have been thinking about the results from a recent survey conducted by the Zeughauser Group. Although the survey covered a variety of issues, the responses related to succession particularly struck me.
- When describing the top objectives for their firm, the most frequently stated objective was to “achieve long term stability.”
- When describing the biggest challenge facing their firm in the next 3-5 years, the biggest challenge stated was “transitioning leadership to the next generation”, closely followed by “transitioning client relationships to the next generation.”
- Finally, when asked about the biggest priority in the next 3-5 years the greatest priority was “building a more stable future.”
Strength and growth come only through continuous effort and struggle. – Napoleon Hill
The market volatility during the last year and the increasing concerns about a coming recession foreshadow risk for many law firms. Additional market disruption may lead to challenges for firms of all sizes and in most practice disciplines.
Most firms are in the final stretch for this year, wrestling with collections, budgets, promotions and compensation decisions. All of these are important activities. But, while focused on wrapping up 2018 let me suggest one more subject that deserves attention — something that stands a chance of making a real long-term difference.