BigLaw leaders have many things to think about when guiding their firms to Top 100 finishes. One major item is the need to respond to client expectations of value. The idea that clients expect value in the legal services they buy is not a radical idea. As long as law firms have had clients, there
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
The typical press release announcing a law firm merger extolls the excitement, the opportunity to have one plus one equal three, and the great fit of culture, practices and people. It’s perfect until it is not. In fact, by some measures more than half of all law firm mergers fail. When the realization sets in that your law firm merger is a bad one and not the combination of your dreams, what can you do?
Besides whistling past the graveyard, you’ve got to do something. And while a solution stimulated by panic is not recommended, prompt action is advisable. As action plan options go, the following three options generally are presented and often are considered:
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.
Law firm succession planning represents an important component to law firm longevity. The two forms of succession most often discussed-leadership and client relationship transfer-should be top of mind to any firm thinking about being an enduring institution. While leadership succession can be a significant challenge, creating an effective client relationship transfer strategy is among the most complicated things to achieve.
In client relationship transfer, it takes four different parties to make it work. First and foremost is the client without whom there can be no client relationship transfer. Surprisingly, too often the client’s thoughts and perspectives on relationship succession are not prioritized, at least to the degree desired by the client. If the client’s interests are neglected, there is little hope for a successful plan.
Fingerprints are unique. No two snowflakes are alike. And the more one looks at law firms, the more it is apparent that each law firm has its own personality. Whether small or large, local, national, or international in scope, general service or specialized boutique, driven by profit or public service, each law firm has its own DNA.
Though distinctive, many law firms share common characteristics. One shared by all law firms is the need to be financially healthy. Law firm financial health is the universal need of every law firm—without financial health a law firm’s future is seriously suspect.
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.
It can’t be overstated. The legal services business is experiencing dramatic change. For law firms as institutions, it is obvious because more work than ever before is brought in-house by clients, and alternative service providers are rushing into the competitive landscape. Besides the increase in competition, there are technical and practice advances that have changed the way law firms do business. Legal project management, once a novelty, is altering the focus law firms are expected to bring to a task. Technology in law is evolving so fast that even law firms committed to investing in new tech have a hard time keeping up. And artificial intelligence is finding its place in the ultimate objective of meeting the legal needs of clients.
With all the industry change, most firms know that settling on the status quo is risky. Still, more than a few firms are slow to change. Some are overwhelmed by the idea of innovation itself or are worried about the appropriate time and capital to invest in its execution. Without adequate experience or guidance, a firm can be paralyzed.
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.
Despite the seemingly “good” year that 2018 was for many law firms, experience tells us that ”good” can be a relative thing. While 2018 performance data compares favorably to the data from the prior years following the Great Recession, all is not completely rosy. Today’s law firms face more competition than ever as market share is shrinking, and the industry is being disrupted in multiple ways.
The recently released Thomson Reuters State of the Legal Market 2019report provides some industry information about how the 2018 results should be viewed. The report concludes that despite good results last year, a robust round of “high-fives” should be tempered. As Thomson Reutersnotes, shared competitive industry information, technological advances, client control of legal service use and terms, greater competition among law firms and other resources, have all greatly altered the legal services market. This change in landscape has, among other things, stimulated a war for talent, causing valuable lawyers with valuable clients to move from one firm to the next in free-agency run wild.