I have previously referenced the excellent McKinsey report COVID-19: Implications for law firms. In a re-read of it this morning, a universal truth regarding client relationships struck me: the stronger firm communication with its clients, the less likely there will be a surprise in decreased work.

During normal times a routine communication between the firm and its clients is helpful to both client retention and relationship growth. During times of turmoil, communication becomes even more critical and can provide solid indicators that assist in cash flow planning.

For those of you without a structured client feedback/communication program, here are ideas you might consider implementing immediately..

Design a listening process

Whether it be a 5-question electronic survey, a 30-minute Zoom meeting, or (when you deem appropriate) a 45-minute in-person visit, create a regular outreach to clients that asks how can we do better.  A client feedback initiative will do at least two things: (1) build relationship equity, provided you act on what you hear, and (2) uncover issues-in-the-making, giving you an opportunity to proactively respond to client needs.  Note that this is about listening, not pitching. Resist the temptation, and leave a discussion of your capabilities for another conversation.  Nothing you do over the next 6-months will have a more positive impact on revenue tied to client relationships.

Institutionalize this listening process as part of firm culture

The best process will include an open dialogue within the firm about what is learned and what should be done in order to perform better. To this end, you should immediately, involve all attorneys with significant client contact in the client feedback process. Regularly reporting to the firm on the number of client interviews and the number of professionals involved will further the activity as an ingrained part of the institution.

Include leadership

The more significant the client relationship, the greater the need for senior management involvement in the client meeting. The inclusion of senior management sends a clear message of importance to the client.

Follow-up

We referenced this above: the failure to respond to concerns or issues raised during client feedback sessions should be a firing-offense. It is essential that any comments related to how the firm can do better be responded to with an action plan to resolve the issue. Those action steps should not only be taken; they should be the subject of on-going communication with the client.

Eric Fletcher, a person with great perspectives on client communications, just posted a terrific piece on this very topic. I encourage you to read it.

 

For more insights on managing issues related to crisis and COVID-19 click here.

Virtually all law firms have had to adjust business practices to address the pandemic’s impact.  Whether working remotely, refocusing or changing firm economics, making personnel moves, or partnering with clients more, today’s challenges have fundamentally changed the way law firms operate.  For the law firms grappling with too many upheavals in their world, crisis looms.

For most law firm leaders, the advent of crisis is a new experience.  Instead of making decisions that merely move the dials of profitability, growth or long-term strategy, the leaders confronted by crisis are playing for all the marbles.  A misstep here or there can lead to disaster.  When crisis looms, two areas of focus can be key to avoiding catastrophe.

First, leaders should act immediately with a blend of short-term and long-term objectives.   Immediate action demonstrating that solutions are being implemented, essentially real-time wins, helps avert a downward momentum that can suck away confidence in the future.  Short-term actions that seek tangible results will counter lingering doubts about the firm spinning out of control.  But as good as immediate responses can be, they need to fit into a bigger picture-they need context in a long-term vision that speaks to the firm’s future.  This blend can’t advance disparate ideas-the short and long term must be in sync.

Second, the firm’s solution(s) must be communicated quickly, consistently and honestly.  Leadership credibility depends on telling and selling the path back to stability in a way that is believable.  Disparate messages delivered by uncertain and confused spokespersons will harm more than help.  Getting the message right is enormously important.

If these thoughts on communication in crisis prompts additional thinking, don’t hesitate to reach out to us for a brief no obligation conversation at either:

ajillson@haysellc.com  or

rhayse@haysellc.com

 

In last week’s post, we explored the surprise loss of a law firm leader. Today I want to suggest an orderly approach to this inevitable event.

The Zeughauser Group conducted a survey that included several interesting issues. Three observations related to planning for the long-term health of the firm 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 most frequently cited challenge 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 number one answer was “building a more stable future.”

These responses aren’t surprising — especially when considered along with repeated surveys indicating a minority of firms have developed any formal plan to transition leadership and or client relationships to the next generation. (See here for some good discussion related to the lack of preparation industry-wide.)

Is it possible that Covid-19 has prompted us to rethink how we prepare for the future?

If you are a law firm leader, the challenges do not surprise you. We regularly visit with managing partners and governing bodies that see the writing on the wall. Except for those who choose to bury their heads in the sand, most agree succession must be addressed. A comprehensive and workable succession plan is essential if a law firm hopes to survive beyond the current generation.

A 3-Step Path to Survival

Step 1– Start now. As simple as this may sound, it may be the single toughest part of developing a plan. The day-to-day demands of managing a practice make it difficult to step back and consider the future. This reality is one of the biggest reasons many firms find themselves in the current predicament — years of not having time to address relationship continuity and succession.

To think too long about doing a thing often becomes its undoing” –Eva Young

Step 2– Engage your colleagues in a series of discussions intended to yield a plan for succession. Inclusion is essential to obtaining the buy-in necessary for a plan to succeed. Conversations with those impacted (clients as well as lawyers) that focus on long-term benefits, continuity of representation for clients, and the value of legacy are critical pieces of the puzzle. Some of these conversations may not be easy, but without them, you are reverting to a strategy of hope.

Step 3– Execute and monitor the plan. Very few plans roll-out precisely as intended, but the routine monitoring of performance to the plan provides a means of adjusting as necessary to achieve the objective. Succession is about the future–and any conversation about the future must be on-going. Inside a successful firm, a good plan must be able to evolve.

A successful succession plan doesn’t necessarily mean future leadership comes from within your firm. The plan may include the recruitment of new talent in leadership areas and or client generation and servicing. It may mean that the core of your firm survives as a part of another organization. The real key is that the result your firm ends up with is the result you desire. Without adequate planning, the desired result is highly unlikely.

One additional note that many firms miss regarding succession planning is —-Succession is likely on the mind of your clients. The issues of experience and continuity are likely being dealt with inside your client’s organization. A thoughtful collaboration between the relationship partner, the client, and firm leadership is an opportunity to demonstrate that level of client-centeredness all law firms proudly tout.

Our experience is that most firms wait too long and suffer the consequence of fewer or no options. Don’t let that happen to your firm!

See here for additional reading on this topic.

recent post in Law.com about Boies Schiller and Flexner reminded me of the critical dynamics associated with losing key members of a law firm. The departure of individuals responsible for a significant amount of client revenue, or those who serve in leadership positions can be traumatic events and may pose a considerable threat to firm stability. This post addresses the loss of law firm leaders.

 The loss of a law firm leader can occur as an orderly planned-for event, or it can come as a surprise to the organization. When the departure is one of those out-of-left-field surprises, it can result in disruption, loss of confidence and loss of more lawyers.

Or, it can be managed in a way in which stability is maintained.

Responding to the surprise

There are several steps a firm should consider in response to the unexpected loss of a leader, including:

  • Appoint the right spokesperson – the key members of the firm should immediately come together to select one individual to speak on behalf of the firm. The message should be clear, concise, and forthright, and address transition issues, with special attention to matters that will impact clients as well as processes inside the firm. The designated spokesperson need not be seen or presented as a replacement or new leader; however, the individual must enjoy the trust of the organization. When this individual speaks, it must resonate with authority and inspire confidence.
  • Create a transition committee – the committee should consist of a small group of respected firm personnel. Their job is to design and implement a leadership transition process. The process should strike a balance between being thorough, inclusive, and fast. Although getting a new leader in place quickly is essential, making the right choice is far more critical.
  • Communicate, communicate, and communicate – those that are involved in the transition must remember that honest, regular communication is essential to creating the confidence necessary to minimize anxiety and the risk of additional losses.

In next week’s post, I will address the creation of a leadership succession process that contemplates the eventual loss of a firm leader.

The pandemic has caused an unprecedented change to the practice of law for many law firms.  Since March, the delivery of superior client service has required a new way of thinking and a little bit of scrambling.  Yet after a couple of months living in the Covid-19 world, some law firms feel a new normal that instills confidence about the future.

While trust in the future may have grown, fully returning to past practices is unlikely.  Remote work processes and client interaction are commonplace and established.  With legal services now understood and delivered differently, firms reshaped by change should reassess their paths forward.  And because the merry-go-round of the past has slowed or jumped to a new carousel, the time is right to freshly assess two components key to firm success.

First, are today’s owner’s aspirations in sync?  Now that the autopilot from past years has been disengaged, your changed firm should be viewed against your owner’s aspirations.  If a new path has rendered untidy the collective aims of the firm’s owners, assessing the reason for aspirational disorder is critical.  Addressing newly identified disparate views about the firm’s bearing is important.  In this transformed world don’t assume that owners previously “on the same page” still are.

Second, the firm’s prior strategic course may be stale in light of its pandemic response.  Taking stock of the firm’s pre-pandemic business plan is essential.  Does it fit with the firm’s new practice paradigm, geographical footprint, service offerings, talent and client base?  If the firm’s practice remains largely unchanged, the earlier strategy may retain its vitality.  But if pandemic driven adjustments have altered the firm fundamentally, a fresh strategy may worth considering.

Surviving the pandemic does not end a firm’s challenge.  Reassessing immutable past beliefs about the firm’s unity and objectives deserve a careful review as well.

If these thoughts prompt interest in additional discussion, we are offering private, confidential, and free 30-minute discussion sessions from 3:00-5:00 (CST) Tuesdays and Thursdays. To reserve a slot, send an email to either of the below:

ajillson@haysellc.com  or

rhayse@haysellc.com

To read more on leading through law firm crisis, visit Managing Law Firm Transition.

In a conversation last week, a friend who is a partner in an AMLAW 100 firm told me that he received a record number of calls from search firms during the previous month. In a separate conversation last week, a Managing Partner client noted the incredible number of calls she was receiving pertaining to hiring opportunities.

It appears that the lateral market is abnormally active.

There are a number of reasons an individual lawyer might be available during this unique period; let’s consider two:

  • Concerns about current firm. While an impressive number of firms seem to be weathering the challenges associated with the pandemic, we are seeing many forced to respond with cuts to compensation and/or draws, furloughs and layoffs. Given the environment, it is not surprising that some partners are unhappy with how their firm has responded to the pandemic, and have decided to leave, or at least test the waters of the lateral market. These individuals may represent a real opportunity for a firm with a need for their practice.
  • Individuals who have been victims of the pandemic. Many lawyers have been let go or had their compensation reduced (many more will be subjected to this reality in the months ahead), and are looking for a new home. In a significant number of these cases, a decision to hire will actually make your firm immediately weaker, and more vulnerable to the inevitable stresses of the coming months.

If there was ever a time for real due diligence in the hiring process, it is now. We urge firms to cautiously calculate whether you are really adding value. Most industry observers and advisors agree — more than 50% of lateral hires deliver less than expected.

Crisis Management Plan on an office desk and papers.

Law firm crisis typically brings financial pressure.  Reduced demand, slow-paying clients, and now due obligations incurred in better times are but a few of the hallmarks of crisis.  As bad as these things can be, the strain can intensify quickly when the firm’s lender expresses concern.  Because a lender’s involvement can dictate the outcome, any impacted law firm leader should observe three fundamentals.

First, having a thorough knowledge of the loan documents is essential.  Thinking you know your firm’s bank obligations from memory can be a serious error.  A law firm leader (or professional advisor) must read and intimately understand all loan documents and associated firm/lender communications.  Exacting details about representations, warranties, events of default, collateral granted, reporting obligations, lender diligence, potential holes to the lender under the loan (whether intrinsic in the loan structure or due to lender inattention) must become etched in leadership’s mind.

Second, understanding the loan is not enough. Context is very important.  The loan package must be understood in the context of the firm’s past and anticipated business performance.  A soon to be requested loan advance critically needed looks drastically different to a lender during times of loan compliance, looming default, or existing default. Relationship context is equally important. Knowing your firm’s and bank’s past history together is a vital component to any workout, as is your firm’s stature in the bank’s big picture and its portfolio of outstanding loans with others.

Third, credibility with your bank is a precious commodity-one that hopefully remains in supply.  In crisis, a trusting banker can be a valuable asset.  Conversely, a skeptical or distrusting banker can make life hard.  So, when crisis hits, a law firm should realistically assess how it is perceived.  If too much history has passed and the relationship is frayed, rebuilding trust by replacing leadership or hiring recognized professional assistance should be considered.

When crisis hits, lurking lenders can amp up its gravity.  Adhering to these three fundamentals can make a difference.

If these thoughts prompt interest in additional discussion, we are offering private, confidential, and free 30-minute discussion sessions from 3:00-5:00 (CST) Tuesdays and Thursdays. To reserve a slot, send an email to either of the below:

ajillson@haysellc.com  or

rhayse@haysellc.com

To read more on leading through law firm crisis, visit Managing Law Firm Transition.

 

“If you throw a frog in a pot of boiling water, it will hop right out. But if you put that frog in a pot of tepid water and slowly warm it, the frog doesn’t figure out what is going on until it’s too late…” Stephenie Meyer

 

Much like the boiling frog, if a law firm’s partners don’t recognize that the water is heating up — and not in a good way — they too may face a painful demise.

For some law firms COVID-19 has resulted in an immediate and apparent crisis; for others (e.g., bankruptcy and employment law firms) business has rarely been better.

Thousands of firms find themselves somewhere in between, considering what the damage associated with the virus will have on their firms.

Here are three specific areas that should be examined and routinely monitored in order to accurately assess what the future holds.

  1. Client satisfaction and stability– Any significant decrease in the depth of relationships with key clients, or the loss of any material number of clients is reason for heightened attention. The percentage of revenue associated with key clients, as well as the quantity of clients served should be closely monitored. Too many eggs in one or two baskets is a warning sign.
  2. Personnel unrest or discontent– A negative shift in the way lawyers and staff feel about the firm is reason for further study and concern.
  3. Economic stress– declining financial performance is an indication of a firm that must take steps to strengthen operations or face the prospects of serious challenges to its survival. As obvious as this may seem, it is puzzling how often firm leadership manages to ignore economic issues. Several indicators to watch include:
    • Falling revenue per attorney
    • Declining productivity
    • Failure to meet monthly budgets
    • Slower turnaround on payables and receivables
    • Decreased partner distributions
    • Increased reliance on debt

All of the above are signs of a potentially unstable platform. In the end, the impact of financial decline is the decreasing ability to pay partners fairly for their contributions to the firm. As partners make less and less for the same work, dissatisfaction will be followed by departures.

In summary, the sooner potential challenges to law firm stability are identified, the more probable damage can be limited and long-term fixes can be implemented.

If these thoughts prompt interest in additional discussion, we are offering private, confidential, and free 30-minute discussion sessions from 3:00-5:00 (CST) Tuesdays and Thursdays. To reserve a slot, send an email to either of the below:

RHayse@HayseLLC.Com or

AJillson@HayseLLC.Com

To read more on leading through law firm crisis, visit ManagingLawFirmTransition.com.

Covid-19 has impacted virtually all law firms.  A few firms have benefitted, some have suffered catastrophe, while the bulk of firms fall somewhere in the middle and forge ahead as best they can.

Whether leadership for this third group is plugging a leaky dike or simply boosting morale, the focus on short-term survival is a common concern.  As scary as present circumstances may seem, however, Covid-19’s impact will continue throughout the rest of 2020.  Fortunately, two things about the present landscape may help firms get through the year intact.

First, law firms battling now are bound to face significant challenges later when hoped for performance falls short at year-end.  End of year disappointment is difficult to overcome if its surprise leaves little time to react. Because firms now are attuned to their Covid-19 predicament,  year-end planning should and can begin immediately.  With over 6 months to go, leadership can strategically and tactically get ahead of the anticipated performance shortfall likely to occur.

Second, your challenged firm is not alone.  The competition likely is facing similar obstacles to normalcy, meaning that attorney defection may be more controllable.  Showing your talent that a plan exists for maintaining stability and stimulating future success may convince your valued lawyers to stay.  This may be the year “the grass is greener” pitch may not resonate.

Even with the havoc wrought by the pandemic, effective planning for year-end and keeping talent are two things that can still be achieved.

If these thoughts on leadership in crisis prompts additional thinking, don’t hesitate to reach out to us for a brief no obligation conversation at either:

ajillson@haysellc.com  or

rhayse@haysellc.com

To read more on leading through law firm crisis, visit ManagingLawFirmTransition.com

Three points in a law firm’s development will demonstrate the degree to which law firm owners share common values and aspirations:

  • when the compensation system is under scrutiny,
  • when it is time to commit to a new lease, and
  • in an hour of crisis.

Typically, when a firm is formed, two, three or maybe a handful of individuals gravitate to one another, and realize they share some combination of values, dreams, and aspirations, and decide to partner in pursuit of the future they envision. 

Time brings changes — in market and working conditions, and in individuals. Priorities shift. What was once important becomes less critical. The greater the divide, the more the relationship is stressed. 

The emergence of a crisis will inevitably highlight the shift, and often test the viability of the current partnership.

When shifts that come somewhat naturally with time are exacerbated by something unforeseen — like COVID 19 — the challenges related to stability compound. 

What is the keys to managing through crisis?

Immediate Actions

As part of managing crisis, a firm must first develop a liquidity plan. This is to ensure the economic flexibility necessary to survive the short-term. Along the way it will become increasingly clear what direction the firm should take in the longer-term.

Though no one really enjoys conversations that focus on disagreements and differences, a conversation today will help with one of two eventualities: it will facilitate a discussion around clarifying shared aspirations; or, it will expedite a conclusion that dissolution or restructuring is a better answer for the majority of those involved.

To the extent members of a firm conclude that their aspirations have shifted to a point that it no longer makes sense to practice together, it is prudent to execute the separation in a way that causes the least pain and disruption.

An impartial third party can shape a process that is collegial and effective.

What is the degree to which you and your partners are still on the same page? Does your firm have the experience to really test the degree of continuing shared aspirations?