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.

Continue Reading Four Ways a Strategically Designed Merger Can Strengthen Your Law Firm and Make it More Competitive

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.”

Continue Reading Will Your Firm Be A Victim of the Law Firm Succession Crisis?

No sooner than closing out 2018 than do law firm leaders confront the next challenge-2019.  Even firms not facing upheaval caused by attorney departures or declining client relationships will encounter other transitional events.  The contest never ends.

Whether 2019 preparations are just getting started or already developed, some areas deserve a firm’s attention.  Focusing on these select areas can deliver short-term and long-term benefits and aid in making a law firm stronger.  As the New Year dawns, the five areas that should receive a firm’s focus are:

Continue Reading Focusing on a Great 2019-Five Areas for Law Firms to Consider

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.

Continue Reading Is Your Firm Prepared For Major Disruption in 2019?

Although the final numbers are not in yet, 2018 has been touted as a good year for law firms.  Based on various reports including the 2019 Citi-Hildebrandt Client Advisory, revenues were up, billing rate increases held, and client demand increased.  These improvements are not shocking as law firm performance has been ascending in recent years.

Just because industry performance this past year was on the whole very good, not all law firms can look back on 2018 with such positive thoughts.  Indeed, the overall industry uptick is pulled along by strong performances among the AmLaw 100, especially the top 25 firms.  Performance among the second AmLaw 100 (or 101 to 200) generally was not as positive. Similarly, firms outside the second 100 did not, as a class, enjoy the kind of robust financial performance logged by the bigger firms.  Specialty firms (obviously focused in the right specialty) were the exception among smaller firms.

Continue Reading Law Firms Enjoy Positive 2018-What If Your Firm Didn’t?

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.

Continue Reading Preparing Your Firm For 2019 and Beyond

Law firm leaders understandably see lucrative client work as an important key to overall firm profitability.  Left to their own devices, those leaders would eagerly raise rates or otherwise take steps to ratchet up the yield on work.  In contrast, their clients often consider the containment of legal costs as a key component to valuable legal services.  If clients were in control, they frequently would reduce rates, or seek other ways to manage down their legal bills.

While these respective objectives may seem incompatible, they don’t need to be.  Hitting the sweet spot of simultaneous law firm profitability and client satisfaction is possible—it simply requires greater effort in managing the law firm/client relationship.

In recent years, some firms are learning that achieving firm profitability and client satisfaction can be aided through the use of a law firm pricing professional.  The recent Thomson Reuterspaper Law Firm Pricing Insights – Value, Profitability, and What Comes Next provides an informative overview about this breed of professional and some of the successes enjoyed to date. Law Firm Pricing Insights makes the case for using pricing professionals to meet law firm financial objectives while growing client relationships and satisfaction.

It’s review of the growth, use, and roles of pricing officers at law firms is commended for your review and will not be repeated here.  But it may be worth looking at five of the more practical benefits for a law firm that utilizes a substantively empowered pricing professional:

Enhances the Understanding Between Firm and Client.  By already knowing the firm’s financial strategies, the firm’s pricing professional can concentrate on listening to the client to understand its objectives. Instead of acting as an advocate to convince the client that it mustaccept the firm’s financial terms, the pricing professional takes what is learned from the client to arrive at a solution that works for both sides.  Communication improves understanding, the client relationship, and in many cases, financial results.

Brings a Bigger Toolbox to Fixing the Profitability and Value Conundrum.  Most pricing professionals are aware of numerous ways to price legal services.  With a firm pricing professional involved, creative financial arrangements can be discussed to keep the firm/client discussions from getting bogged down.  The bigger pricing solution toolbox reduces the likelihood that an impasse with the client will arise.

Can Foster the Institutionalization of Clients.  While working on an acceptable financial arrangement with a client, a pricing professional may see opportunity beyond the immediate engagement. Instead of the analysis being limited to a short-term pricing arrangement, the pricing professional may recognize ways the client’s fundamental requirements can be leveraged long-term. An astute pricing professional may see how it may be worth strategically investing in a new relationship in order to build a long-term one.

Let’s Lawyers Concentrate of What Lawyers Do Best.  A pricing professional can free a lawyer to focus on client service.  Once an acceptable arrangement between the firm and the client is endorsed by the firm, the firm’s backing may make it be easier for the lawyer to concentrate on achieving substantive results.  While a priced arrangement does not excuse a lawyer from managing a file correctly, it can establish a clear understanding between firm and client that engenders the efficient delivery of client service.

Improves Lawyer Morale. Too often lawyers are told to raise their rates beyond their comfort zone.  It’s not as if lawyers don’t value their own worth, but they see firsthand the impact of being priced out of the market.  The firm’s desire for higher rates versus the lawyer’s desire to not rock the client boat can amp up the pressure at the firm.  By moving outside the attorney rate merry-go-round, a capable pricing professional can find a solution that satisfies firm leadership, the lawyer, and the client.  A busy lawyer is a happy lawyer.

More and more law firms are turning to pricing professionals to improve the client experience and financial results.  Is it time your firm does likewise?

 

 

Succession and succession planning are hot topics in the legal profession. One statistic explains the focus on the topic – only about 30% of law firms make it beyond the first generation.

Why Do So Many Law Firms Fail?

Why do so few law firms make it to the second generation? Consider this progression of logic:

Few goals are realized by happenstance;
The greater the objective, the less likely it will be realized without serious intent;
A written succession plan is a reflection of serious intent;
95% of law firms have no written succession plan;
For a majority of law firms, 25% or more of revenue is generated by or closely associated with lawyers that are 60 or older;
Few firms will survive the loss of 25% of revenue in a short period of time.
So What?

If you are a law firm leader, this reality does not surprise you. We regularly visit with managing partners and governing bodies that see the writing on the wall. With the exception of those who choose to bury their 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 simplistic as this may sound, it may be the singles 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.   The first step is to be done with hand wringing and more talk.

“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 exactly 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 the areas of leadership, and/or client generation and servicing. It may mean that the core of your firm survives a part of a bigger organization. The real key is that the result your firm ends up with is the result you desire. Without planning the desired result is highly unlikely.

One additional note that many firms miss when it comes to the issue of succession planning—-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 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!

 

The issue of succession planning at law firms is a topic of great importance.  The need to address succession won’t always wait until a convenient time and makes planning as important than ever.

Succession planning among firms, whether leadership succession or client relationship transition, is a mixed bag. Some firms have thought about it deeply and are well prepared for succession. Typically, those firms recognized the issue some time ago and have prepared for the eventual need to turn the reigns over to the next generation. Other firms have not had the requisite foresight or discipline. Sometimes lulled into a false sense of security by the continued vibrancy of their partner ranks, they have continued to focus on the day to day blocking and tackling instead of giving succession planning the attention it deserves.

At some point, however, most firms wake up and start addressing succession.  While the level of preparation at firms varies, there are at least five common succession planning mistakes that every firm should seek to avoid, including:

Waiting Too Long. The press of business and attention to more immediate matters can distract a firm away from planning for succession. Waiting to a later date to plan is not a good idea. Succession issues can be complex, the personalities affected can be many and the time it requires to get it right can be great. Like waiting to the night before a spouse’s birthday to buy a present, leaving succession to the last minute can have lasting negative effect.

Failing to Prepare Future Leaders or Relationship Managers. A by-product of waiting too long is failing to develop leaders or relationship managers that can be integral to a firm’s future. Scouting for future talent is one thing, but developing that talent is as important as prospect identification. Inattention to development is bad for two reasons. One, future leaders or managers may have inadequate time to mature into readiness. Second, despite initial high hopes, the development process may reveal that he or she is not up to the task. In instances in which a future leader or manager turns out to be uninspiring, a firm will benefit if it still has time to think of alternatives, including looking laterally or for a merger.

Failing to Make Succession Part of a Larger Strategic Plan. A succession plan should not stand alone-it should be part of an overall strategic plan. Simply changing out leadership or managers without knowing where the firm is going long-term is short-sighted. Installing new leaders or managers through the use of a succession plan is helpful, but if their skills are not in concert with an overall strategic plan the firm seeks to follow, success may be fleeting.

Overlooking the Impact on Morale. A well-planned and transparent succession will be far more comforting to firm personnel than a succession cobbled together when a succession crisis arises. Discussing the upcoming succession and the future of the firm will instill confidence in the firm, its management, and its future. Forgetting about how the rank and file feels can undermine morale and make an otherwise smart succession plan problematic. Good communication is critical in any succession plan, and especially so when trying to build widespread support.

Failing to Prepare Clients. At the end of the day, law firms don’t exist if they don’t have clients. Even when addressing leadership succession, a sound plan recognizes that clients can be skittish about the stability of their law firm. A smart firm deals with that concern by keeping the client informed about leadership succession. Getting a client involved is even more important when addressing the transition of relationship managers.  A client not involved in the selection of the next relationship manager for its matters will not be a client for long.  Whether addressing leadership succession or client relationship transition, preparing clients for succession is critical.

No doubt your law firm has thought about succession.  But as it has begun to prepare for its future, has it approached the task in a way that avoids these five common mistakes?

 

 

 

As we approach the the long Thanksgiving holiday I’m reflecting on my appreciation for law firm leaders who are accountable and drive a culture around that standard.

Somewhere along the line the idea of being held accountable began to be viewed as punitive. Paying the price.

Certainly this is part of the equation; but accountability is a much greater concept than merely calling one (or a group) to account for decisions and deeds.

Today’s most effective leaders know this, and successfully incorporate accountability to check progress against guides and benchmarks.

Effective law firm leaders are no exception.

Not An Outside-In Proposition

Extraordinary leaders are, before contemplating any other measure, accountable to themselves.

It is unfortunately common for would-be leaders — those who hold-down positions of authority — to shy away from accepting responsibility for less-than-winning results. Many are skilled at deflecting or redirecting blame to others or even to circumstances. This approach can work in the short run; but the eventual cost comes in the form of lost credibility and trust. When the tab in these columns reaches a tipping point, any ability to lead is gone — position on the org chart or title notwithstanding.

We’ve all witnessed the would-be leader. Accomplished in the art of deflecting responsibility when the news is bad and taking full credit when times are good. This individual’s calls for solidarity and partnership will eventually ring hollow. Few will follow.

Accountability For The Organization

The accountable executive has a clear vision of the steps necessary to ensure that the organization remains true to its purpose, mission, values and goals. When / if these components have not been articulated, the accountable leader has both the institutional equity and the tools necessary to instigate the necessary dialogue.

Accountability For Firm Members

The effective leader builds and hones an entire organization that is accountable. Expectations for performance, culture and professional growth for every member of the organization are clear. With those expectations established and communicated, the accountable leader (or a team of accountable leaders) routinely monitors actual performance to those expectations, taking appropriate actions in response.

Inside the accountable firm, when expectations have been met or exceeded the performance is rewarded in a visible manner. If expectations are not met corrective action is taken in a humane and respectful manner.

Having a culture in which there is a recognized expectation that is routinely measured against is more important than what those expectations actually are. An organization whose leader ensures that goals are regularly set and measured against is on its way to improvement.

Accountable firms are the byproduct of teams and individual leaders who first hold themselves accountable.

Does your law firm and its leadership project a culture of accountability?