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THE NEW LAW FIRM SUCCESS MANTRA: Strategic plans and staffing

As the business of law continues to change, emerging forces are moving the legal market forward and those firms that are willing to practice a new mantra will see continued success.  Throughout history, Law Firms have held various operating mantras that when practiced would yield success of the Firm.  

One such mantra, practiced from about the late 70’s on, is the “bigger is better” mantra which came to be because Law Firms had leverage-driven profit models.  They hired numerous associates, worked them long hours, and the partners at the top of the pyramid made very high profits. We lived through the post-recession/large layoff legal climate.  Now, most Law Firms are looking like a diamond vs. a pyramid. Clients have become insistent on not paying for the training of young associates and for the supervision of experienced lawyers.  

Another preached mantra by the legal profession is “merge or die”.  We are all aware of the many national and international Law Firm mergers that have failed miserably.  Conversely, there are many small-to-medium sized Law Firm boutiques around the country that have their own unique “niche” and are thriving.

As we head into 2020 and beyond, what is the new operating mantra?  To answer this question, we look at what is defining success in a Law Firm of today, distinguishing them from those that are struggling, regardless of size.  In general, the Law Firms that are doing well are more apt to have a clearly defined strategic plan that the partners understand and support. This does not mean the dreaded, expensive, “collect dust on the shelf” plan which results in many people making ad hoc decisions each time challenges and opportunities arise.  Rather, successful Firms have management with authority who execute a plan and make decisions that support the mission and values of the firm. Within this strategic plan, Law Firms that specifically change their strategic approach to lawyer staffing, efficiency of legal service delivery and pricing are consistently more likely to see increases in gross revenues, revenue per lawyer and profits per equity partner than those firms that have not embraced strategic change.

Many law firms still have no written strategic plan and accordingly have not furnished their managing partners a road map for the firm direction.  These firms are at best standing still, but are usually going backwards. And, often, these firms are relying solely on “loyalty” to keep top producing partners and associates from jumping to better-positioned, more profitable firms. 

One of the greatest impacts to a Law Firm’s success comes from a strategic change to lawyer staffing.  In a national Law Firm Transition survey, 77% of Law Firms that changed their strategic approach to lawyer staffing reported an increase in Profits per equity partner, compared to 56% of Firms that had not made such a change – a 21 point difference.

Strategic Lawyer Staffing is based on a firm’s mission, values and client demand.  Here are some examples of practices to evaluate when defining a new success mantra around strategic lawyer staffing:

  1.  Hiring partners and associates who match the firm’s core values.  You might hear this described as hiring “team players”. People who will foster and not damage the culture or reputation of the firm.  My advice when guiding firms through merger discussions, acquiring new practice groups or opening offices in new geographic regions is to carefully assess the culture fit before digging through the dollars.  
  1.  Utilizing alternative staffing strategies such as:
  • Part-time lawyers
  • Contract lawyers
  • Staff lawyers
  • Outsourcing non-lawyer functions
  • Creating a low-cost service center for back-office functions
  1.  Appropriately using and managing a non-equity partner tier.  This might be establishing an “up or out” policy.
  1. Effectively planning the retirement of Baby Boomer partners.  This timing is not flexible. The lack of planning in this area results in lost revenue and client relationships, costs that could be devastating.  Establish each senior partner’s intentions and timeline, address compensation issues and create a formal framework to achieve a smooth transition of clients and knowledge.
  1. Addressing overcapacity and under-productivity.  Overcapacity and under-productivity is a real problem that dilutes profitability and compromises the law firm’s long term health.  Adopt a policy based on performance. Stop hiring associates without critical analysis of future needs.  

Other good strategic staffing practices include:

  1. Candidly assessing all of your personnel and investing in high-quality people delivering outstanding performance.  This means all people hired intrinsically follow the core values as stated by the firm and are capable of performing their jobs well.  
  2. The creation of an accountability chart to increase efficiency, accountability and foster team. You might see that fewer support staff are needed.
  3. Appropriately delegating to support the best and highest use from all people within a practice group.

Managing for the future.  Firms will still have to hustle, be lean, be businesslike as well as understand and deliver client service and value to continue their success.  Those Firms that have begun change efforts in the areas of pricing, staffing, and efficiency will outperform their peers as these are rational business responses to the trends before us.

Career Navigation and Necessary Endings

The beginning of the year is a natural time for us to stop, reflect and ask ourselves what we want to take forward into the New Year and what we want to leave behind.  Do we really want to carry the burden of failures, mistakes, and drained resources into another year? Or do we want to start anew?  

Life and success require necessary endings.  Recognizing when to walk away is a crucial life skill and the sooner you put an end to things that stall your growth, the better.

What habits, thoughts and actions must you put an end to in order to achieve your goals in 2020?  Here are some thoughts adapted from Dr. Henry Cloud’s book Necessary Endings to help navigate this important question:

1. Determine whether a “season” has passed.

Everything has a season. Remember CDs, cassettes, and phone books? They had their place and time, but their season has passed. And the truth is, no matter how wisely we invest in a service, strategy, person or even some relationships, eventually, the season for our investments come to an end. Endings are a natural part of the cycle of growth.

I remember one CEO group I was in for several years that was life changing. But, years later, I was not in the same place, nor were they, and we all needed something different. It was time to initiate a necessary ending. Once I did, I was able to find new support systems to help me achieve new goals.

Similarly, in business, someone who is right for a certain position when they’re hired may no longer fit the changing needs of the company as it grows. Or perhaps a strategy was implemented years ago that put your business on the map, but no longer works due to new market conditions or other factors. These are two examples of how necessary some endings really are, in order for a company to thrive.

It’s important to remember that this does not mean that the person, idea, or strategy was “bad.” It simply means that the time for that phase in your business or personal life has come to an end, so that new ideas and directions can take root. Even good things run out their life cycles, and to everything, there is a season. Take some time to figure out whether what you’re doing belongs to a season that has passed.

2. Determine whether “pruning” is necessary for growth.

In order for a rose bush to achieve its full growth potential, every good gardener knows that it must be carefully pruned. There are three circumstances in which a gardener prunes a rose bush: 1) when the bush produces more buds than it can sustain, 2) in order to remove parts of the bush that are diseased, and 3) to remove dead branches in order to make way for new growth.

First, when the bush produces more buds than it can sustain, the overgrowth drains essential resources from the bush, and the gardener must choose which of the “good” buds are “best.” He then prunes the good buds so that all of the bush’s resources can be focused on helping the best buds thrive.

Our lives and businesses are just like the rose bush. We may have a lot of really good strategies, services, activities, relationships, or ideas that we’ve poured our resources into. But if we pruned some of the good stuff back, we would enable the best parts to get all that they need to thrive, making our businesses and relationships even more productive and happier.

Second, when parts of the rose bush are diseased, and every effort to nurse them back to health has failed, a gardener must prune the diseased parts to prevent them from spreading. Similarly, in business, when all of the coaching, mentoring and training you’ve offered cannot make some employees more productive, or a strategy you’ve worked on isn’t producing the results you’d hoped for, it’s time to get out the pruning shears. Whether services or people, there are some elements of our business and personal lives that cannot be helped, and letting them go – whether temporarily or permanently – is essential to your survival.

Third, many branches are already dead, and taking up space that living branches need in order to grow. Similarly, there are many aspects of business that have run their course and can no longer contribute to the company’s success. Those parts of the business must be shut down so that the rest of it can thrive. And in our personal lives, there are many activities and people that aren’t conducive to our health or growth, and must be lovingly pruned.

To recap, make decisions about what to prune by asking the following questions:
a) What is “good but not best?”
b) What is “sick and can’t get well?” and
c) What is “long since dead?”

3. Figure out the difference between “hoping” and “wishing.”

We all hold out hope for many things in life. In my career as a consultant, recruiter and leadership trainer, I often hear the following:

“I hope my business grows in 2020.”
“I hope she turns her performance around.”
“I hope I find a new position.”

Hope is one of the greatest virtues in life. However, it can also serve as an impediment to success if we don’t have a real, objective plan for our hope. Hope without plan is only a desire or wish; not a hope you can expect to materialize.

It’s important to ask yourself why you have hope for something to happen. If you’re hoping for growth in your business next year, are you expecting new markets to open for your service?  Hiring talented new lawyers? Planning exciting new service launches? If you answered “yes” to questions like these, then you have good reason to hope for a turnaround in 2020. But, if your answer is “no,” and you continuing to do the same things you did in 2019, but “hoping” to have a different result in the New Year, then your hope may be just a desire or wish. 

Here are some questions you can ask yourself to help make the distinction between a hope and a wish:

1. Is there some sort of involvement in a proven change process? Real change requires implementation of new and proven strategies. If you’re trying to grow your business, find out what processes need to be implemented to help you achieve your goals.

2. Is there a “time and place” structure to the change process? Goals cannot be achieved if you’re only working on them “when you have time.” Time and place commitments must be made in order to effect real change. Whether your goal for 2020 is running a 5k or getting a new client, set and adhere to a time and a place structure that organizes your life around achieving your goals.

3. Are you seeking new wisdom? New information, knowledge, and principles are required to learn and grow. Doing things the way you’ve always done them won’t get you where you need to be in the New Year.

4. Is there self-sustaining motivation? For real change to occur, a person must have a self-motivated desire to change, as opposed to being constantly pushed to change by others. That does not mean that they are not getting help and encouragement from others. It does mean that the motivation to change must come from within.

5. Is there an external source of support and energy? Support systems, groups, or individuals that provide external energy are essential to an individual’s efforts to achieve real, lasting change. Who are you drawing inspiration and support from in order to help you realize your goals?

6. Establish a clear vision of what you want your life or business to look like in 2020.  Be specific.

A gardener can only prune a rose bush if he knows what a beautiful rose looks like. In other words, he prunes towards his vision of the future. In order to know what endings should occur, you must first decide what you are trying to achieve. What kind of business are you trying to build? What kind of relationships are you trying to create? What kind of personal life do you want to have? Once you clarify your vision, you will be able to determine what “necessary endings” are required to bring about the change you desire in 2020.