How many articles, reports and predictions does it take before law firm leaders start making needed changes?
- Continue to hire laterals that most often produce mediocre results,
- Grow for growth’s sake, without any concern on the side effects, and
- Permit senior lawyers to hoard their clients and block transition to younger lawyers:
Unfortunately, that approach can be damaging in ways that go far beyond financial losses. The negative impact on a firm’s culture, morale and long-term institutional stability can be devastating.
Who wants to be part of a law firm whose culture, morale and long-term institutional stability is being negatively impacted?
Law firms, their leaders and their lawyers have good reason to be worried. Clients are not happy with their law firms, they are bringing more work in-house and demanding more of the law firms with whom they are doing business. But, even though they are worried, law firms are not making changes.
Many law firms continue to focus on the scoreboard (profits per partner) and not the basket (exceeding client expectations and creating an environment for lawyers to succeed.) If you want support for that premise, read this list of priorities from Steven J. Harper’s article:
When asked to prioritize goals for their firms, they placed “client value” number eight—behind (1) increasing revenue, (2), generating new business, (3) growth, (4) profitability, (5) management change, (6) cost management, and (7) attracting talent.
No wonder there is a problem: The top goals are focused on what is in it for the law firm, not what is in it for the law firm clients.
Current Thinking: Add Laterals, Decrease Number of Partners, Cut Costs
Those law firms are searching for ways to keep those profits per partner from slipping. Two popular approaches are decreasing the number of partners (the denominator in the profits per partner formula) and cutting costs (what is subtracted from revenue to get to profits.)
Some large and medium sized law firms are also cutting their budgets for career development and client development (marketing.) I know because, I coached lawyers in some of those firms and they are not currently making that investment with me, or anyone else. They can’t cut very much. (I suspect at best the cuts mean a few extra Starbucks coffees for the partners.)
Change Focus to What Produces Revenue and Ultimately Profits per Partner
Focusing on the basket means focusing on what produces profits per partner-more revenue. Specifically it means, recruiting and hiring lawyers who have a burning desire to become the best lawyers they can be. Then, it means providing those lawyers with the training and opportunities to develop their skills. Finally it means providing extraordinary service to clients, with a specific focus on responsiveness, efficiency, certainty and cost effectiveness.
The key to a firm’s long-term success will depend on strong and flexible leaders whose strategy reflects the realities of the legal market and a will to change the status quo.
Law Firm Leadership Focuses on the Future, Law Firm Management Focuses on this Quarter or Year
Managing partners, management committees, department chairs and practice group leaders need to actually lead rather than manage partners and associates. What’s the difference? Leadership focuses on the future. Management focuses on the present including profits per partner, billable hours, hourly rates and costs.
Daniel Pink says:
Symphony is largely about relationships. People who hope to thrive in the Conceptual Age must understand the connections between diverse, and seemingly separate disciplines. They must know how to link apparently unconnected elements to create something new. And they must become adept at analogy-at seeing one thing in terms of another.
Law Firm Leaders: Motivate, Inspire and Train Your Lawyers
Symphony for law firm leaders in 2014 is taking the element of what clients want: Responsiveness, Efficiency, Certainty and Cost Effectiveness and connecting the dots by motivating, inspiring and training firm lawyers and professional staff to provide it.
What should your firm teach your young, and not so young, lawyers? Take a look at this: Ten Competencies Law Schools Should Teach – But Don’t for some pretty good ideas. As you will see, all 10 of the suggested competencies are “soft skills.”
In 2014, keep this idea in mind:
The people you pay are more important over time than the people who pay you.
Jay William Lorsch and Tom Tierney made this point to professional firm leaders their book: Aligning the Stars: Organizing Professionals to Win. The reasoning behind the statement is simple: Without high quality, motivated lawyers performing at the top of their game, the firm will not attract, retain or expand relationships with clients.
Will you be one of the first law firm leaders to get the firm lawyers and staff to focus on the basket in a way that will improve what shows up on the scoreboard?