Slicing and Dicing Survey Results with Demographics

In the course of our work with law firms, we have occasion to do many kinds of surveys. Here are two simple examples:

1. In the context of strategy assignments, we may survey partners as to their aspirations and their views about their marketplace(s).
2. In the context of conducting a cultural assessment, we may survey all of the personnel of a firm irrespective of role in the firm as to their views about collegiality, strategic focus, governance, and values – all related to the firm culture.

Survey results will paint a detailed landscape of opinions and views – including the intensity with which they are held – as well as contrasts that will offer a texture to the feedback.

Here’s the demographic rub. If there are statistically significant different views in the firm – about itself or its marketplace – based on demographic differences, then senior leadership should know so they can adjust strategy as well as action plans accordingly.

The demographic groups can be as broad or specific as the firm may wish; however, typical demographics might include:

• Roles (the job they perform)
• Offices (location, for multi-office firms)
• Years with firm
• Recruitment to firm (merger, lateral, internal)
• Age
• Gender
• Race
• Such other demographic attributes as the firm may select.

To give you an illustration of the relevance of a demographic analysis, imagine that the belief that the firm has a strong strategy is very different based on gender. Senior leadership within the firm may want to know why that difference exists and whether it is desirable. In most cases, leaders would not find such a gender gap desirable. We would then invite the firm to work with us to create action plans that might investigate those differences and then, over time, reduce them.

The simple point of this article is that doing a survey without the benefit of having the demographic distinctions creates only a fraction of the value of a survey that includes appropriate demographic slicing and dicing.

Playbooks Aren’t Just for Coaches!

For those of you who have had the patience (of Job!) to read my previous articles on law-firm differentiation and client-experience innovation, you have heard me extol the virtues of a “law-firm playbook.”

Team sports coaches create playbooks to write down on paper the tools, strategies, and methods their players will use to defeat their opposition. Similarly, a law-firm playbook can clarify for its own players – its lawyers – how they will help their clients “win.” It should be a thoughtful compilation of a firm’s own best practices, operating procedures, and way of doing business; it should emphasize the less obvious as well as the more conventional inputs that produce legal work; and it should tell a compelling story of process richness that lets the market know that good client experiences with your firm are no fluke.

So, build your own firm playbook! Below are some thought points I suggest our law firm clients keep in mind relative to playbook development.

Where to Begin? The best law-firm playbooks are comprehensive, and reveal to playbook readers (your lawyers, clients, perhaps prospects) the secret sauce of why your firm (or practice group) is different and, therefore, better. I encourage firms to start off their playbook planning by thinking about the three following firm or practice-group feature sets:

1. Compelling sources of differentiated value that are perceptible to clients when they rely on your work product; e.g., “We have arbitrated and never lost an investment manager ‘raiding’ case in ten years . . . .”
2. The different methods, processes, and structural attributes of your firm that, while not perceptible to your client, help you produce a better set of insights and better work product; e.g., “We are not a very leveraged firm by design, as most of our clients want our more senior lawyers to have more exposure to their matters . . . .”
3. Areas of technology, process and structural innovation that will allow clients to consume your service differently; e.g., “We have a documented and technology-supported matter-management process on which all lawyers are trained from Day One, so that clients know that no hour will be invested in a client’s matter casually . . ..”

Identity Building Playbooks also shape and inform culture, and give your attorneys a unified sense of identity. As a result, lawyers will engage their prospects and clients with conviction.

Culture Building Playbooks don’t just reflect culture externally but rather help build it internally. When your lawyers read a cogent formulation of your firm’s way of doing business they will mobilize around it and reflect it.

Example Playbook Structure

• Unique M&A Transaction Structuring Strategies
  • Engineer the deal structure from the earn-out backwards
  • Using an expert system to support due diligence contract review
• Proactive Client Value Management
  • Authoring a tailored ROI model that allows clients to determine return on investment in acquired companies, and legal fees associated with structuring acquisitions
  • Aggregating multiple data sources to help client with deal sourcing, not just deal execution
• Relationship Development & Management
  • “January meetings” – at the beginning of each year, require key clients to educate you about the priorities coming out of their annual planning process
  • Review annual departmental plans of your client to better understand the functional areas of the business (and, thereby, the legal work they likely generate) that are likely the most active internal clients of the law department
• Practice Innovation and Management
  • New service and product development function to create a pipeline of new capabilities to address emerging client problems
  • Shadowing the non-legal thought leaders and consultants to your clients’ industry sector to gain an early warning on new business gaps that need to be addressed

One-Firm Integration

The development of the playbook should be a collaborative and internally integrating exercise for your firm and its lawyers. Clients and prospects who know about the playbook and how it was developed will give your firm a lot of credit for having a “one-firm” integrated culture from which they will benefit as clients.

So . . . make your firm’s “secret sauce” a little less secret, and develop your own playbook. After all, playbooks aren’t just for coaches!

Sharing Your Profitability Numbers: All for One?

Because of client pressure on fees, law firms are scrutinizing their profitability numbers more than ever. If the clients are right, firms are looking for new efficiencies, better project management and innovative staffing. But we see that law firm leaders are looking at profitability as “business lines” as well. Is this area of practice a drag on our overall profits and should we drop it? To the extent that some firms have a culture of “One for all and all for one,” that culture is fraying.

If you are a managing partner or an executive committee member, the way that you share profitability numbers can threaten a unified culture. The flip side is that a shared analysis of profitability signals transparent management. We are not talking about firm-wide monthly or annual profits. Of course, all partners get to see those figures. But who gets to see profitability at a practice-group level or the individual-partner level?

We expect the CFO, managing partner and an executive committee to look at profits at a granular level. It would be irresponsible to ignore flagging practices or partners without counseling them. But beyond that group, these seem to be the choices:

1)  share practice-level monthly profitability figures with the practice-group leader and keep them confidential beyond that;

2)  share practice-level monthly figures with all partners (with the greater risk that bad news will leak beyond the firm);

3)  share both practice-level and individual-partner profitability figures with practice leaders, but individual numbers only with each individual; or

4)  share all profitability figures at each level with all partners.

There is a cultural consequence for each of these options. In firms that have a modified lockstep compensation system, there may have been an “all for one” attitude. Over time, litigation may be up when transactions are down. Real estate practice is booming but government investigations are slow. It was assumed, without transparent analysis over time, that revenues and profitability balanced out across groups.

At the other end of the spectrum, firms that place heavy emphasis on originations are more likely to reveal partner-level revenues to all. Some of those are now sharing profitability figures as well. In that culture, the knowledge of my partner’s profitability may not be a surprise. We know we are a “one for one” firm at heart.

The challenge is for leaders in the middle of the spectrum. Even in thriving firms, the profitability of some practices and partners is down and the lawyers either have to improve profit margins or get out of the practice. Do you go about this in a quiet, managed way, without opening controversy between practices, or do you share profitability numbers with all partners and place public pressure on some?

The response will depend on how leaders assess the impact on their culture. Having a strong understanding of the current culture is as important as knowing your numbers.