Tag Archives: law firm planning

Strategy on the Back of an Envelope

I’ve just participated in a two-week charity fundraising event, driving 40-year-old cars 5000 kilometres through the Australian outback to raise money for disadvantaged kids. The fleet consisted of 95 pre-1976 vehicles, no four-wheel drive, no engine modification allowed.

This event presented me with a useful metaphor for the business of legal practice. Nearly everyone made it despite himself or herself. About two percent of the field had a well-thought-out, well-executed strategy. The rest of us succeeded because our ability to get out of strife was a tiny bit better than our ability to get into it (sound familiar?).

So too law firms. Leaving aside the elite, how many firms really succeed as a direct result of a well-executed strategic plan? Not a lot, I suspect. In fact, between 1980 and 2007, it probably took effort not to succeed. To fail, one needed a dysfunctional partnership, a bad premises deal or a propensity to pay people way too much: these were pretty much the only ways to stuff it up. Oddly enough, some folk did manage the trifecta.

Times have clearly changed. Success doesn’t just happen by muddling through. Even small firms should invest in this list of must-haves:

  • A well-thought-out strategy – they know what they want to be and what they don’t want to be;
  • A leverage structure with a balance between relatively junior solicitors and senior solicitors – not all one or the other;
  • An understanding by all fee earners of ‘minimum acceptable contribution’;
  • A clear pricing strategy, regardless of methodology (fixed fees, hourly rates, scale, perceived value or whatever). The best performers keep all of these possibilities in their tool kits;
  • An understanding of cost of production;
  • A management structure with clear objectives and the support of partners;
  • Leadership as well as management;
  • Good financial housekeeping (price, WIP and debtor management).

My Edge colleagues and I have written, over the years, about all of the above. We continue to assist firms with pragmatic implementation.

For the benefit of those who are yet to invest in a robust strategy process, here’s a better-than-nothing, back-of-the-envelope approach to start the ball rolling.

Planning Is Key

In my experience, the best self-help first step in the practice-improvement process is planning. I am not talking about a multi-volume document brimming with colourful flow charts and management clichés. On the contrary, I am talking about a discussion that results in a one-page summary that tells every partner (or sole practitioner) where they are headed. The plan will guide those who have been delegated the responsibility of implementing it.

For this planning session, meet as a partnership (or with a key advisor if you are in sole practice) away from the firm, somewhere where participants won’t be distracted by staff or clients. Give each item full and frank consideration. Business plans in small firms are next to useless without consensus. Partners will simply agree in the meeting and then continue doing whatever the heck they want.

I recommend that the discussion revolve around the following decisions:

 

 

The Components

  • What type of work – refers to the type of matters the firm is seeking to offer. In considering this, look at those services that you offer now. Consider what you would like to stop doing – or to stop doing within five years. Having done this, consider what you do wish to be doing and add these offerings to the ones that you want to keep.
  • Partner numbers – refers to the number of equity partners. You may wish to include salaried partners here, but I usually put them into the “employed fee earner” section.
  • Gross fees – refers to the total fee billings of the practice (excluding disbursements).
  • Net profit per partner – refers to the desired profit per partner. When you are considering desired profit, remember that as a principal you should receive a reasonable pay for your time and effort, and a reasonable profit.
  • Employed fee earners – refers to the number of employed solicitors, associates, non-equity partners and paralegals. (Full-time equivalent, so someone may be 0.5 paralegal and 0.5 support.)
  • Support staff – refers to all support staff in full-time equivalents.
  • Space (sqm) – refers to the office space required. The average Australian firm uses about 25sqm per person (including public space like reception and meeting rooms). This is not ideal though. I suggest that you allow for about 18sqm/person. (We are told that best practice space utilisation is about 7sqm/person, but this requires significant cultural and operational change.)
  • IT commitments – refers to any foreseen expenditure on technology such as PMS, litigation support, marketing data base, etc.

The best way to approach these discussions is to fill out the actual numbers for this year, then do Year +5 first. Come back and do Year +1 next, then simply ‘join the dots’.

This is a start – a bit rough and ready but better than nothing.

By the way, our “Annual Variety B to B Bash” raised 2.25 million dollars for disadvantaged Aussie kids – admittedly despite most of us, not because of most of us.

Next year I’ll be one of the planners.

 

In Successful Law Firms, Actions Speak Louder than Plans

Time for action clock“Doing” wins out over “Strategizing”

Studies predictably show that firms with a plan do better than firms without a plan.

As managing partner, you need to determine whether your firm actually has a plan or not. Here is a test that will tell you if you do –

Choose a member of your firm at random and ask her/him what the firm plan is. If you get an answer that resembles your concept of your plan, you win. Winning would place you in rarefied air — most lawyers have no idea what their firm plan is (even the lawyers who were on the committee that drafted it).

The first step in implementing a plan is to communicate it, so that all stakeholders are on the same page. Once you have done that, you need to decide how you will execute it. Here are some suggestions that might help you get it right.

Be careful that what you plan passes the practicality test.

When senior partners lean back in their chairs to create a “plan,” they typically envelop each other in profound abstractions sifted through the filter of critical and analytical thought. The result is a work of art that is absolutely incomprehensible (except by those who created it) and therefore incapable of being executed. To make it worse, several senior people now have a stake in an unworkable plan.

Imagine yourself in a car that is being driven by several strong-minded individuals all at the same time, each with a different route and even a different destination in mind. Clearly, this is a pointless exercise. If you want to help your firm succeed, maintain a light touch on the steering wheel: give your senior leadership team a very short list of issues that are worthy of a place in your plan.

Decide how you will enlist the help of those who need to participate in the execution of the plan.

Have you ever tried to persuade someone to buy another brand of smart phone or automobile than the one they already own, or to change their minds on an issue relating to politics or religion? Okay. Good. Then you know how hard it is to change anyone’s mind about anything. People are deeply invested in their own opinions, biases and prejudices. In relation to firm planning, rather than arguing about the overall objectives, what you need to do is to show the lawyers whose help you need how the firm’s plan is going to help them to achieve their own objectives.

Encourage the firm’s lawyers to take small, incremental steps toward an objective with which they all agree.

As lawyers, we don’t normally think in incremental steps. We think in giant leaps. Ask a lawyer to write an article or make a speech and the typical lawyer will say that the only step involved is to “Write an article” or “Deliver a speech.” BZZZZT! Wrong! Writing an article or a speech begins with a single step – choosing a topic that is relevant to the audience. And how do you do that? By taking more, smaller steps: reviewing recent cases, perhaps, or observing recent trends in the industry you serve. After you decide on a topic, you move on to the next stage of writing your speech or article, and you break that down into small steps, too.

Your firm plan must be broken down into incremental steps as well, and appropriate constituencies within the firm must decide the baby steps that will be taken to achieve the objectives that affect them. By achieving one small step at a time, the team will gain a sense of accomplishment in moving toward an agreed-upon larger goal.

Create metrics to help you measure what you achieve.

If you know exactly what is supposed to happen next, you can determine whether it occurs or not: achievement of a step becomes a binary (yes/no) issue. Without metrics, you will pass George or Elizabeth in the hall and ask, “How’s the project going?” and you will invite meaningless replies such as, “Not too bad,” and “We are getting there.” Instead you need to be able to ask, “Has your team completed that list of top ten corporate targets?” – a question that requires a yes/no response. The clearer you are on what you expect to happen next, the greater the probability that your expectations will be met.

Firm leadership must over-communicate and then over-communicate again: You need to become obsessed with reporting back to the firm.

To return to our driving metaphor, imagine that the next time you take out your car, you find that the dashboard has been covered with masking tape. Will you take the car out in that condition – not knowing at what speed you are travelling, the oil pressure, the RPMs and engine temperature, or how much fuel remains and how much farther you can drive before the tank is empty? Not likely.

Keep in mind that your firm has absolutely no dashboard when it comes to the progress of the firm’s plan except what you communicate directly. You are the dashboard. Car dashboards update themselves in real time and are accessible continuously. A dashboard in an automobile cannot over-communicate. Neither can you.

The greatest minds with the greatest thoughts are crucial to the contemplation of complex legal matters, but thoughts will never move your firm closer to its designated objectives. Create a plan that your people can correlate with their own visions of success, and then design the path they need to take in order to achieve it. It is your responsibility to keep the display illuminated: show your people their progress along the way, thus offering them a sense of fulfillment as they advance together toward the agreed-upon destination.