Law Practice Management Asked and Answered Blog

Category: Strategy

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Jan 12, 2011

Changes and Challenges Ahead For Law Firms and Lawyers

Question:

Our firm is conducting a planning retreat next month. We have had retreats in past years that have focused on “touchy feely” programs for the attending partners. This year we really want to focus on a strategy and plan for the future. What do you see as primary changes and challenges ahead for law firms and lawyers?

Response:

The internet as well as advances in information technology has and will continue to be the key driver forcing change in the legal marketplace as well as other segments and our daily lives as well. Being the king of the hill or the biggest is not the strategic advantage that it once was. The internet is leveling the playing field in many industries as well as law firms.  There are new opportunities and new competitors. Consider the following:

  1. Everything is being commoditized. More practice areas are moving down the value curve and prices are becoming more price sensitive.
  2. Disintermediation of traditional delivery channels. The internet provides new access to information and is eliminating the middleman. It is impacting how we shop, bank, conduct business, and pay our credit cards and taxes. It is also impacting how clients locate and select lawyers and how legal services are delivered.
  3. Our society is becoming – more and more – a DIY (Do it Yourself) nation.
  4. Lawyers competitors are just a click away whether they be legal process outsourcing providers (LPO) in India, other lawyers in your state – but further away and servicing clients remotely, legal publishers, or online form providers.
  5. New client opportunities for your may also be just a click away.

Challenges and Questions to Think About

  1. How do you deal with commoditized transactions?
  2. How do you tie yourself to your client in an online world?
  3. How do you compete with new models and approaches to the delivery of legal services?
  4. How do you compete with virtual law firms?
  5. Would you consider adding a online delivery component to your traditional brick and mortar practice?
  6. Should you embrace legal process outsourcing and begin forming alliances and relationships or should you wait until your clients take the initiative themselves?

Click here for our blog on strategies

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John W. Olmstead, MBA, Ph.D, CMC

Dec 15, 2010

Ideas for a Successful 2011

Question:

Our firm, a 12 attorney firm, in Detroit, is having a partner meeting next week focused on thinking about what we can do different in 2011 in order to have a more successful year. While we have a few ideas what are your thoughts?

Response:

The economy is still posing challenges for many law firms and will continue to do so in 2011. Law firms must continue to be dilligent about managing costs but more importantly must really hone in on improving revenues. Here are a few ideas:

  1. Take a serious look at the firm's present position in the marketplace. Review financials, compare against financial ratios, compare with both firm past history and against law firm benchmarks. Examine how well the firm is competing. Is the firm too dependent on a narrow base of clients? Is the practice at risk? Conduct a client survey and obtain client feedback both on firm performance as well as possible unmet needs and opportunities. Consider a comprehensive management review.
  2. Formulate business goals and develop a strategic business plan as a roadmap for the future. Design and simplify business reports designed to measure the goals identified in the strategic business plan. Strive for a one page summary as the primary report.
  3. Require all timekeepers in the firm to submit personal one page business plans which in addition to outlining goals for the year provided fee revenue goals with an element of stretch. The goals should have a stretch component but yet be realistic and attainable. These plans should be approved by the Executive Committee, Managing Partner or the Partnership.
  4. In all of our client engagements we typically discover that the root cause of most problems is poor internal and external communications. Poor client service, attorney and staff competency and morale, interoffice conflict, and client defections typically can be traced back to poor communications. Work on improving internal communications with firm personnel and external communications with clients and prospective clients. Yes, you have to have meetings now and then. Devise systems to improve communications and implement properly. If a meeting is required – conduct it properly, use agendas and take minutes. Use your email systems. Match the richness of the communication method with the nature and depth of the message to be communicated.
  5. Improve relationships with your clients. Studies show that each year 'lack of responsiveness' has been the number one reason for client dissatisfaction.
  6. Find ways to focus the firm and foster accountability from all.
  7. Undertake a few projects at a time that can be realistically accomplished. Delegate tasks across the firm. All firm personnel should have marketing responsibilities – from the receptionist to the senior partners and everyone else in between. Databases must be maintained, newsletters and articles written, presentations given, clients to be wined and dined, etc. There is work for everyone.
  8. Law firms must adopt management structures that enables the firm to act decisively and quickly. Structures that do not support such a culture must be replaced.
  9. Come to grips with the fact that times are changing and law firms are going to have to change and reinvent their firms dramatically in the next few years.
  10. Begin exploring new business models such as virtual approaches to the delivery of legal services.

Click here for articles on other topics

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John W. Olmstead, MBA, Ph.D, CMC

Nov 02, 2010

Getting Law Firm Partners Onboard

Question:

I am the managing partner of a 90 attorney firm in Chicago. We have 45 equity partners, 20 non-equity partners, and 25 associates. We have a three member executive committee as well as other committees in place in addition to the managing partner. Five years ago we formulated a strategic plan and have been attempting to successfully implement it since that time. We have had limited success. We don't seem to be able to get our partners "on board" with the actual implementation. I will tell you – I am truly herding cats here. Any ideas on how to get these guys and gals on board?

Response:

Getting your partners on board is always a challenge. The obstacles are almost too numerous to outline. Yet if law firms want to be successful in this turbulent environment they must embrace change and get their partners not only behind new strategies but often they must also be the ones to implement these strategies as well.

Managing lawyers in general is like herding cats. But trying to manage "star partners" is a real challenge. They are the "hitters" upon which a firm's future often depends. True star partners are:

  1. Building enduring client relationships
  2. Consistently performing up to their full potential
  3. Putting the firm first and implementing strategic imperatives

Star and other partners in the firm must continually balance their roles as producer, manager, and owner. Often, these roles may be in conflict. Also there are personal strategies and agendas as well.

Actually, I don't think they can be managed – but they can be led. There is a difference. But in order to accomplish this the following need to be well designed, in alignment and balanced:

Strategy

The personalities, emotions and needs of your partners constrain a firm's ability to design and implement strategy. Keep in mind that firm leadership cannot order the troops forward; instead the troops (partners) must essentially vote with their feet to pursue a new strategic direction. Absent a crisis, partners tend to stay on track and support only modest adjustments to strategy.

Organizational (Structure, Governance, HR Systems)

When organizational characteristics – structure, governance, and HR systems (recruiting, training and mentoring, performance management, and compensation) are aligned with the needs of the partners and the strategy of the firm, they create the conditions under which strategy can be implemented effectively. Matrix and team structures are the norm.  Collegial partnerships, consensus based governance, and leadership at the pleasure of the partners, rules the day. The cats have the power and the leader serves to a large extent at their pleasure.

  1. Look for ways to build consensus and create buy-in
  2. Involve all partners in major decisions – more than input – but a say
  3. Implement a first-rate partner performance management/review/evaluation system
  4. Review and insure that your compensation system is fostering alignment
  5. Provide as much transparency as possible
  6. Review your organizational structure

Culture

The firm's culture deals with its underlying core of beliefs and values, which shape the behavior of the firm. Nothing can weave new strategic and organization choices together and hold them in alignment better than culture. A strong culture can also provide enormous help in attracting, retaining and motivating stars. A strong culture is the glue that helps a firm overcome major obstacles, it can help foster major changes in strategy and or organization, and it can be a strong force for unity and coherence. 

  1. Work at building and managing the firm's culture.
  2. Recruiting, compensation, training, mentoring, performance management – should also be deployed to reinforce the firm's culture.
  3. Guard the firm's culture and keep in mind the impact that laterals, mergers, etc. might have upon it. 

Leadership 

As the firm's leaders you and the other leaders in the firm are serving at the pleasure of your partners. You are probably elected by them. Your positional power is limited – sort of like the President of the United States and the Congress. As a result exceptional leadership skills are needed and each of you must master the skills of building consensus and facilitating decisions so your partners will agree with and support them.

  1. Pick the right priorities
  2. Pick the right fights and fight the right battles
  3. Build support and coalitions through integrity and trust

For a good read on this subject – the book “Aligning the Stars” by Jay W. Lorsch and Thomas Tierney is an excellent resource.

Good luck! 

Click here for articles on other topics

Click here for our blog postings on partnership and governance

John W. Olmstead, MBA, Ph.D, CMC

 

Oct 19, 2010

Law Firm Year End Planning Retreat

Question:

Our firm is a 25 attorney IP law firm located in Washington D.C. Metro area. We are planning our year end firm retreat to plan for next year. This will be our third retreat. While we believe we have achieved some positive results from the last three retreats – we believe that we need to accomplish much more. What are your ideas or thoughts on the matter?

Response: 

We find that many law firms try to use their retreats to be an extended version of their regular partnership meetings. They simply try to do too much. The agendas are loaded down with far too many topics. As a result there is a lot of debate and discussion on often day-to-day operational items and no focus on the more complex-strategic issues that often have been ignored or pushed under the rug.

This year try to do less and achieve more! Consider narrowing down the topic agenda and focusing on one of the following areas of concentration: 

Concentrate on an area and come out of your retreat with specific action plans which can be implemented and put in place.

John W. Olmstead, MBA, Ph.D, CMC

Oct 06, 2010

Characteristics of Successful Law Firms – Basic Building Blocks – Block 7 – Marketing

For the past six weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:

Partner relations, leadership, management, partner compensation, planning, and client service blocks have been discussed. 

The seventh and final basic building block is marketing. Successful firms have an effective marketing infrastructure and program in place.  

Gone are the days when attorneys simply practiced law. Today, they face increased competition, shrinking demand for services and increasing supply of professional talent, availability of service substitutes, and marketing of professional services. Marketing can no longer be ignored if small law practices are to survive in the future.

Based upon our observations working with client law firms over the past twenty six years we have concluded that marketing is poorly understood and ineffectively implemented in many small law firms. In addition, the following obstacles are at play:

Time – There is no time for marketing or any firm developmental activities. Production is king and non-billable activities such as marketing are discouraged.

Uneasiness With Marketing – Attorneys are uncomfortable with marketing. This is primarily due to lack of understanding, training, and experience with the process.

Lack of Marketing Understanding – Many attorneys confuse marketing with advertising. Marketing is not advertising. Marketing activities can exist without any promotional components such as television advertisements, radio spots, tombstone magazine advertisements, or direct mail. Marketing is the broader process concerned with the development and delivery of legal services and is part of the firm's long range planning process. It provides answers to the questions what are we selling and to whom are we selling. It involves maintaining relationships with existing clients as well as creating new relationships with prospective clients. In fact, a major objective of many successful marketing plans is obtain additional business from existing clients.

Focus and Accountability Problems – Frequently law firms experiment with marketing and engage in isolated promotional activities not integrated with the firm's business plan with the expectation of immediate results after the one-shot activity. The firm engages in fits-and-start activities that are completely unfocused, unrelated to an overall plan, unmeasured, inconsistent and often inappropriate.

Cultural Issues – The typical culture of many law firms discourages investment in long-term developmental activities. The focus is on billable hours and production. Everything else is of secondary concern. The consensus governance model typical in law firms hinders change and timely decision-making at the firm level. In addition, effective marketing in law firms requires marketing at the firm, practice group, and individual attorney levels. This requires effective training, mentoring, follow-up, and accountability at each of these levels.

Reward and Compensation Systems – RMost reward and compensation systems focus on short-term production and discourage participation in longer term (non-billable) firm investment activities or projects.

Click here to read one of my articles on marketing

Click here to read my blog postings on marketing

I hope you have enjoyed the series. Next week I will resume posting questions and answers received from law firms. 

John W. Olmstead, MBA, Ph.D, CMC
www.olmsteadassoc.com

Sep 28, 2010

Characteristics of Successful Law Firms – Basic Building Blocks – Block 6 – Client Service

For the past five weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:

Partner relations, leadership, management, partner compensation, and planning blocks have been discussed. 

The sixth basic building block is client service. Successful firms deliver exceptional client service. They don't just meet client expectations – they exceed them. 

This is the decade of the client. Clients are demanding and getting – both world-class service – and top quality products. Many law firms have spent too much energy on developing new clients and not enough retaining old ones. For many law firms, obtaining new work from existing clients is the most productive type of marketing.

Delivering great client service is extremely important in today’s legal marketplace. More and more lawyers and law firms are competing for fewer clients while client loyalty continues to drop. It is no longer sufficient to simply be competent or an expert in today’s competitive legal environment – law firms must distinguish themselves by the service they provide. Lawyers and law firms must strive for 100% client satisfaction. Service is how many clients can tell one lawyer or law firm from another. 

Clearly, from what law firms' clients are telling us, lawyers and law firms need to improve client service by integrating a client-first service focus into everyday practice and getting feedback on performance.

Most clients can’t evaluate the quality of your legal work. What they can and do is evaluate the experience of working with you. 

Lets face it – customer and client expectations have changed across all industries. It is a buyers market and they know it. Today clients want it all – better, faster and cheaper. If you can’t provide it they will go somewhere else.

The key is to management client expectations – underpromise and overdeliver.

Click here to read my article series on client service.

I will address each of the other building blocks in upcoming postings.

John W. Olmstead, MBA, Ph.D, CMC
www.olmsteadassoc.com

Sep 22, 2010

Characteristics of Successful Law Firms – Basic Building Blocks – Block 5 – Planning

For the past four weeks I have been discussing the characteristics of successful law firms and introduced the following basic building blocks that successful firms typically have in place:

Partner relations, leadership, management, and partner compensation blocks have been discussed. 

The fifth basic building block is planning. Successful firms have a long range business or strategic plan in place.   

Based upon our experience from client engagements we have concluded that lack of focus and accountability is one of the major problems facing law firms. Often the problem is too many ideas, alternatives, and options. The result often is no action at all or actions that fail to distinguish firms from their competitors and provide them with a sustained competitive advantage. Ideas, recommendations, suggestions, etc. are of no value unless implemented.

Well designed business plans are essential for focusing your firm. However, don’t hide behind strategy and planning. Attorneys love to postpone implementation.

  • Elements of an effective business plan should include:
    • Decision as to direction of the firm
    • Data collection and review
    • Data collection and review
    • Action plans
    • Implementation and follow-up mechanisms

    Failing to plan is planning to fail.

    Click here to read my article on the topic.

    I will address each of the other building blocks in upcoming postings.

    John W. Olmstead, MBA, Ph.D, CMC
    www.olmsteadassoc.com

    • Dec 13, 2009

    Insurance Defense Law Firm Strategy

    Question: I am a legal administrator with a 14 attorney law firm in the Chicago area. It seems that it is becoming more and more difficult to deal with insurance company clients.While we have always had to deal with low billing rates and unrealistic controls mandated by insurance companies, recent trends have reached levels that threaten the business relationship which has reached an all time low. We must now jump through even more hoops to be able to play in the insurance defense arena. What are your suggestions?

    Response: The present state of the insurance defense practice presents numerous challenges to the law firm. These challenges simply cannot be ignored – they will have to be faced head-on. The solutions are complex and will require time to sort through. While solutions can come in different varieties, they will take the form of one of two general strategic approaches.

    Reinvent The Practice – Stay In The Game

    For many firms the appropriate strategy may be to stay in the game. These will be firms that have a well-established reputation in insurance defense, where insurance defense represents a major source of their revenue, and where adequate leverage and profitability and leverage exist. These firms will not be firms that dabble in insurance work. These firms will be committed to this practice area and will focus on it exclusively. They will be innovative client-market driven firms that blend contemporary approaches with the lessons learned from the founding fathers.

    Exit Or Diversify The Practice 

    This strategy will be appropriate for firms that desire to get out of insurance defense work entirely or that desire to reduce their dependence on insurance defense work by diversifying the practice. In this way the mix of the practice can be altered. This strategy will not be easy. It will be a rough road and will take time.

    Insurance defense attorneys typically do not have the expertise, experience, or the client contacts in other practice areas such as corporate business. Another factor is perceived image. The business community often views insurance defense firms as second rate firms. Often the law firm has in essence branded itself as an insurance defense firm. This can be a difficult obstacle to overcome. Client law firms with whom this author has worked have found that it can take five years or longer to accomplish such objectives.

    Specific tactics will depend upon the firm’s size and the amount of insurance defense work in the practice mix. One of the first steps is for insurance defense firms to try to leverage their litigation experience in order to obtain the defense work from self-insured corporations and general corporate representation. In some instances it may be possible to pick up some of the general corporate representation of insurance companies. This will be a tough road.

    Larger firms will require some new blood in the firm with expertise, experience, and a book of business in the desired practice areas. This will require insurance defense firms to consider merger or acquisition. Smaller firms may be able to accomplish these objectives completely internally or with lateral partner acquisitions. Both large and small firms should begin extensive programs of continuing education in desired practice areas. Firm and personal marketing plans should place strong emphasis on creating new business relationships as well.

    Much work needs to be done by management of insurance defense firms. The process will take time, hard work, and dedication regardless of the strategic options chosen. Now is the time to get started. Click here for an article on the topic.

    John W. Olmstead, MBA, Ph.D, CMC

    Nov 24, 2009

    Getting to the Next Level

    Question:

    I am a member of a three attorney firm. I think that we know where we are as a firm, where we want to be, but we don't know how to get to the next level. Do you have any ideas?

    Response:

    Rather than following the pack – attorneys need to find ways in which their firms can "dare to be different."

    Many attorneys are providing the same service – solving the same sort of legal problems for their clients using similar tools strategies/approaches. To many clients – attorneys all look the same. What can you do to stand out?

    Marketing is about more than just promoting the firm to get clients. It is also about deciding on:

    1. What services to offer, where, and to whom? Sometimes less is more – by focusing on fewer areas of practice. Just because a law firm focuses on say three areas of practice – doesn't mean that it does not handle matters in other areas. It just means you are building you brand around the three core areas. These are the areas you primarily promote, speak about and write about. Broader geography?
    2. Pricing. Not just the amount to charge but how to charge. Clients are asking for budgetary certainty? Get creative.
    3. Delivery and producing the service. Are you doing all that you can using technology, staffing, work processes, etc. to minimize the cost of producing your services? If you are – aggressively promote it. Office location, client site visits, etc., all come into play here. 
    4. Promotion (which can include advertising, e-newsletters, newsletters, websites,
      networking, seminars, press interviews, social networking on the internet, etc.)

    Effective marketing requires a mix of the above elements in your plan and then effectively communicated.

    Many attorneys suffer from random (unplanned) acts of marketing or business development. To be effective you need to be well focused, have a plan to focus the firm's efforts, and be disciplined and make excellent use of your professional time. Often the largest marketing investment is not advertising or the cost of other marketing vehicles – it is the cost of you non-billable (or investment) time.

    A business/marketing plan (10 pages or less) for the firm can do wonders.

    Sit down with the other attorneys in the firm, do some brainstorming away from the office, and put a plan together. Then work the plan.

    John W. Olmstead, MBA, Ph.D, CMC

    Nov 17, 2009

    What Can We Do To Be Different

    Question: During a recent firm meeting one of our partners asked what the firm could do to be different than every other law firm. What are your thoughts?

    Response:

    Creating a competitive advantage that is sustainable over time is difficult at best. It is so easy for your competitors to copycat your recent innovations. Clients of law firms advise us that they hire the lawyer – not the firm. However, this only partly true. The firm – its image – its brand – provides a backdrop for the individual attorneys marketing efforts as well – makes marketing easier – and provides backup and bench strength that many clients require before retaining a lawyer.

    In general the law firm is faced with the dual challenge of developing a reputation (brand) at both the firm and the individual lawyer level. In general – client delivery practices and behaviors that are part of the firm's core values and have been burned into the firm's cultural fabric are the hardest to copycat.

    Areas in which you can consider differentiation strategies:

    John W. Olmstead, MBA, Ph.D, CMC

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