Dr. John W. Olmstead, Jr., MBA
During the next ten years law firms will either undergo dramatic change and transform themselves or they will cease to exist. Present business and management practices will no longer serve practitioners well in the global electronic marketplace. The Internet and e-commerce is changing the rules of business on a global basis. New business models for virtually all businesses are being formulated on a daily basis. Law and other professional service firms will require new business models as well.
In general, practitioners in law and other professional service firms are often at a disadvantage when it comes to business management issues. The professional goes to school, learns a professional skill, and forms a business firm to practice his or her professional skill. Staff employees are hired and eventually additional professionals. Down the road various members of the professional staff are made partners in the firm and the cycle continues. Throughout this process the central role of all members of the professional staff, including the founder, was to provide professional services to clients. This is what the professional was trained to do.
What about management? In many cases management in law and other professional service firms is lacking or nonexistent. Leadership is nowhere to be found. There is no strategy, no vision, no long range plan, and no sense of direction. When such firms do try to tackle various management issues they get stuck in the mud and are unable to move anything forward. The firm has no management scheme or plan of action whatsoever. There is no long range plan, no overall goals, no production goals, no marketing plan, and no client service delivery plan. Often firms are strong on ideas but weak on implementation. Typically, there is lack of management and structure and a general lack of leadership and focus. Communication is generally poor. Compensation systems for both the professional staff and the support staff are often not defined nor tied to goal attainment or performance.
Many law firms have made some recent progress on management initiatives. Computer systems have been implemented and office administrators have been hired. Marketing activities have been placed in motion. However, very little action has been taken in the more strategic areas that effect firm performance and the bottom line. Work in the areas of firm strategy, vision, and general
leadership have been limited. There has been very little effort in redefining work processes, leadership development, and changing the mindset of the firm to a client focused culture. Many firms are still suffering from not having a goal, charted sense of direction, or management scheme. Firms are still having problems with accountability and implementation.
While progress has been made more needs to be done. Many projects that have been implemented by many firms were the easy ones. They were operational or administrative projects as opposed to management projects which require initiatives and leadership at the partner level. Management projects are much harder and they often require changes in skills, behaviors and working relationships. What makes management projects so much harder is that they are more complex and results are not immediate and are often delayed into the future. It is extremely hard for a group of attorneys to focus on strategic long term projects when they are up to their elbows in daily crisis. Lawyers must learn how to effectively partition their routines to enable an appropriate focus on long term projects. Lawyers must learn to think differently. This will require changes in skills, behaviors and working relationships.
The primary problems facing law firms are accountability, implementation, follow-up, and a reluctance to explore new ways of delivering legal services. Partners must begin to raise their hands and sign up for special firm management projects and be accountable to other members of the firm. The marketplace for legal services is changing rapidly and law firms must change in order to survive and compete in the future. You can either be a change leader and control your destiny or be victim of change.
This dismal track record of the past could doom the future of may law firms. Inaction and compliancy is no longer an option. For many firms incremental change will not be enough – total transformation of the practice will be required with new business and client service delivery models.
The future of virtually all businesses within the next decade, including law firms, will rest on the ability to successfully implement and manage change. The following tips are offered as guideposts as you begin your journey down the road to implementing change and reinventing your law practice:
Tip #1: Develop a business mindset. Become an entrepreneur and learn how to think like a businessman. Look at the world from your client’s perspective. Consider you client your business partner.
Tip #2: Select your clients carefully. Establish client acceptance criteria. Learn how to say no. Dump undesirable clients.
Tip #3: Brand yourself. Look for ways to differentiate yourself from your competitors. Become the only attorney that can do what you do. Make a decision – what do you want to be known and remembered for? Unique services, unique client groups, different service delivery strategy, personal style. Create a five-year plan for goal accomplishment.
Tip #4: Learn how to become “solutions orientated” and become a consultant to your clients as opposed to simply their attorney. Solutions may involve activities and services other than legal services. Think out-of-the-box and outside of typical frameworks in which you are comfortable.
Tip #5: Conduct a firm-wide management and leadership assessment and identify strengths and weaknesses. Enhance management and leadership skills through skill development training and personnel acquisitions.
Tip #6: Begin formulating change goals at the firm and the individual level. Consider using outside coaches and consultants where feasible.
Tip #7: Get out of the office. Visit a client’s office or work location once a week.
Tip #8: Make work fun everyday. Involve all members of the firm and solicit ideas on how to improve the office work environment as well as the actual work as well. Try to reduce the intake of work that is not enjoyable, challenging, and rewarding.
Tip #9: Begin getting ready for Multidisciplinary Practices. Formulate alliances with other professionals. Experiment with alliances and strategic referrals with other professionals when such alliances will provide appropriate solutions for clients.
Tip #10: Begin surveying you clients within 30 days. Complete the project within 90 days. Review and analyze the quality and status of all active matters.
Tip #11: Diversify your people -ethnic, race, age, creed, and culture. Only through diversity will client focus and creativity be maximized. Opportunities cannot be maximized without diversity.
Tip #12: Require all employees, attorneys and staff, to develop personal goal plans for the year. Incorporate these plans into performance appraisals.
Tip #13: Socialize outside of your comfort zone. Have lunch with young people in your office, staff members, and others with different points of view. Learn how they see the world. What do they see as opportunities and challenges?
Tip #14: Transform the firm from a culture of individualism to a team culture. Begin fostering the development of team skills. Begin rewarding team accomplishments as well as individual contributions. Incorporate team-based measurements into the firm compensation system for both attorneys and staff.
Tip #15: Fall in love with the Internet. Look for ways to use the Internet to enhance the ways legal services are delivered. Successful law firms have gone past e-mail and web sites. They are now using intranets and extranets to collaborate directly with clients. Case management databases are updated by both the client and the law firm in real time via the Internet. Video conferencing is being used to conduct client consultations. Some attorneys have begun representing clients in new geographical areas without having an office in that area by conducting “virtual consultations” over the Internet. Voice over the Internet is being used to expedite client communications. Document collaboration is being done in real time.
Tip #16: Evaluate other key technologies that will revolutionize the way in which law is practiced in the future. While voice recognition software is not yet ready for prime time in a production environment, improvements are being made daily. This will be a key technology within the next few years that will have a major impact upon law firm business models. Knowledge management systems which leverage the firm’s work product and experience should be investigated. Stay on top of innovations in virtual networks and expert based systems and be ready to deploy rapidly when the time is right.
Tip #17: Look outside your local market. Evaluate client opportunities outside your present market boundaries. Consider opportunities throughout your state, nationally, and internationally. Do you have to be restricted to your local city or town?
Tip #18: Investment in skill development training for all firm members, attorneys and staff, in marketing and client service. Everyone in the firm should be a marketer.
Tip #19: Get a dedicated Internet connection and acquire all of the Internet bandwidth that you can afford.
Tip #20: Break the pattern of making decisions based upon precedent. No one cares who is second. Strive to be first rather than second. Be a winner. Don’t wait to see what the other firms are doing.
Tip #21: Consider using a client advisory council. Twice a year hold a client advisory council forum in which the firm solicits feedback from clients.
Tip #22: Break the rules. Encourage all members in the firm to think out-of-the-box and innovate. Look for new ways to solve client problems. Look for new solutions. No topic should be initially be considered out-of-bounds.
Tip #23: Begin developing global contacts and alliances. Become familiar with other cultures and customs.
Tip #24: Join a client’s trade association and make contributions in the form of articles, speeches, conference attendance, etc. Learn the client’s business from top to bottom.
Tip #25: Develop action plans for reinventing your practice. During the next decade we will experience unprecedented change driven by the technological revolution that is presently underway. The Internet and e-commerce will drive change that will force all businesses to develop new business models or perish. Law firms and other professional service firms will be no exception. Law firm leaders should be reinventing their firms now so they can be in the driver’s seat rather than an unwilling victim.
Dr. John W. Olmstead, Jr., MBA, is a Certified Professional Consultant to Management and the president of Olmstead & Associates, Legal Management Consultants, St. Louis, MO. The firm provides organizational performance, management, leadership development, and marketing advisory services to law and other professional service firms. He is the Editor-in-Chief of The Lawyers Competitive Edge: The Journal of Law Office Economics and Management, West Group. He may be contacted by e-mail at email@example.com.