In a posting here several weeks ago, we asked whether the traditional model for law firm success is broken.  And though we are confronted with considerable evidence that this is the case, I expected to receive a good deal of push-back on the idea.  There was almost none.

Even though a number of you pointed to extremely successful firms operating based on a model that works, I was struck by the number of you who shared articulate anecdotes and perspectives that underscore the fact that growth-for-growth’s-sake or profits-per-partner tunnel vision are antiquated models that spell eventual failure.

In fact, there is a model for the successful, enduring law firm.  When executed correctly, this model lays a solid foundation, constructs an effective infrastructure, and yields an enviable bottom-line.  Each of these is an essential component to survival – not to mention growth – whether maintaining a strong practice in the predictable economic cycles of business, or knee-deep in the immediate challenges unique to our turbulent industry.

What does this model look like?

In this post I’ll offer my view on the two foundational elements.  In coming weeks we’ll dive deeper, but I solicit your thoughts and feedback in this process.

It begins with what, in my view, is a basic tenet of any successful partnership – clearly understood and shared aspirations.  This concept has been discussed at some length in these postings…perhaps even to the point of desensitizing some of us to the cornerstone nature of the idea.   So here’s a quick review.

Long term success for any partnership hinges on being able to make core decisions in the context of common goals for both present and future.  This means discussions of compensation, growth, practice diversification, governance and even billing expectations are finally measured by their impact on shared aspirations.

The second element foundational to a successful model is operation based on solid, tested business practices.

There is an increasing array of expertise having little or nothing to do with the practice of law, but essential to a competitive law firm.  Technology, human resources, finance, business development and communications/media relations have become part and parcel to the business of practicing law.  In the process, law firm leaders are confronted with an ever-growing slate of issues that do not convert to billable hours . . . but clearly relate to client service, productivity and survival.

So, if essential to our model, what constitutes a solid set of business practices?  How does the business side of a law firm interface (and peacefully coexist) with the practice of law?  Can solid business practices be a reflection of shared aspirations?

These are the questions I’ll focus on in my next contribution to our dialogue.  I’m convinced that, coupled with shared aspirations, the right approach to the business side of law firms is the key to profitability and stability in today’s marketplace.

Lest I leave the wrong impression, I’m not suggesting there is a silver bullet for all that ails us.  This year may well be one of the toughest years our industry has seen since thirteen firms closed their doors a half-dozen years ago.  But firms with these foundational elements in place are unlikely to fall victim to the predictable cycles of business and the fallout of an industry in the throws of change.

Even firms feeling the negative impact of change can take steps now that will begin to turn things in the direction of stability.

What do you think?

Let me hear from you.

The question has been poised for a number of years . . . but rarely spoken.  A few spectators wondered when Brobeck seemed to vanish as quickly as it had risen to prominence.  There were whispers when Arter Hadden and Althiemer and Gray vanished from the legal landscape.  Some of the whispers turned into murmurs when the 150+ year old Coudert Brothers filed for bankruptcy.

But by the end of 2006 — after witnessing the demise of four industry giants, multiple high profile false starts, combination failures, and an increasing number of AmLaw 200 firms struggling to keep pace – the question was actually being addressed in industry venues.

Has our traditional law firm business model outlived its effectiveness?

A recent article on Law.com, reviewed comments from a February Law Firm Leaders Forum.  The forum presented two perspectives on where we are.  One warning of an economic correction, and the other projecting that the good times will continue to roll.

As we have consistently discussed in this forum, there can be little argument that our industry is in the midst of significant change.  The landscape shifts routinely and without warning.  I believe this year we will witness the beginnings of a correction that will see more law firm failures than we have seen since the 13 failures of 2003.

But pronouncing a model either broken or healthy and thriving, first presumes a model exists.  And I’m prepared to argue that point.

You pick the operational discussion – compensation, growth, governance, rate structure, client acquisition and business development, staffing.  Our industry has changed so much in the past two decades that there has scarcely been time for a workable model to emerge.

But I’m convinced that it is possible to define (and successfully execute) a plan that lays a strong foundation for every facet of your law firm – one that will enable you to build the kind of profitable, enduring partnership you envision in your most optimistic and ambitious moments.

In other words, I firmly believe we can identify a model for the successful law firm – even in the midst of today’s changing market.  To be relevant, such a model should provide cornerstones for effective growth, compensation, decision making and governance, and all components central to success in our marketplace.

To those of you who are regular participants in our dialogue, it will come as no surprise that I believe the first cornerstone of the model is what we’ve termed “shared aspirations.�  (http://www.thehayseblog.com/?m=200606)  But we do work in the real world, and reality give rise to two questions:

• How do you bake this concept of “shared aspirationsâ€? into your growth strategy?â€?
• And, what can you do to correct aspiration misalignment?

I have a few thoughts on these questions, and I’ll offer them up for discussion in our next posting.

But what do you think about this idea of a broken model?  Do you feel your firm is operating based on a workable model?  And what about the idea of shared aspirations?

Let me hear from you.

There’s a running joke used to poke fun at direction-impaired individuals.  It ends with some variation on the line “. . . not that left; your other left!”  This month, as law firms inaugurate plans and strategies designed to get a new year off on the right foot, we might want to step back for a moment and ask whether our plans focus on the correct right foot.  Here’s what I mean.

By virtually any measure, our industry is in the midst of unprecedented change.  Often, in the same instant, it is both exhilarating, and dramatic enough to give significant pause.  Mergers — many mega in nature – and seemingly unthinkable dissolutions headline stories with equal frequency.

In a reality that has no relationship to the quality of legal work delivered to clients, hundreds of quality law firms will wrestle with the identification of the right productivity and profitability equation.

So, as we finalize budgets, lock in leadership, establish productivity targets, escalate plans for growth and expansion, and generally resolve as leaders to get 2007 off on the right foot, it seems the ideal time to step back . . . insure we’re headed in the right direction . . . and focus on a few key questions.

• Are institutional (firm) goals aligned with the goals of partners?
• Do our investments (time, money and other firm resources) mirror our goals . . . or do we sabotage success by chasing the urgent or one-off good ideas?
• Are we directing disproportionate investment to those market segments (the specific place where service-type, client-type and geography intersect) where we have a calculated opportunity to strengthen position — or create dominance?
• Have we identified the area of the firm that creates the greatest practice or economic exposure for the firm, and have we initiated a plan to eliminate or decrease the risk?
• Do we know the most significant change our partners want to see in the firm?  Are we doing anything about it, and do they know it?

In a recent article on TheLawyer.com — http://www.thelawyer.com/cgi-bin/item.cgi?id=123593 — BDO Stoy Hayward, an English accounting firm predicts that a change in the banking marketplace will result in 15% of UK firms either folding or engaging in a defensive merger.  Earlier this week Law.com carried news of two mergers and two dissolutions of U.S. firms.

Stability, to the extent it exists in today’s marketplace, belongs to the law firms that have answered the tough questions, and made the choices necessary to remain competitive and respond to the needs of their partners, thereby serving their clients.

How is your firm making itself more secure?

Let me hear from you.

We have been discussing client service and the gap that sometimes exists between what clients expect and what we deliver.  And because our dialogue is about more than simply pointing to what is wrong, this begs the fundamental question — what do clients really want in the way of service from a law firm?

First let me reiterate what we noted in our last post: the expectation of quality legal work is assumed.  Service has to do with how your clients experience working with you.  To the law firms I consult with I put it this way.  Client service is:

• what differentiates you from scores of firms capable of delivering quality work;
• what builds and strengthens productive relationships;
• the “stuff� that, when push-comes-to-moving-across-the-street-for-a-better-rate, creates loyal clients.

And if this seems tough to define, there are numerous surveys of GCs and client decision makers that tell us what clients expect in the way of service.  Here’s what clients consistently say is important:

• Responsiveness (work done in “client-time�)
• Awareness of, and adaptability to industry trends and business changes
• Clear communication (the client defines this)
• Absence of surprises (in billing, in promises kept, and in work specs)

The things many law firms cite as the cornerstones of robust client service – attorney count, location of offices, number of practice areas — are almost never central to the way clients define the experience they desire with their law firm.

And even if you find the list above far too generic, here’s the good news: if you’ll listen, your clients will tell you what it takes to deepen or even completely redefine your relationship.

A law firm that I have assisted on numerous merger and acquisition transactions has developed an impressive method for getting valuable client input in this area. Their program is built around a client interview specifically designed to measure a client’s loyalty.  The premise is simple.  Satisfied clients are not enough.  Loyalty is the goal.  And this law firm is looking for ways to engender that kind of loyalty.

Each interview generates a loyalty score against which the firm can measure itself in subsequent interviews.  In the process, this particular approach identifies existing gaps, potential problems, and both immediate and long term opportunities for new work.

The interview information is presented to the firm’s client representative and client service task force, where specific short term and long term improvements are identified.

One final note of interest — this firm’s approach utilizes a senior non-lawyer client service manager and a partner on each interview.   Both individuals have been trained for maximum effectiveness, and the lawyer participant is a partner not working with the client being interviewed.  This “fresh eyes and ears” approach encourages the highest quality response from the client.

I have seen other firms utilize similar programs – often with the firm’s Managing Partner conducting the interviews and others (less successful) with written client service forms.  In all cases the firms have been better off for asking the questions.

How does your firm understand its clients real needs and determine service satisfaction?

Let me hear from you.

Client service is at the top of the list of things every law firm promises the marketplace.  Check out the website or brochures of any firm and you will find language that reads something like “…dedicated to delivering the highest level client service…�

But does the marketplace believe we deliver on this promise?

I have been going to a little Vietnamese restaurant, Vietnam, for years.  It has few of the external indicators of excellence.  Located in a low income, urban setting, it is housed in an old, poorly maintained building.  The furnishings are little more than utilitarian.  Yet, I return to Vietnam at least once or twice a week.  Over the years I’ve introduced well over 100 friends, colleagues and clients to the restaurant.  And I’m not alone.  Recently, on a rainy day I arrived to find the line out the door.

Ever the insightful consultant, I pointed out to the owner that this consistent increase in loyal clientele might warrant a bump in the $5.99 (for as long as I can remember) all-you-can-eat buffet price to a still-ridiculously-affordable $6.99.

He thanked me for the advice, but responded that his customers would not appreciate such an increase as well as a longer waiting line.  Loyal patrons had provided him with a reasonable profit for years, and in a city that leads the nation in restaurant openings and closings every year, he didn’t want to give them any reason to look elsewhere.

Now, before you hit the delete button, I’m not equating client service with rates.  Nor am I suggesting that a restaurant is the same as a legal practice.  What I am saying is that what you (or even a consultant) believe about client service matters little.  The way your clients define client service is the only definition that matters.

In survey after survey, law firm clients list various aspects of service – from unexpected surprises to how files are managed to a pure lack of communication – as their greatest complaints against law firms.  Not the quality of legal representation . . . not the depth (or lack thereof) of bench strength . . . not winning or losing . . . not even rates, per se.  And the surveys tell us one more thing.  Clients wonder if we’re listening.

In fact, everything about today’s market suggests that satisfaction – with representation, counsel or even results – is no predictor that your client today will still be your client tomorrow.  Further, recent history suggests that the majority of clients who fire firms in the next quarter will tell you they are very satisfied with their lawyers today.

Clients do not equate excellent legal counsel with high quality service.  They expect excellent representation.  In many quarters, expectations with respect to service are less than high.

But I am convinced that, just like my friend at the Vietnamese restaurant, it is possible to know your clients’ most critical considerations.  And, armed with this intelligence – even in a marketplace where it seems an endangered commodity – law firms can enjoy the stability and profitability that stems from a loyal client base.

I propose delving deeper into the specifics of this topic in our next visit.

In the meantime, how loyal are your clients?

Let me hear from you!

What does it take to build a great law firm? In recent postings we’ve focused on some of the things I believe to be essential – defining career aspirations, shared vision, and the integrity of partnership.

But building a great firm – one that delivers the highest level of quality and service to clients, while being able to endure and grow in a volatile marketplace – is about more than excellent lawyers who share a vision. It is about building a successful business.

Of course, selecting the right lawyers is critical; and putting the right lawyers in the right senior management and leaderships positions isn’t far behind. But if your goal is a secure and growing enterprise, making the best decisions with respect to laterals, associates and legal support staff isn’t enough.

Kenny, a long-time friend of mine, recently had a heart attack. He was taken to a highly respected, Chicago area hospital where an experienced heart surgeon successfully performed a triple-bypass. In addition to being thankful for the fact that the surgeon saved Kenny’s life, I was struck by the difference in the leadership model of the medical profession verses the typical law firm. This prestigious hospital, which includes hundreds of doctors and surgeons, is led by a top-flight business professional, who didn’t go to medical school. And this got me thinking.

Inside today’s law firm many talent related decisions are easy. When you need to serve a client with reorganization needs, you recruit a seasoned bankruptcy attorney. And few lawyers would attempt to practice without a top flight assistant to keep files organized, client materials presentable and schedules straight. In the face of accounting and financial reporting needs, you recruit an experienced accountant or financial manager.However, when it comes to the question of who will provide business leadership and day-to-day management of the firm, law firms look almost exclusively to lawyers for the business leadership that will result in solid and secure firm.

Before I lose you – and before we invest too much time in pointing to what seems askew in our model, let’s return to healthcare. There was a time, not all that long ago, when virtually all organizations in the medical profession were led by physicians;. A number of factors precipitated major change in that model. Among them:

• Tremendous consolidation within the industry;
• The advent of Increasingly complex organizations;
• Changing economic metrics.

Any of this sound familiar?

Here’s my advice to law firms: be open minded in considering exactly what talent will best serve the partners’ aspirations and firm growth. This obviously includes talent in the discreet areas of accounting, human resources, marketing and technology. But beyond these functional arenas, consider the value that a talented business executive can bring to the overall leadership of your firm.I’m hard pressed to point to a firm that is struggling or that has failed because of talent on the legal side of the equation. On the other hand, I would propose that solid business leadership could have altered the path for many firms that are no longer with us. If you’re building a business, hire business talent and let them run the organization.

How is your firm staffing for success?

Let me hear from you!

In today’s hyper-competitive legal market, a growing number of firms are wisely developing strategies for how to compete more effectively.  However, an unfortunate number fail to execute these strategies.  The reason, in my experience, is there is no foundation for improvement.

A foundation for improvement has nothing to do with intellect, education level or desire.  Rather, it speaks to a process and discipline.  And the result is a relentless execution of a strategy reflective of agreed upon objectives.   What does this process look like?

Law Firm Improvement and a Yoga Class . . .

Henry, an ERISA lawyer and friend of mine, is a dedicated yogi.  Henry convinced me that through yoga I could improve my strength, flexibility and state of mind.  My first trip to Henry’s yoga studio made me (painfully) aware of a correlation between the goals of yoga, and achieving law firm success.

In yoga a proper position is ultimately achieved through the repeated execution of specific steps.  No one (me in particular) executes all poses correctly on the first attempt.  Knowing this, the instructor encourages the class to consistently move with intentionality towards the desired position.  Depending on your physical condition you may achieve the desired pose after a week, a month or a year of consistent effort.

Without the consistent intentional effort, the proper position will never be realized.

This is precisely what we must do to improve a law firm.  Sweeping initiatives rarely last.  Big programs fall in and out of favor.  But if we will move with intentionality from where we are to the place we seek to be, one small area at a time, we can achieve measurable improvement.

Here is a simple 5-step process designed to help you and your partners move with intentionality toward measured improvement.

1. Identify an area in which you would like to improve. 
2. Establish a quantifiable goal reflective of partners’ shared objectives.
3. Select an individual who will accept responsibility for moving with intentionality toward the goal.
4. Recognize achievements and remedy lack thereof
5. Repeat…set another objective for improvement

Every time you go through this cycle your firm’s future is enhanced in at least two ways: first, by the actual improvement targeted; and second, through the organization’s increased ability to drive future improvements.   Once you have mastered the process, you will be in a position to increase the quality of your improvements.

Regardless of size, perfecting this 5-step process will put your firm on the road toward a  secure future.

How is your firm driving improvement?

Let me hear from you.

We’ve been applying Jim Collins’ idea of “getting the right people on the busâ€? (from Good to Great) to the structure of a successful law firm.  Today we come to the multi-faceted challenge firms face in today’s marketplace — keeping the right people.

Not a week goes by without a mention in the legal press drawing attention to a prominent partner leaving his firm for greener pastures.  Today’s leaders must increasingly deal with this reality: in an ultra-competitive, ultra-mobile market place it is critical that law firms hold their best talent.  If we can’t keep the best, how can we hope to “have the right people on the bus?�

The good news is it is possible for your firm to take steps today that will help you keep your best partners.  Two things are necessary: