When it comes to law firm performance, does alignment matter? A recent article by The American Lawyer investigates, positing that the answer is an emphatic yes. Deborah Farone, author of “Best Practices in Law Firm Marketing and Business Development” reports on the topic, citing that recent research demonstrates there is a strong correlation between a firm’s culture and its performance. According to Farone, firms that align their compensation and other recognition methods with their key goals and objectives, demonstrate a high degree of transparency and reinforce their vision with communications are more likely to demonstrate success than those that are merely average.
Alignment applies to large, multi-practice firms and small firms alike. So, how does a firm’s management begin to put alignment into place? According to the article, there are several tactics law firms can follow to begin the process. First, operational and marketing tactics should all be based on a well-defined and articulated strategy. Secondly, strategy must be communicated, up and down the organization. “Sharing strategy both with direct reports and throughout the organization leads to greater loyalty, a shared sense of purpose, and collaboration. The time spent communicating these decisions is an investment that pays off in multiples,” notes Farone.
Farone adds that C-suite members should have a role on the executive committee to provide input in the development of the firm’s strategy and vision. Not only will C- suite involvement build loyalty, these executives will be allies in plan implementation. Additionally, Farone suggests that compensation metrics should be transparent and reward those behaviors that a firm values. Consider rewarding not just for business development activity, but where there is collaboration across all practice areas, (as quoted in The American Lawyer).
During compensation time, Farone recommends looking at qualitative metrics for more than simply self-reporting. Consider asking partners not only to self-report, but to answer assessment questions, such as: “Over the past year, which partner outside of your practice, helped you build your practice the most?” Third-party recognition will give a more robust picture. Lastly, Farone declares that leaders of the firm, practice areas and committees should be those who emulate the values of the firm and further its strategic mission. Bad behavior that goes against firm policies and standards puts the firm at risk, erodes culture and communicates a message that the mission is not a serious one, (as quoted in The American Lawyer).
See highlights from the full article on The American Lawyer.
Contact Bill Sugarman for more information.
Clients need outside counsel that can collaborate to solve their problems, but law firms’ increased specialization creates an unfortunate conflict, and many are leaving big money on the table as a result, The American Lawyer reports. Recent NALP plenary speaker Heidi Gardner notes that “when firms get collaboration right — that is, do complex work for clients that spans practices and offices within the firm — they earn higher margins, inspire greater client loyalty, gain access to more lucrative clients and attract more cutting-edge work.”
Gardner notes that even firms that have figured out how to use collaboration to provide the best service to clients—and get paid accordingly—aren’t optimizing collaboration across their portfolios. According to her estimation, at least 70 percent of large global law firms today include collaboration-related goals in their strategic plans. But many of these same firms lack a solid understanding of how collaboration is working across their portfolios and where the gaps are. Simply put, you can’t just state that collaboration matters and hope lawyers change their behavior. You need to set specific objectives, based on a deep understanding of your data and its implications, then hold people accountable for delivering, (as quoted in The American Lawyer).
According to Gardner, in order to effectively implement smart collaboration and deepen these high-value client relationships, you must figure out ways to unlock value that your firm can provide given how deeply embedded you are in the client’s current work. In the article, Gardner lays out data showing that cross-collaboration in law firms yields a level of benefit far greater than anything achieved in a silo. Specifically, Gardner suggests that firms should locate potentially big clients that are only getting served by one practice group and identify areas to expand into other groups that add value for the client. Strategically, she notes that “you want to focus on this high-worth portion of your portfolio simply because adding additional practice groups at this level is worth such a significant chunk of revenue.” Additionally, Gardner recommends pairing junior partners eager to collaborate with more experienced practice group leaders to help further develop collaborative skills across the firm.
See highlights from the full article on The American Lawyer.
Contact Bill Sugarman for more information.
BTI Consulting recently analyzed over 300 law firms to identify the key characteristics shared by the most profitable law firms, observing that while “rates can help…the outsized profits come from behaviors, strategies, and culture.”
On the client side, these behaviors include concentrating the firm’s focus in certain practice areas or industries, targeting clients that tend to have a continuous stream of work, and proactively engaging with and discussing the clients’ business, even before active matters arise.
BTI also found that the most profitable firms encourage socialization among partners, in order to create a collegial environment that encourages cross-selling and collaboration for increased business development. They conclude that “the more you can push the behaviors and strategy into the culture–the better your profits.”
See the other habits and read more here.
Professor Heidi Gardner of Harvard Law School presented her research at the 20th Annual Law Firm Leaders Forum in early October, where she discussed why law firms should encourage collaboration among firm partners in order to increase innovation and development.
Sean Doherty of Above the Law highlights the key points of her talk, noting two trends that lend themselves to partner collaboration: first, the increasing complexity of law, which requires lawyers to specialize and work in discrete practice groups, and also the engagement in the “volatile, uncertain, complex, and ambiguous (VUCA) phenomena” that is often used to coordinate business spanning multiple disciplines.
As part of her research, Gardner interviewed law firm clients about the importance of partner collaboration within the firms, and found that clients believed that such collaboration increased the efficiency, cost-effectiveness, geographic reach, and innovation of the legal services, as well as led to a more complex understanding of the client’s enterprise.
Gardner posits that collaboration will be largely beneficial to firms over time, despite initial costs. Doherty reports Gardner’s list of benefits from collaboration to include “more successful business development, higher personal productivity, enhanced reputation, and ‘sticky’ (read: loyal) customers.”