The purpose of any business is to be profitable, and provide conditions for a satisfying work experience for those who work there. The collective intelligence within a law firm should make these goals a slam dunk; unfortunately, in many ways the culture of the typical law firm works against its financial success. See if any of these examples sound uncomfortably familiar…
- Over-emphasis on limited measurement tools: Too much of a lawyer’s reputation within a firm depends predominantly on their stats – specifically billings compared to target, and hours. Hitting target is a lawyer’s greens fees, but I care very little for how many hours it takes to get there. If a lawyer can premium bill, do work for a fixed fee with ruthless efficiency, or be high functioning due to strong precedents or great paralegals, don’t penalized them for working smarter. Ensure your lawyers hit their billings targets, but also measure other activities that are part of their value proposition to the firm:
- Origination: The real value of a partner is not the work they can do each day, but rather their ability to bring work in for themselves and others. Origination should count. Track how much work each lawyer brings in, and sub-divide that by how much of that work they do themselves (good) and how much they hand to others (better).
- Rainmakers: In my experience, real rainmakers represent less than 3% of the typical law firm. Even those who do very little work themselves but bring in work for others are worth their weight in gold. Yet Partners get nervous about properly funding rainmakers. It doesn’t seem fair to give one lawyer more marketing funds than another…especially if that lawyer is under-producing personally. Get over it. If you think you have a rainmaker, set them on a different track and nurture them. Insist they have a documented plan for their activities, and strong accountability. They probably still need to deliver on billings, but if they bill $200k/year and bring in an additional $500k of work to the firm, they’re worth it.
- Marketing: Marketing is critical to the sustainment of a lawyer’s practice and to the firm as a whole. It should be a requirement of all lawyers. A good marketing plan includes activities that promote the skills and reputation of the lawyer but also contributes to marketing for the firm as a whole. You can assess the value of these efforts in two ways. 1. Ensure the lawyer has a documented plan, with clearly identified goals and a list of the actions they will take to achieve those goals. 2. Meeting with them regularly (quarterly) to track their accomplishment of those activities, and examine the results. In the absence of tangible documents and an accountability system, it is impossible to assess and give value to the marketing done by your lawyers. And without an assessment of value, it probably won’t get done.
- Delegation: The model of more successful firms often requires that work is delineated and delegated according to the level of skills and experience required. You don’t make money if your $400/hour lawyer is typing up a will or doing basic legal research. Lawyers who hold onto such work are not helping the firm’s bottom line, or supporting a sustainable business structure. You can encourage better delegation by valuing it. Include delegation as a metric. Look at the hard numbers but also interview people the lawyer has delegated to in order to assess delegation skills as well.
- Administration/leadership: Lawyers in a law firm are part of a business community in which the members rely on each other to keep the firm running. In most firms, it’s insufficient for a lawyer to simply bill. They need to help out in terms of administration, firm culture, marketing and community engagement, and even leadership. We know this to be true, yet few firms attribute any value to these efforts when assessing a lawyer’s overall contribution to a firm each year. That’s a mistake. Valuing their non-billable contributions doesn’t belittle their requirement to hit their billable target (unless they are the Managing Partner!) But valuing non-billable work that is important to the firm’s management and morale will ensure that good people continue to put in their fare share of effort in these areas.
- Origination: The real value of a partner is not the work they can do each day, but rather their ability to bring work in for themselves and others. Origination should count. Track how much work each lawyer brings in, and sub-divide that by how much of that work they do themselves (good) and how much they hand to others (better).
- Competitive marketing: I recently facilitated a retreat at which we held an afternoon team building exercise. In this exercise, three teams were all regional offices of the same company. Each team was tasked with a similar project that required they achieve a profit. The teams spent the next hour quietly determining how they could “beat” the other teams. Ultimately, the teams learned that they had all failed, because the test was really to engage in activities aligned with the theme of the entire retreat: team work and collaboration. In striving to “beat” their colleagues, teams forgot that their collective knowledge and collaboration would have resulted in significantly higher profits for everyone. Law firms can be like this. Individual lawyers or practice groups may (perhaps unconsciously) compete for billings and even clients. Most firms are poor at cross selling because the last thing a lawyer thinks about is how they can encourage “their” client to engage a different lawyer at that firm. People, a rising tide will lift all boats. Individual lawyers and practice areas may have a healthy, friendly competition going but when it interferes with the accomplishment of the firm’s main business goals, it’s a problem. Don’t counteract each other’s actions, don’t stand in each other’s way. We are stronger collectively than we are individually. That’s the very reason we form firms, isn’t it?
- Short-term planning mentality: Some firms (not all) can tell you what their specific business goals are for the year. And when a lawyer leaves, or a client is in trouble, firms are pretty good at filling in gaps. But too few law firms have a strategic plan, by which I mean long-term planning. To me, short-term business decisions without a longer-term business plan is triage. It takes care of the moment but you might wake up one day and find you’ve got no strategy, no brand differentiation, and are bleeding clients and lawyers/staff. You need to know where you’re going in order to ensure your next few steps are in the right direction. Author Stephen Covey called this beginning with the end in mind. Here in B.C. PI firms are realizing that life is about to change dramatically. Several years ago, I worked with a firm that was on the cusp of losing 1/4 of their annual revenues, and they had known it was coming for four years. Think this can’t happen to you? It might be already. Stop being a short order cook and figure out what kind of establishment you want five years down the road. I assure you, it will make a difference to how you operate each day for the next year.
- Fear of policing: The typical law partnership is based on the belief that partners will always do what’s best for the firm, all on their own. Sometimes this is true, but often people don’t change unless they are forced to do so. The “force” could be new rules, a higher degree of accountability within the firm, or coaching. We call these extrinsic motivators. Eventually, it is hoped that the individual will develop intrinsic motivation – the ability to do something even if they don’t like it because they know it’s good for the them and/or the firm. Firms dislike extrinsic motivation because partners believe that a lawyer should see what needs to be done, and change on their own. Never mind that this goes against human nature. Never mind that the last x number of years have demonstrated that the lawyer will not change. This continued belief that self-change will occur creates a dysfunctional culture that is re-enforced every time the lawyer operates in a way that is counter to the firm’s interests. But partners don’t want to call out that behaviour, or establish extrinsic motivators, because they believe it will destroy the culture of the firm. Thus, a dysfunctional culture is not only accepted, it is cultivated. The cure? Establish rules of operation based on firm goals and value systems, not based on personalities. Then stand by those standards, and provide support to anyone who needs help in getting there. But don’t ignore behaviour that doesn’t meet those standards. That’s the fastest killer of good culture that I know of.
It feels like an oxymoron that a profession usually so averse to risk will be the riskiest with the thing that is the most important: firm culture. The solution requires that firms move beyond their status quo. Start by declaring values and goals, then create valuing and accountability systems to reward good behaviours, and address bad ones. Your future depends on it.
Heather Gray-Grant is a business strategist, marketing expert and executive coach for law firms and lawyers. She can be reached at heather@heathergraygrant.com