State Of Law Firms Now

The legal industry faces powerful and rapid changes. Mergers and acquisitions have increased the number of national and international mega law firms ' and this trend is expected to increase. Competition in local markets is fierce as large law firms open satellite offices or buy mid-sized or small firms in cities across the nation. Accounting firms are big competitors. They employ hundreds of attorneys to serve their many existing clients and to hunt for new prospects. The shrinking number of companies created by mergers and acquisitions in the business sector makes getting new clients more competitive. With a limited client base, everyone is targeting everyone else's clients and clients are demanding better service at lower prices. But most leaders are beginning to really understand this is where the profession stands. Staying at the top in such a competitive and challenging market, however, may be something that is new to many of today's law firm leaders.

The mega law firms look more and more like companies they serve with the centralized leadership and stronger hierarchal control. They are big and more bureaucratic. The attorneys become more and more like employees than owners, with less involvement in the running of the firm. This is not a bad thing. In fact, it is almost necessary for survival. Centralized leadership will always win. Lending everyone your ear is certain to cause factions, leading to fragmentation of strategy, efforts and results.

Regional Med-Sized Law Firms

These trends force mid-sized and smaller firms to face many challenges. Those who “step up to the plate” will turn these challenges into opportunities. To be competitive, or even survive, they face many difficult decisions. Should they merge? Compete more effectively by acquiring laterals? Review their market position and services to find more profitable niches? How should they structure themselves internally to increase efficiency? What do they need to do attract and keep good clients? The key ingredient to answering these questions and for regional and mid-sized law firm survival and success is enterprise leadership.

Enterprise leadership takes the business of lawyering to a new level. Problems are not ignored but embraced, analyzed, understood as challenges to be faced with firm decisions and accountability. Change is a constant and enterprise leaders act quickly and decisively to meet internal and market-driven challenges. They are more flexible and willing to take calculated risks. There are many issues that enterprise leaders of regional firms need to address to lead effectively. The following issues are most important.

Understanding the Firm's Expertise and Client Needs

In mid-size firms, leadership must be really good to retain the firm's lawyers and to compete with the larger firms. Effective leaders understand the nature of their firm's legal expertise and develop business strategies consistent with available expertise. There are three kinds of legal work based on the complexity of the clients' issues and the availability of attorneys with the required expertise and reputation.

The three kinds of work are “high-end work, “important” work and “commodity” work. Clients with high-end work recognize the need to hire attorneys who have the “right” expertise and the reputation. In these high-end situations, competition is limited to a small number of attorneys. Price is not an issue and the client wants and pays for the “best” legal representation. Regional firms are finding it more difficult to keep the “stars” of high-end work.

Most regional firms do “important” work. This work involves complex issues. But, unlike high end-work, there are many experienced attorneys who have the required knowledge to resolve important client issues. Clients with important work, have many attorneys to choose from which results in lots of competition between lawyers and law firms. “Commodity “work involves situations where the knowledge base required to resolve client issues is not complex (at least from the clients' perspective). This kind of work often has lower margins due to the vast amount of firms available to do the work.

Client-focused Leadership

Successful leaders of regional firms create client focused strategies for helping their firms win and keep clients with “important work” by systematically knowing what these clients want and creating structures, practices, training and rewards for “super satisfying” them. They initiate client information gathering strategies, including client satisfaction interviews, end of matters interviews, client forums, and client panels.

Information about clients shape the development of structures best suited for exceeding client expectations. These structures usually involve teams that mirror client needs. For example, key client teams are created across practice groups for providing, coordinating and growing the work from key clients. Attorneys receive client service and team skills training and are rewarded not only by individual achievement but also by team success.

Clients are viewed as clients of the firm where it is everyone's duty to service the client well. If the firm does not support an “all clients are firm clients” culture, the leadership is not supporting a client focus but an individual lawyer focus. This focus does not support a “rising tide floats all boats” environment. It could be time to think about shifting the focus away from individual rewards and supporting a team reward culture.

Teams

Developing effective teams at all levels of the firm is the hallmark of enterprise leaders. The management team is created to mirror the beliefs and values of the firm and of the leader. The management team is led by the leader, and each member has responsibility within specific management areas such as marketing, governance and firm administration. They act as a team. There is agreeing on specific projects that each member initiatives and oversees. There is support and constructive criticism and each team member is held accountable for his or her actions.

Practice groups, key client teams, industry teams are real and functioning groups that make and carry out plans, receive and send information to the management team and other parts of the firm. Team member accountability is the norm. The enterprise leader supports teams by leading the firm's team development culture, rewarding positive team member behaviors and team outcomes and dealing with negative performance of teams and team members.

Leadership Characteristics and Personal Traits

Problem solving orientation

Problems and difficulties are common to all firms. The critical factor is the leader's attitude towards difficulties. The enterprise leader has a problem-solving attitude. Leadership involves making hard decisions. Conflicts and problems are expected as challenges to be managed with actions and values that give the message that management is in charge, problem areas are recognized and decisions will be made.

The leader also provides actions, which reflect integrity. There are political realities but the values are not compromised. For example, when an eight hundred pound gorilla over steps the behavior norms of the firm, that person is told to reform and act appropriately or face sanctioning. Leaders in this role must be change agents and keep the best interests of the firm in front at all times.

Power

Power is the ability to do things effectively. The enterprise leader is comfortable with power and uses it to focus the firm on making the changes internally to meet and capitalize on the changes in the marketplace. For example, effective leaders advocate the development of ancillary businesses from consulting activities to the development of non-legal products to increase the competitiveness and the profitability of their firm. They support the retraining of attorneys in unprofitable practice areas, go head to head with competition from accounting firms and focus the firm on new products and expanding into new geographic areas.

They understand the importance of running an efficient firm though instilling the importance of accountability. If the firm professionals and staff do not understand that they are held accountable for their actions, they can do things their own way.

Efficient firm management requires that people follow the rules and procedures developed to insure good practices. Continuing late billing, large discounting of bills, poor billable hours, failure to do agree business development activities, and circumventing intake policies all deal with directly and firmly.

Conclusion

In summary, informed, skilled, strong leaders are required to help shift firms from an internal perspective to a culture that focuses on the external – the clients. Modeling strong behavioral traits that build a culture of trust and respect is critical to the survival of all firms and in particular, the mid-size or regional firms. Making some tough decisions will undoubtedly help the firm survive and grow and reap the rewards of profitable client relationships.

Harry Keshet, Ph.D., is a legal firm consultant and business development coach with Law Practice Consultants (www.lawpracticeconsultants.com). Silvia L. Coulter is Editor-in-Chief of LFP&BR, as well as the former CMO of two Global 100 firms. She is the managing partner of Coulter Consulting Group, and the President of the Legal Sales and Service Organization (www.legalsales.org). She may be reached at 617-726-1500.

The legal industry faces powerful and rapid changes. Mergers and acquisitions have increased the number of national and international mega law firms ' and this trend is expected to increase. Competition in local markets is fierce as large law firms open satellite offices or buy mid-sized or small firms in cities across the nation. Accounting firms are big competitors. They employ hundreds of attorneys to serve their many existing clients and to hunt for new prospects. The shrinking number of companies created by mergers and acquisitions in the business sector makes getting new clients more competitive. With a limited client base, everyone is targeting everyone else's clients and clients are demanding better service at lower prices. But most leaders are beginning to really understand this is where the profession stands. Staying at the top in such a competitive and challenging market, however, may be something that is new to many of today's law firm leaders.

The mega law firms look more and more like companies they serve with the centralized leadership and stronger hierarchal control. They are big and more bureaucratic. The attorneys become more and more like employees than owners, with less involvement in the running of the firm. This is not a bad thing. In fact, it is almost necessary for survival. Centralized leadership will always win. Lending everyone your ear is certain to cause factions, leading to fragmentation of strategy, efforts and results.

Regional Med-Sized Law Firms

These trends force mid-sized and smaller firms to face many challenges. Those who “step up to the plate” will turn these challenges into opportunities. To be competitive, or even survive, they face many difficult decisions. Should they merge? Compete more effectively by acquiring laterals? Review their market position and services to find more profitable niches? How should they structure themselves internally to increase efficiency? What do they need to do attract and keep good clients? The key ingredient to answering these questions and for regional and mid-sized law firm survival and success is enterprise leadership.

Enterprise leadership takes the business of lawyering to a new level. Problems are not ignored but embraced, analyzed, understood as challenges to be faced with firm decisions and accountability. Change is a constant and enterprise leaders act quickly and decisively to meet internal and market-driven challenges. They are more flexible and willing to take calculated risks. There are many issues that enterprise leaders of regional firms need to address to lead effectively. The following issues are most important.

Understanding the Firm's Expertise and Client Needs

In mid-size firms, leadership must be really good to retain the firm's lawyers and to compete with the larger firms. Effective leaders understand the nature of their firm's legal expertise and develop business strategies consistent with available expertise. There are three kinds of legal work based on the complexity of the clients' issues and the availability of attorneys with the required expertise and reputation.

The three kinds of work are “high-end work, “important” work and “commodity” work. Clients with high-end work recognize the need to hire attorneys who have the “right” expertise and the reputation. In these high-end situations, competition is limited to a small number of attorneys. Price is not an issue and the client wants and pays for the “best” legal representation. Regional firms are finding it more difficult to keep the “stars” of high-end work.

Most regional firms do “important” work. This work involves complex issues. But, unlike high end-work, there are many experienced attorneys who have the required knowledge to resolve important client issues. Clients with important work, have many attorneys to choose from which results in lots of competition between lawyers and law firms. “Commodity “work involves situations where the knowledge base required to resolve client issues is not complex (at least from the clients' perspective). This kind of work often has lower margins due to the vast amount of firms available to do the work.

Client-focused Leadership

Successful leaders of regional firms create client focused strategies for helping their firms win and keep clients with “important work” by systematically knowing what these clients want and creating structures, practices, training and rewards for “super satisfying” them. They initiate client information gathering strategies, including client satisfaction interviews, end of matters interviews, client forums, and client panels.

Information about clients shape the development of structures best suited for exceeding client expectations. These structures usually involve teams that mirror client needs. For example, key client teams are created across practice groups for providing, coordinating and growing the work from key clients. Attorneys receive client service and team skills training and are rewarded not only by individual achievement but also by team success.

Clients are viewed as clients of the firm where it is everyone's duty to service the client well. If the firm does not support an “all clients are firm clients” culture, the leadership is not supporting a client focus but an individual lawyer focus. This focus does not support a “rising tide floats all boats” environment. It could be time to think about shifting the focus away from individual rewards and supporting a team reward culture.

Teams

Developing effective teams at all levels of the firm is the hallmark of enterprise leaders. The management team is created to mirror the beliefs and values of the firm and of the leader. The management team is led by the leader, and each member has responsibility within specific management areas such as marketing, governance and firm administration. They act as a team. There is agreeing on specific projects that each member initiatives and oversees. There is support and constructive criticism and each team member is held accountable for his or her actions.

Practice groups, key client teams, industry teams are real and functioning groups that make and carry out plans, receive and send information to the management team and other parts of the firm. Team member accountability is the norm. The enterprise leader supports teams by leading the firm's team development culture, rewarding positive team member behaviors and team outcomes and dealing with negative performance of teams and team members.

Leadership Characteristics and Personal Traits

Problem solving orientation

Problems and difficulties are common to all firms. The critical factor is the leader's attitude towards difficulties. The enterprise leader has a problem-solving attitude. Leadership involves making hard decisions. Conflicts and problems are expected as challenges to be managed with actions and values that give the message that management is in charge, problem areas are recognized and decisions will be made.

The leader also provides actions, which reflect integrity. There are political realities but the values are not compromised. For example, when an eight hundred pound gorilla over steps the behavior norms of the firm, that person is told to reform and act appropriately or face sanctioning. Leaders in this role must be change agents and keep the best interests of the firm in front at all times.

Power

Power is the ability to do things effectively. The enterprise leader is comfortable with power and uses it to focus the firm on making the changes internally to meet and capitalize on the changes in the marketplace. For example, effective leaders advocate the development of ancillary businesses from consulting activities to the development of non-legal products to increase the competitiveness and the profitability of their firm. They support the retraining of attorneys in unprofitable practice areas, go head to head with competition from accounting firms and focus the firm on new products and expanding into new geographic areas.

They understand the importance of running an efficient firm though instilling the importance of accountability. If the firm professionals and staff do not understand that they are held accountable for their actions, they can do things their own way.

Efficient firm management requires that people follow the rules and procedures developed to insure good practices. Continuing late billing, large discounting of bills, poor billable hours, failure to do agree business development activities, and circumventing intake policies all deal with directly and firmly.

Conclusion

In summary, informed, skilled, strong leaders are required to help shift firms from an internal perspective to a culture that focuses on the external – the clients. Modeling strong behavioral traits that build a culture of trust and respect is critical to the survival of all firms and in particular, the mid-size or regional firms. Making some tough decisions will undoubtedly help the firm survive and grow and reap the rewards of profitable client relationships.

Harry Keshet, Ph.D., is a legal firm consultant and business development coach with Law Practice Consultants (www.lawpracticeconsultants.com). Silvia L. Coulter is Editor-in-Chief of LFP&BR, as well as the former CMO of two Global 100 firms. She is the managing partner of Coulter Consulting Group, and the President of the Legal Sales and Service Organization (www.legalsales.org). She may be reached at 617-726-1500.