Different Horses for Different Courses

As firms grow and evolve, strategic planning plays a role in maintaining prosperity

by Joel A. Rose

A firm in financial trouble that is struggling to pay its employees each week must focus on how to improve short-term financial performance. Once it restores financial stability, it can deal with its long-term goals.

A new firm must concern itself with facilities, equipment, internal systems and financial stability. Partners may have to work far harder than they would in an existing firm because they must spend inordinate amounts of time in making initial management decisions in addition to spending a lot of time on marketing, practicing law and getting paid. Once the firm is established, the partners can devote more of their energy planning for the future.

A firm that has been in existence for many years and undertakes strategic planning for the first time often must address internal issues that are obstacles in strategic planning.

These three examples show how strategic planning means different things to different firms at various stages of their growth and maturity.

The first step in planning is to ensure that the firm is well-managed. A well-managed firm that has experience in strategic planning generally has a well-defined vision that allows it to concentrate on verifying its direction and updating goals. Client service, practice expansion and marketing are the focus. A firm in this position can easily adapt its goals to address changes and trends in the marketplace. Take total quality management, for example. A well-managed firm can implement total quality management goals without having to engage in a time-consuming process to restructure the firm to get it done.

Strategic planning must have a practice focus. The partners have to understand what the law firm does best and why. Planning by law firms must be client-driven if it is to be effective. How well is the firm servicing clients currently? Are the quality of both the legal work and the service delivered satisfactory to clients? Does the firm have sufficient knowledge of the clients' businesses? Does the firm have sufficient knowledge of the clients' industries?

To place appropriate focus on client needs and satisfaction means you need to have input and feedback from the clients themselves. Increasingly, many law firms have retained our firm to conduct client satisfaction surveys to obtain this information, asking clients what they think, through personal interviews, written surveys or a combination of the two.

More law firms are using these tools to involve clients in their planning process. Getting feedback from clients is daunting to many lawyers who are afraid to open themselves up to criticism. As a result, they set goals in a vacuum. The goals may bear no relationship to client needs, which is a serious mistake. In fact, clients appreciate -- and often expect -- to be asked. Client feedback and an analysis of its client base will allow the firm to better understand its clients and answer questions essential to good planning, including:

  • Who are the firm's major clients and how are their businesses or industries changing? How will those changes impact the firm? How can the changes be turned into opportunities? If the changes are a threat, how can the firm best be insulated?
  • Is the firm too dependent on any client? Does the firm receive as much as 10 percent of its revenues from one client or as much as 30 to 35 percent from its top 10 clients? If so, what specific steps can the firm take to dilute this dependence?
  • Are the firm's practice areas susceptible to economic downturns or to legislative change? If so, is that practice so significant that an economic downturn or a legislative change would mean a large decrease in revenues? Is there a way to insulate against such a problem?
  • Are clients satisfied with the service they receive? If not, what specific aspects of service are they unhappy with? What can the firm do to correct the problems?
  • What other practice areas does the firm want and/or need to pursue in the future? Is there a particular area that could be cross-sold to existing clients?
  • What types of clients or industries will the firm attempt to represent in the future?
  • Does the firm need to increase its level of specialization in any current or potential practice areas? If so, what kinds of staffing changes (if any) will this require?
  • Who are the firm's major competitors? What advantages do those competitors have over the firm? What advantages or strengths does the firm have over its competitors? Is there anything, from the clients' perspective, that distinguishes the firm from the competition?
  • What are the firm's income goals and how will they be achieved?
  • What image or reputation does the firm have with its clients? With the general business community? What image or reputation does the firm want to project to its clients and prospects?
  • Is the firm satisfied with the commitment to, and progress in, its marketing efforts? What needs to be changed, and how should those changes be implemented or encouraged?

There are a number of keys to planning success.

Strong leadership is critical to successful implementation of a strategic plan to anticipate change; know what's going on in the marketplace; do what has to be done to take advantage of opportunities in the marketplace; ensure that the firm implements policies and procedures to respond to change; build consensus for changes that must be made; and motivate the firm's lawyers into doing what is necessary to prepare for the future.

The firm's infrastructure must support implementation of a plan. Partners must be committed to address problems and, in many instances, make significant changes. The management group must be accountable for development and implementation of a strategic vision and plan. All partners and associates must be involved. Professional guidance during the process can make the difference between success and failure. The professional can help the partners understand planning and can keep them focused and moving in the right direction. The process should include several meetings (perhaps involving an outside consultant) to agree on firm direction and develop specific goals and strategies. Not only must there be specific goals, but there must be specific action plans with assigned responsibilities and timetables. Partners must be held accountable for specific aspects of development and implementation.

A common institutional practice philosophy is essential: The firm comes first; and individual goals of partners are secondary to overall goals of the firm. Obviously, the marrying of these two philosophies is most desirable.

A strong administrative staff plays a significant role. No firm is too small for a professional non-lawyer administrator if the partners are willing to delegate appropriately. Planning must be viewed as a continuing process -- it never ends.

©1999-2017 Joel A. Rose & Associates