by Joel A. Rose

What is Strategic Planning?

A strategic plan is a clear statement of guiding principles, beliefs and overriding values that will direct the firm in the future. It is a clear delineation of who the partners of a law firm want to be, and the process to be followed to achieve these objectives.

The plan should include a clear resolution of important contradictions among and between partners, and address such items as:

-Will the firm be a "unified" law firm or a collection of solo practitioners?
-Should we emphasize providing superior service vs. being more pragmatic and emphasizing cost consciousness?
-Shall we strive to achieve uniformity vs. autonomy?
-Should we be more production oriented vs. people oriented?
-Should we emphasize business production vs. business origination?
-Will we emphasize profitable growth and investment in the future vs. current compensation?
-Why Engage in Strategic Planning?

Properly conceived and implemented, the strategic planning process, and its results will foster communication, provide partner input, and create a sense of ownership and common direction that will bind the firm, and help it withstand adversity, and to achieve longevity, and success. It builds "emotional and financial equity" among partners, as opposed to only financial equity.

Strategic planning allows firms to re-focus on team work and investment in the long-run, even though this investment can reduce short-run profit. The glue that holds the law firm together, never has been and never will be partner income. Instead, it is composed of the values and beliefs about client service held and followed by everyone in the firm, a clear and concise mission and direction, and goals that partners and employees understand and to which each partner is committed.

Lawyer managers in the better managed and more financially and professionally successful law firms recognize that their firms cannot build a long-term continuous stream of business in one year. No organization is static. Both internal and external forces change law firms. The following examples illustrate this point: Internal: The successful and profitable firm that fails to plan for the replacement of business generated by retiring rainmakers; External: The current recession, especially in transactional work, i.e., Mergers and Acquisitions, etc.

Law firms must grow (however defined) to improve position and retain viability: An important goal of long-range planning is to assure, as much as possible, that partner income will continue to rise at a pace equal to or better than the rate of inflation. But, growth must be managed so that success does not crush the organization. Strategic planning does not necessarily mean - how do we grow bigger? That may not be what is right for the firm, i.e., Brobeck, Phlager, since continuous issues affecting a law firm may change with growth.

Participation and Roles for Strategic Planning

Law firm managers must be committed to planning and execution. Without that commitment, no strategic plan will be successful. One of the crucial decisions that must be made in the planning process is whether to take a top-down approach or give more authority to various practice area and have them develop their strategic plans with the firms plan being the cumulative input from all of the various departments and offices.

The Managing Partner and Executive or Management Committee must set the tone and methodology of communication, inclusion, efficacy and input by all partners. They must review lessons of the past, lest mistakes of the past be repeated and decide on the result of the Strategic Planning Process, even if the goal is as simple as getting all partners together for a weekend Retreat for fun and interaction that reminds them why they are practicing law together.

The Department Heads and Practice Group Leaders provide the ultimate "sanity check" for the Managing Partner and Management Committee, i.e., are their broad goals and desired results realistic and achievable given the expertise, personnel, personalities and level of business in the firm? Further, they should offer more precise goal definition given their front line responsibility for, and knowledge of, the firm's practice and practicing lawyers.

All Partners will be responsible for contributing to the development and implementation of components of the implementation process.

How to Ensure Participation

Before the Retreat or Strategic Planning meetings, interview or survey all partners on the critical issues defined by the Executive Committee and Department Heads. Interviews or Surveys are best conducted by an independent, experienced law firm management consultant. Partners are more likely to "open up" to outside consultants during confidential interviews. Such interviews can advise the creation of an appropriate survey to propel the planning process into the directions that the partners of the firm consider advisable.

In larger and mid-sized law firms, interviews should be followed up with a survey to confirm the definition of critical issues and establish reportable and understandable data that will move the Retreat or Strategic Planning meeting into the desired direction in advance of those meetings. Moreover, interviews and surveys will eliminate or minimize wasteful pontificating at the Retreat or Strategic Planning meeting, and will focus the firm on the key issues for discussion and action.

Critical Elements to a Sound Strategic Plan

Partners must reach a consensus about the firm's (1) Culture; (2) Governance and Management for policy determination and implementation; (3) Compensation System; (4) Competitive Position; and (5) Plan of Attack, and each group's and each individual's role in the implementation effort.

1. Culture: Partners must define what is the firm now and what they want the firm to be within the next three to five years. They must assess those broad wealth, life, liberty and the pursuit of happiness issues.

2. Governance and Management: Partners must define how their firm is managed and how it should be managed. To achieve this consensus partners must determine what form of management best fits its culture, and will best achieve the partners' goals as in and through the strategic planning process. Also, they must agree upon their expectations of the various roles that law firm leaders will play and how their contributions will be measured.

3. Compensation: Partners must define the current compensation system and reach a consensus about whether it (a) reflects the defined culture and goals of the firm, (b) motivates and incentivizes partners to buy-in and to play their roles after the planning sessions, (c) will achieve group and personal reinforcement of expected behaviors, (d) will reward successful participation in implementing the firm's strategic plan and (e) will achieve results.

4. Competitive Position: Since a firm's competitive position represents its core strengths and competencies, and even, to some extent, its weaknesses. It answers the following questions: (a) Who are we? (b) What are we? (c)What makes us successful? (d) What inhibits further success? and (e)What should we do, and in what directions should we go?

Strategic planning requires assessment of core strengths and of weaknesses. The strategic plan must leverage strengths to exploit and profit from prior investment and established good will. At the same time, the strategic plan must identify those weaknesses in which the firm will invest, and those weaknesses which the firm will shed, in order to become more focused on its market position.

The plan must stress the importance of identifying core competencies in strategic planning. The more financially and professionally successful law firms have benefitted from the thoughtful and careful positioning of their firms in their marketplace. While firm's success may resulted initially from the energy, skill and reputations of the partners, at some point the firm should establish an identity which transcends the partners and attracts clients because of the firms special capabilities.

Quantitative and Qualitative Analysis

An examination of a firm's competitive position requires firms to conduct both quantitative and qualitative analysis. The quantitative analysis involves an examination of revenue at the firm level. Fees for the past several years should be collected, and arranged in the following ways:

Clients should be listed in descending order by order by fees collected.

Group engagements should be examined. For example, in an insurance defense firm, one grouping might consist of the dollars generated by coverage opinions.

Grouping clients by industry.

Grouping clients by geography.

Ranking clients by the size of entity.

Examining engagement by size (in fee dollars collected).

Ranking clients by billing rate.

Ranking clients by realization rate.

The foregoing are primarily financial questions, and define the firm's financial situation. The following quantitative issues are positioning questions:

Is the firm's client base diversified or dependent on a few clients?

Is the firm concentrated in one or a few particular industries or is it diversified? What are the future prospects for each industry?

Is the firm concentrated in one geographical area or dispersed?

Is the firm concentrated in one size client (or business vs individual)?

Is the firm performing a small volume of large-fee matters, or a large volume of small-fee matters?

Is the firm offering a full bundle of services to its clients, or just particular services?

What are the firm's trends in regards to profitability? Billing rates? Realization rates?

Are the firm clients sophisticated regarding the delivery of legal services?

What has the client turnover been in the last three years? Why have clients left? How does the firm obtain new work? Are those methods likely to be successful in the future?

What are the firm's service levels?

How does the firm's breadth and depth of expertise compare to its perceived competitors?

By assessing these attributes, the firm can determine its competitive position and determine where it has a competitive advantage, in which industries that it is most likely to obtain business, and in which geographic areas and what services the firm must offer. Most important, the firm will learn whether it is capable of offering the bundle of services needed to address its target market.

Plan of Attack: Positioning and Business Development Through Implementation of the Strategic Plan

Consistent with the definitions of culture, compensation and governance, and with established goals, the plan must:

Define expectations for group and individual behaviors.

Establish implementation systems that give constant feedback, that reward contribution, efforts, and results, and reinforce these expected behaviors and results.

Establish objective and measurable standards against which the firm can measure its progress and in interim and "final" basis.

Establish a culture of accountability achieved through the governance, management and compensation structures of the firm.

Identify trends.

Identify strengths - core business issues.
Firms should be the best at what they do, and should do what they are best at doing; and
"Many lawyers seem to feel that it is difficult to differentiate. Yet, they go about trying to differentiate themselves daily in their working activities." (Lundy article)

Identify targets consistent with the trends.  Set goals.

What strategies and tactics will lead to achievement of goals?

The below strategies illustrate representative strategic planning action plans:

Example: Environmental Practice Group
-Cost recovery actions
-Insurance coverage issues

-Real estate marketplace, professionals in the market, banks and business owners.
-Cost recovery plaintiffs with insurance policies.

-Get six new clients in these fields within six months.
-Increase billable hours associated with insurance cost recovery actions by 10% over last fiscal year.

Example: Capitalize on client-service strengths and eliminate client-service weaknesses.
Analysis: Our firm is dedicated to serving the best interests of its clients. The firm intends to heighten all employees' awareness that its business is dependent on its clients.

GOAL : Create an environment which stresses commitment to client service. Continually seek to improve the quality of client service.

A.         Objective: Seek to capitalize on client-service strengths and eliminate client-service weaknesses.

  1. Strategy: Develop new programs to improve existing high standards of client service.
    1. Tactic: Strengthen "O defect" call back program wherein all calls are returned as soon as possible but in no event after one business day.
    2. Tactic: Initiate "O defect" client response program pursuant to which all client concerns are addressed within one business day.

  2. Strategy: Become technically proficient so as to provide premier client service and internal operating efficiency.
    1. Tactic: Use Internet technology to enhance the service provided by the firm.
    2. Tactic: Develop systems to forge closer ties with clients via firm technology.
    3. Tactic: Use technology creatively in trials, hearings, and other public arenas to represent clients more effectively and successfully.
    4. Tactic: Train employees to utilize technology to increase the value of work for clients and to eliminate lower-billing, non-value-added and administrative activities.
    5. Tactic: Provide tools to enable employees to serve clients as efficiently and expeditiously as possible wherever the employee may be located, at as low a cost as possible.
    6. Tactic: Utilize all available methods of obtaining competitive intelligence, such as attendance at conferences and exhibitions, review of other law firms' initiatives, and analysis of initiatives in electronic commerce and client service in areas outside of the legal profession.

  3. Strategy: Provide employees with requisite technology to maximize client service and internal efficiency.
    1. Tactic: Develop and effectively utilize the firm's extensive data bases.
    2. Tactic: Train employees to effectively utilize the firm's extensive databases.
    3. Tactic: Promote "partnering" between all firm employees and IT department in developing new methods to deliver excellent client service; create an environment in which employees consider IT related solutions when confronted with client-related problems and needs.
    4. Tactic: Provide sufficient financial and staffing resources to enable exploration of evolving technologies and ways of doing business and to permit effective implementation of projects.

  4. Strategy: Annually develop a list of clients that will be included in the Key Client Program.
    1. Tactic: Differentiate the way the firm provides services to corporate counsel by promoting the Key Client Program.
      1. For each key client, assign a Relationship Principal (Account Executive) and initiate the following partnering concepts which are appropriate to each identified key client.
        1. Joint matter staffing;
        2. Joint training/CLE;
        3. Seminars and reverse seminars (repeat periodically);
        4. Technology integration such as e-mail, voicemail, case management, research resources, access to time/billing systems for their accounts;
        5. An annual plan of services to be provided (free of charge);
        6. Voluntary case/matter budgets to enable better projection of legal costs by the client;
        7. Rent-a-lawyer programs for finite client needs on a cost plus basis;
        8. Alternative pricing;
        9. Swap programs (trading lawyers, then trading back).
      2. Develop a long-term institutionalized relationship with corporate legal departments by including the firm's associates in the key client program.
      3. Prepare and distribute written description of the key client program as a supplement to the firm's marketing brochure and proposals.

  5. Strategy: Develop a plan to eliminate client-service weaknesses.
    1. Tactic: Discuss client service priorities at employee training sessions and meetings.
    2. Tactic: Administer client panels, user groups or reverse seminars with clients/prospects at least three times each year.
    3. Tactic: Conduct market penetration research to assist with the identification of industries to target as well as to ensure excellent service to current clients.
    4. Tactic: Focus on efficiency in delivering legal work product. Train timekeepers in appropriate time to devote to tasks and appropriate timekeeping methods to satisfy client billing requirements.
    5. Tactic: Involve principals in ongoing litigation training for associate attorneys.
    6. Tactic: Solicit client feedback on attorney quality and immediately follow up on valid client concerns.
    7. Tactic: Consider client service issues when developing team rotations. Balance professional development goals with client service.
    8. Tactic: Assess workload allocations and devote resources as appropriate to meet client service needs.
    9. Tactic: Conduct client service performance reviews. Involve clients in the review process and get feedback from them on team members.
      1. Conduct end-of-matter surveys.
      2. Conduct overall client satisfaction surveys.
      3. Senior principals will periodically visit clients at their places of business.

  6. Strategy: Identify those aspects of the practice for which traditional trial skills are vital and develop opportunities for lawyers to hone those skills.
    1. Tactic: Identify attorneys who are best suited by talent and inclination to serve as trial lawyers.
    2. Tactic: Train those attorneys in traditional trial skills by providing opportunities to try cases through trial academy, pro bono work, mock trails and other training vehicles.
    3. Tactic: Give those attorneys opportunities to work either directly or on a shared basis in substantive areas and on teams where work which leads to trials is more prevalent.

Strategic Plan Implementation

Accountability is an essential part of the strategic planning and implementation process. If the investment of time and effort needed to develop a plan strategic planning process is worth engaging in, then it is worth supervising and insuring successful achievement of goals. Therefore, the firm must assign someone with responsibility and authority to implement the strategic plan.

The strategic planning process requires the full and complete support of lawyer management at the highest levels. Below the firm level, firms increasingly are using plans at the practice group, departmental, and individual levels. It is clear that overall direction must come from the top - this is the long-term strategic plan. The implementation of plans, at the department, practice group, and individual levels, drive toward short and long-range goals that lead to achievement of the long range strategic plan targets.

Increasingly, firms are gauging in new business development practices through practice groups, which are now key to many firms' marketing strategies. If practice groups are not used, marketing is conducted by specific legal discipline.

A critical role in the implementation process calls for firm management to define, for each partner and group (a) Their role in the large firm picture, (b) What each partner promises to do, and (c)(And later) An assessment what each partner and practice group has done to implement the strategic plan. As an integral part of the implementation process, the author recommends that the firm's lawyer management conduct a quarterly review of the plan's implementation and that ultimate accountability be enacted through the compensation system.

Implementation of the strategic plan requires the same priority as client work, continuing reminders of the firm's culture and expectation, follow-up, reinforcement, publicity - internal and external - for efforts and especially results, measurement of results and an assessment of goal achievement at various stages, i.e., are we getting it done? If not, mid-course corrections. Finally, the system must offer appropriate rewards to those who successfully comply with the strategic planning process.

©1999-2017 Joel A. Rose & Associates