“A goal without a plan is just a wish.”
— Antoine de Saint-Exupéry
NEW YORK — What do law firms mean by strategy?
All law firms claim to have it, of course. Indeed, without a sustainable business strategy dictating how they operate in the market, law firms would have a difficult time surviving. Yet, too many firms seem to take their strategy for granted, often unable to even articulate what the firm’s current and future plans entail if called upon to do so.
A recent panel at the Legal Executive Institute’s 18th Annual Law Firm COO & CFO Forum took up this question, examining why law firms may have such a difficult time with it and how firms can approach the question of strategy more proactively and successfully.
First, devising, implementing and executing a business strategy for a law firm is difficult, chiefly because the concept seems a bit overwhelming even as firm leaders recognized its importance. (In fact, one panelist compared how law firms look at strategy to how cows look at a new gate blocking their path. They understand its significance to their lives, but they don’t really know how to deal with it.)
Panelist Arthur Armstrong, Executive Director at Debevoise & Plimpton, admitted that formulating business strategy may be harder than it looks for law firms because firms have multiple owners attempting to forge a singular direction.
“Strategy is about choices, where to invest, what to pay attention to, and where to devote resources.”
The panel outlined three key questions that firms need to ask themselves as they formulate a business strategy: i) what are the firm’s goals and ambitions? ii) where does the firm want to play? and iii) how does the firm want to play? In each of these questions, of course, there is a veritable decision-tree of options. For example, in deciding where to play, a firm would have to consider issues of industry sectors, practice areas, geographic markets; and the question of how to play would bring up issues of planning, accountability, staffing, and internal communication.
“Strategy is about choices, where to invest, what to pay attention to, and where to devote resources,” Armstrong said.
An Exercise in Self-Examination
Those law firms that feel they may be lacking in the strategy department can begin the formulation process relatively easily, the panel suggested. It just takes some firm-wide introspection. Another panelist, Sally King, Chief Operating Officer at Patterson Belknap Webb & Tyler, said it may be as simple as conducting a good self-analysis. “Look in the mirror and see who you really are, what your strengths and weaknesses are, and where you want to be,” King said.
While this self-exam is a crucial first step, too often that’s where a firm’s commitment ends, observed panelist Meagan Newman, Chief Operations Officer at Bartlit Beck. “It’s important to know who you are — to understand your clients, your culture, and your business model. That is the foundation, but how to get there is often the hardest part to address,” Newman added.
How to Get There
Once the self-examination is underway, it’s critical that several issues are addressed immediately, such as how the strategy will be internally communicated, who will be involved internally in forming this strategy, and how the implementation process will go forward.
Another panelist, Mark Flanagan, Chief Operating Officer and Partner at Dentons, said that how the strategic plan is communicated internally, how investment decisions are made with the plan in mind, and how the firm’s practices are aligned to the plan are all critical questions, as well as — perhaps most importantly — how the firm will convey this new strategic message to clients and the market via branding.
“Too often when big questions of a firm’s strategic direction come up, the client’s voice gets missed,” noted Patterson Belknap’s King. “Forming a singular voice of the firm around brand, culture, and values is very important to clients.”
One way to make sure all those questions get addressed, Flanagan said, is to continually ask yourself why the firm is doing something. At Dentons, for example, Flanagan says the firm’s strategy centers on scale, innovation and connectivity. Thus, all the firm’s decisions around investment, branding, staffing, practice management, and other areas revolve around those three imperatives, he explained.
Indeed, deciding any of these questions — such as who within the firm will be tasked to formulate and implement a new strategy — is challenging and need to be carefully addressed, the panel agreed.
“It’s important to know who you are — to understand your clients, your culture, and your business model.”
“Each person involved should have a clear role,” said Steven Petrie, Chief Operating Officer for the Americas at White & Case. “Firms need to navigate this issue based on their unique cultures, and they must consider the delicate balance between efficiency and consensus.”
Most panelists agreed, but noted that it’s vital to have people behind any strategy initiative if it is going to succeed. “You have to get buy-in,” one panelist said. “All people must be made to feel part of the process so they will become ambassadors for your firm.”
Implementation & Execution
If there was one area the panel was in full agreement on in the complex methodology of strategy formation, it was that once implemented, the strategy needs to be continually measured and evaluated to make sure it is doing what the firm’s strategists had envisioned it would.
“It’s critical to measure progress on the strategy and gauge whether an experiment is successful or unsuccessful,” noted Debevoise’s Armstrong. “Such progress reports can be encouraging and very helpful the next time around.”
Several panelists also cautioned against using strictly financial metrics to study the success of any strategy, suggesting instead that firms look at client-facing measures like the number of informal visits, collaborative opportunities (around CLEs, for example), and where and through what is revenue most robustly flowing. Also, client performance data itself is valuable as well as asking practice groups what they’re doing in areas of client support, panelists said.
While all these considerations may seem daunting, they are crucial to the successful formation, implementation and execution of a law firm strategy. Without these steps, law firms will find themselves no different from the cow, staring at the new gate that’s blocking its path.