Last month, I blogged on the Challenges and Opportunities Facing Lawyers. This post is a follow up and it’s in two parts.

Part 1 today, emphasises the need for law firms to have a business plan, to have leadership at the top and my suggested health check questions.

Part 2 tomorrow, deals with the impact of the Internet, getting new clients, and whether the days of the hourly rate are over. It also deals with control and management, the changes that are happening right now and what the 21st Century Law Firm might look like. It also incorporates important points that came out at last year’s annual conference of the Institute of Financial and Legal Management (ILFM) at the Law Society in London. (view here)

I’m not a lawyer but one of my claims to fame was the time I spent as chairman of LawGroup UK in its early days. This article looks at what’s going on in the legal profession with the perspective on the UK but much of it reflects what’s going on elsewhere.

As with most professions, lawyers are facing considerable pressures and are likely to continue to experience on-going change over the coming years. Some firms are coping with this change better than others. Broadly, firms that are better managed and controlled will be among those likely to do better. But all of them need to look at the changing world that is swirling about them.

The last ten years have been a period of extraordinary change for law firms. The rapid growth of corporate law firms and the emergence of global mega-firms have combined to test the continued existence of the traditional partnership model of management. Successfully meeting the challenges of the new business environment is essential if law firms are to thrive. 

Strangely, so far as I am aware few, if any, law firms have a dedicated telesales and/or sales team. Even more worrying is that most firms, except perhaps the very large ones, have no departments dedicated to marketing, telesales, sales, IT or administration.

The Business Plan

businessplanLet’s look at your business plan. You don’t have one? Oh dear, that’s not a good sign. And as most business plans are more like a wish list than a proper plan, you may want to read Barry Gibbons’ book: If You Want to Make God Really Laugh Show Him Your Business Plan: 101 Universal Laws of Business.

It’s no laughing matter – to survive and prosper, your firm must:

  • Develop a clear, objective business plan
  • Have a management structure and systems to help you achieve it
  • Analyse your market position and agree an effective marketing plan
  • Put in place a fair partnership structure that encourages both younger and more senior partners alike

I strongly believe that law firms will benefit from a proper financial analysis of their financial results. The accounts you get are like the first 1/3rd of a film script. It sets the scene. The missing elements are the remaining two parts. The 2nd part is the in-depth analysis of the results, including benchmarking against firms of a similar size. And the 3rd part is a projection of where the firm is going. My company Bizezia will be launching ExtraMile and Extended reports and benchmarking for accountants to use with their clients, very shortly.

Frankly, if a firm of lawyers is not interested in analysing past financial performance and how it could be improved and strengthened, and assessing where the firm is going in the future, I’m pretty confident it will go nowhere and will likely wither and die.

In his brilliant book, “Managing the Professional Service Firm” 6, David Maister suggests questions for lawyers which will make most readers blush with embarrassment when they offer their answers. Maister should know what he is talking about: he is a leading authority on the management of professional service firms, working with many prominent firms in a broad spectrum of professions, including consulting, accounting, actuarial services, law, investment banking, executive search, advertising and public relations. I met him some years ago at a seminar. He is, I believe, an accountant.


The US management guru Dr Napoleon Hill asked several decades ago, the question – do you know the direction in which your firm should go?  He said: “If someone has definiteness of purpose as to the direction they want to go, they’ll have no difficulty in getting plenty of helpers to assist them along the way”.

Many managing partners play around with mission and vision statements. Unfortunately most of these turn out to be a muddled casserole of values, goals, purposes, philosophies, beliefs, aspirations, norms, strategies, practices and descriptions. They are usually boring, confusing, structurally unsound stream of words that evoke the response “true, but who cares?”  Building a visionary practice requires 1% vision and 99% alignment.  When you have supreme alignment, a visitor could drop in from outer space and know your vision from the operations and activities of the company without ever reading it on paper or meeting a single senior executive.

chessThe role of a managing partner in a legal practice varies from firm to firm and also with the size of the practice. In general though, the managing partner should be responsible for two main things:

  • Knowing the direction in which the practice should go; and
  • Knowing and planning how to get there.

A key element here is leadership (I blogged on this recently here and here). Many senior or managing partners in law firms have authority, but do they provide leadership and do they inspire? Colonel James Durrant III, from the US Air Force, provided the keynote address at a Law Society conference5. He defined leadership as: “The art and science of influencing and directing others so as to accomplish a common goal”. Colonel Durrant III went on to say that there are three types of people: those who make things happen; those who watch things happen; and finally, those who wonder what happened!

Health Check – Areas to consider

To help identify areas you may need to address, I have included some questions for law firms to consider:

  • Does the firm have a business plan?         
  • Does the firm have a budget?
  • How good is the firm’s management?
  • Is the firm “managed” or are the partners more concerned with admin?
  • Are regular partner meetings held?
    –       Is there an agenda?
    –       Are there minutes?    
  • How good is the firm’s management information? Are the management accounts easy to understand?  Do they highlight the main figures and any trends?
  • Does the firm have one partner who is responsible for financial management – a “Financial Management Partner”
  • What proportion of their annual CPD do partners devote to management training?          
  • Does the firm have a partnership/members agreement?
    –       Has it been signed?
    –       Does it need revision?
  • Are there clear rules for retirement and admission of new partners?        
  • Do the partners make adequate provision for their pensions?      
  • How would you assess the firm’s use of IT?
    –       Is there a case management system?
    –       Do you use e-mail as the preferred means of communication?
    –       Have you considered voice recognition?         
    –       Do you use social media, including blogging?
  • Does the firm have a marketing plan?
  • What is the state of the firm’s website? (Come on, be honest, does it need a face-lift?)  
  • How would you assess motivation among partners and staff?       
  • How good are the fee earners at billing and getting paid? 
  • How do you assess the firm’s debtors?
    –       Is adequate provision made for possible bad debts?
    –       If you had to provide a true and fair opinion on the debtors would you be happy with the amounts shown?
  • Does the firm have a qualified cashier (e.g. a member of the Institute of Legal Cashiers)?  If not, would he or she be willing to sit the exams, as a properly qualified cashier can help strengthen a firm’s financial control?
  • Do all fee earners record time?  Is the firm able to calculate a realistic WIP value?

Read part 2 for more about the impact of the Internet, getting new clients, and whether the days of the hourly rate are over. There will also be important points that came out at last year’s annual conference of the Institute of Financial and Legal Management (ILFM) at the Law Society in London.

Martin Pollins
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