02 May 2012

The way ahead for law firms

Greater challenges mean law firms need a new approach towards strategy and implementation. But what will that be? Belden Menkus and Marc Bartel discuss what needs to be done.

Redefining the approach

Law firms are headed into a time of greater strategic change and uncertainty than ever. Faced with these challenges many firms are likely to decide they need to do a better job of strategy – but may inadvertently end up using out of date and inappropriate strategy tools.  Are you unwittingly exposing your firm to the risk of using yesterday’s strategy tools for today’s very different strategic challenges?Given the degree of change ahead, law firms might be tempted to follow a well-trodden path, seeking to emulate the approach strategy consulting firms use for clients in other industries. It starts with a broad-ranging microeconomic analysis as a basis for identifying the “attractive” areas to be in.  This, in turn, is the key input to a plan that includes ways to enter and expand in the attractive areas and ways to get out of or reduce participation in the “unattractive” ones.  Once the plan is set, then it is time to engage employees in making it happen. 

Risk factors

First, you have to assume that the future can be interpreted  from the past - otherwise there’s very little to analyse. Building a strategy around trying to get positioned in the attractive parts of the market runs the real risk of a trying to be part of a gold-rush. Some of the reasons are obvious. New business models like Claims Direct, LawVest, and Lawyers on Demand are just some of the new entrants to the marketplace. Clients are proactively changing how they want to buy and use legal services. There is the  entry of players such as  BT Claims as well as the acquisition of law firms by differently funded players – from within and outside the legal field. With all these changes, it is  clear the future is going to be different from the past.   But determining in what way  is not easy.

Can you develop a plan?

Second, you have to assume you can develop a reliable plan – in other words that you can determine what it will take to get into a market you now want to be in, or to get out of ones you are no longer interested in.  In what’s likely to be a rapidly changing external environment, there’s every likelihood that assumptions about what will be needed to get into (or out of) any market are going to be somewhere between slightly off target to just plain wrong.  Even more, you have to assume that you can (and will) execute the plan: that you will take the actions in the plan and that these actions will have the intended effect.  Given the very limited time available to make any kind of change, and the extremely limited depth of skill in project management and change inside most law firms, those are fairly risky assumptions to make.

Motivating and meaning

Third, and most importantly, it leaves out the critical roles of motivation, meaning and purpose in making anything happen.  How do your employees (and partners) make sense of their situation? What really matters to them?  Why would they be willing to push beyond their previous limits? These are all key factors in making any strategy a success – so much so that leaving them to be addressed once your plan is set surely can’t be the best way.This indictment of traditional approaches to strategy and planning might resonate with you, and yet still leave you thinking there’s no alternative. Not true.There’s a different approach that is increasingly being used by firms facing rapidly changing and uncertain situations – in areas like media, publishing, financial services, and business services. 

The alternative approach

You start by asking leaders across your firm to clarify what really matters to them. (Cynics may say it’s only money - which may be the case for some.  For most, however, there are other things which matter as much or even more so such as reputation, creating an enduring legacy, solving problems nobody else can, providing a great service).  You might not be certain about what the future holds, but you can be clear about what you stand for as individuals and as a firm. 

Get clear on your business model

The next stage is to design a way to deliver what you stand for. Generally, that means you need to define a new business model.  In simple terms, it is  how you convert the things you buy (which for law firms is mostly people’s time) into what you sell (which has generally been people’s time), so that what you sell is more valuable than all the things you have to buy.  Getting clear on your business model forces you to answer questions like: What do we want to sell, to whom?  How do they want to buy this and what are they likely to pay? What will we need to be able to deliver what we’ve sold? How do we add value (training, technology, supervision, etc.) to our inputs to that what we will sell is worth more than what we paid for it?  Ideally, you develop this new business model in a way that involves leaders across the firm, so they feel it’s their model, not one developed by someone else and forced on them. 

Commitment management

The next stage is one of commitment management.  If you’ve helped leaders in your firm genuinely identify what matters to them, they should be willing  to make commitments to each other about results they will achieve and  happy to be held accountable for achieving them.  Performance management can shift from an awkward burden to a collective way to ensure we accomplish the things that really matter to us.

Note: this “commitment management” approach isn’t about giving out goals or an action plan.  It is  about asking leaders to display some fairly basic, yet critical, characteristics: standing for something, being realistic about what it will take to achieve it, having the courage to commit to something even when they aren’t certain how they will achieve it, and then having the integrity to do what they said they would.  (Obviously, if that is not the character of leaders in your firm, maybe you need to find some new leaders – otherwise failure is almost bound to happen.)

Traditional  strategy

The key difference between this new approach and the traditional “strategy consulting” one is that the answers are not imposed, but rather flow naturally out of real commitments that already exist in your firm.  Therefore, people commit more discretionary effort (creativity, inspiration, innovation, risk taking, intuition, plain hard work). As a result you will be able to respond faster, more flexibility and more fully to the rapidly changing and unpredictable world you now face.  

Belden M Menkus is managing director of business strategy consultancy MenKus & Associates and  Marc Bartel is a management consultant with  Heidrick.


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