The past year saw weakening business conditions and challenging financial markets. For most law firms, transactional business was soft but was offset by strong litigation and bankruptcy work. Firms that have not changed with the times continue to implode-yet the strongest, best-managed firms continue to grow stronger. What can you learn from these leaders to put your own firm on a sounder footing?
Tending to the basics. Successful firms will continue to be more successful because they pay attention to the basics. Specifically, the foundation of these firms' business is secure, allowing their practices to keep flourishing. Importantly, they are constantly controlling costs such as lawyer payrolls, leases, administrative staff and costs of capital. At the same time, they are attentive to the human issues affecting their personnel.
Constantly assessing needs. Successful firms do regular internal assessments, continually matching their business base with the resources of the firm. They ask themselves if they have the right number of lawyers who have the right skills to be handling client needs. In addition, they provide adequate support staff to match the lawyers' needs. Quietly, some firms are reducing the number of lawyers and administrative staff, to compensate for the current slowdown and to decrease overhead. They know, however, that it is important not to eliminate people who will be needed later, when business improves. Some leaders are putting transactional lawyers to work in the still-strong areas of workouts, bankruptcies and litigation.
What should you be doing differently? If you are suffering from substandard profits per partner, or your firm is showing signs of weakness, you must take action. You can start by toughening up your management. You may need to do some housecleaning or retool existing lawyers into stronger niche practices. Or you might consider adding lateral hires to enhance the skill set and experience of your lawyer staff. It may behoove you to revise your firm's strategic plan and build up the strength of different practice areas. Most importantly, keep your eye on the business of the law firm and stay focused. And be vigilant about managing the following areas, which can sometimes fall by the wayside:
- Actively manage billings. Daily time entry and prompt billing are optimal.
- Aggressively collect for work on a monthly basis. Don't wait until December to collect your bills.
- Expand existing relationships and encourage cross-selling with clients.
- Don't overlook the human side of the practice of law. Communicate with your lawyers and staff on a regular basis-not just during crises. Put simply, your people want to be appreciated and respected.
- If more resources are needed, increase lateral hirings -especially if your firm enjoys high profits per partner.
- Set and maintain specific levels of productivity for everyone. And have the tools necessary to measure those levels.
- Make sure your credit lines are intact and keep your bankers informed about your business. They need to have faith in the financial credibility of your firm.
- Respect the status quo. Be cautious about major decisions (new leases, binge hiring, M&As and so forth).
- Don't get complacent about monitoring your firm's business, even if you have had a year filled with successes.
- Keep your outlook positive and your eyes open for new opportunities.
You and your partners should take the time to adequately address these issues and find ways to ensure the strength of your business. Your approach to management will differ based on your firm's size and specialties. But the underlying principles of managing a successful firm are the same for all. Find a solution that works for your firm and stick with it.
Todd S. Lundy ( email@example.com) is Managing Director of Litigation Services in the Chicago office of American Express Tax and Business Services and a member of the national Firm Consulting group.
Donelle K. Duvall ( firstname.lastname@example.org) is Marketing Manager in the Chicago office of American Express Tax and Business Services.