A key differentiator between a leader and a manager is the ability to set, and then
Setting The Vision
Numerous methodologies exist to help business leaders establish a strategic vision. Relatively few of them are written specifically for law or professional services firms, but the fundamentals are the same in any market and can be reduced to the following tenets: (1) understand your market, (2) understand your organization’s capabilities, (3) identify an unmet or underserved and ongoing market need and (4) devote your energy to uniquely and profitably meeting that market need.
Many law firm leaders have studied one or more of these methods for understanding a competitive marketplace, yet few have rigorously implemented a strategic framework to guide their firm forward. Some may have even dismissed these frameworks as ineffective or irrelevant to leading a law firm. They are wrong.
‘Too many law firm strategies are predicated on flawed or incomplete
A few years ago, when preparing to deliver a keynote address at a global partner retreat, I asked a newly elected BigLaw managing partner for the key tenets of his platform. He seemed puzzled by the question, so I rephrased it to ask him to identify the specific strategic vision that he conveyed to his colleagues and that led to his election over other suitable candidates. When prompted for an example, I offered a generic, “We’re a global law firm of thousands of lawyers with operations in every major financial center. But our size isn’t why we’re successful. Rather our key differentiation is meeting our client’s complex cross-border and domestic business and legal needs wherever and whenever they do business, and to do so with a consistent service posture and an in-depth understanding of their business needs no matter which lawyer or office they retain. If one of us in our network has specific expertise that will advance our clients’ business interests, all of us have access to that expertise, instantly and comprehensively.” This managing partner of a $1 billion annual revenue law firm sat back, whistled softly, and said, “That’s really good. Can you write that down so I can use it in my welcome remarks?”
I don’t know which was more disheartening: the fact that he didn’t have even an inkling of a strategic vision of his own or that he thought a generic strategic positioning statement equally applicable to all of his firm’s key competitors could somehow be a differentiating platform on which his tenure could be judged.
A recent Acritas-Tilt Institute study found that 80 percent of law firms’ competitive intelligence departments are more reactive than proactive, and more tactical than strategic. (“I need to know everything important about this potential client, condensed to one page, so I can read it in the taxi on the way to our pitch over lunch.”) The study goes on to say that only 8 percent of law firm leaders consider their competitive intelligence function to be highly effective in helping the firm make better, more informed decisions. And yet 82 percent of law firms have invested in competitive intelligence
Marcie Borgal Shunk, president and founder of the Tilt Institute, suggests, “Law firm leaders may be informed. They certainly have access to a lot of data. But they lack a strategic framework to guide them in taking action on this information. They also lack an understanding of change management principles and, in too many cases, a commitment to drive change.”
The first step in setting a strategic vision is to discard the notion that the analysis has to be perfect. Firm leaders may never know, explicitly and precisely, their competitors’ rates and cost structures, what the firm’s clients will next target for rate reductions, which new technologies are a threat to displace long-standing profitable services or how long it will take. But they can be better informed and take decisive action if they have at least some framework to guide their assessments and decisions.
An effective strategic vision must be grounded in data; it must balance current capabilities and competencies with incremental investment; it must provide clear and measurable differentiation, whether on product offerings, service delivery or price; and it must be grounded in economics.
Gone are the days where strategy meant seeking unsophisticated clients who hire brand-name firms and view high billing rates as a proxy for quality. The modern general counsel relies on legal operations and procurement professionals to become a more informed buyer and relies on a variety of providers based on business need, complexity and price. Jeffrey Carr, general counsel of Univar, describes ElevateNext, a groundbreaking alliance his company formed with Valorem Law and Elevate Services, “This is not about vendor management. It’s not about outsourcing. It’s not about insourcing. This is about a shared culture in the way you work. Frankly, it’s about bringing regular, normal, real-world discipline to ‘Law Land.’
Some law firm leaders may dismiss these trends because their particular practices or clients aren’t currently impacted. Every market has a handful of suppliers who are relatively immune from market forces, at least for a while. Leaders of these law firms can rest easy, content that their particular brand of stasis won’t be detrimental in the long run. Still, for those leaders who privately express a tiny shred of doubt as to the innate rightness and inevitability of their market standing, there are relevant lessons to be heeded.
Consider Eastman Kodak. As a native of Rochester, New York, I have great familiarity with its story and its precipitous decline. The conventional wisdom is that Kodak’s leaders were caught by surprise when print photography shifted to digital. In reality Kodak’s leaders were well aware of the changing landscape and, in fact, the company held a number of technology patents that catalyzed the market changes from film to digital. But management was not willing or able to make the necessary adjustments to its business because doing so would impair short-term earnings and displease institutional shareholders.
The Kodak lesson for leaders of the handful of globally dominant law firms is that no one has a right to the status quo. If a firm’s strategic vision places a higher value on harvesting short-term profits for aging senior partners over investing and retooling for the long haul, the market will inevitably and ruthlessly convert today’s market leaders into yesterday’s news.
So law firm leaders, rather than viewing the changing market as a challenge, have a compelling opportunity to identify where their firms can offer unique value, relying on deep subject matter expertise to find efficiencies in the delivery of legal services and generate profits from client retention and penetration rather than billing endless hours.
Selling the Vision
Lawyers tend to have a high preference for autonomy and skepticism, not the ideal audience for a law firm leader to announce a new strategic vision, especially one that may be disruptive or costly in the short term. So the first step in selling a strategic vision is to avoid selling it at all. Good leaders embrace an inclusive approach to driving change by incorporating internal stakeholder feedback. Law firm partners and the accomplished business professionals who support them are quite often aware of trends that, when aggregated with other observations and analysis, provide meaningful insight on notable challenges and opportunities, and, quite often, directional feedback on how best to proceed. Including stakeholders on an ongoing basis in the capture and synthesis of market trends means fewer surprises when results and subsequent actions plans are shared.
Some leaders might be tempted to develop future strategies among their C-level leadership, believing that it would clearly slow down the strategic planning process to interview numerous stakeholders,
Including other stakeholders isn’t the same as crowdsourcing a strategy. Not everyone has to have an equal voice, but the more voices heard, the higher the adoption rate. Including others doesn’t necessarily dilute the strategy. It may come as a surprise to some law firm leaders that stakeholders impacted by tough decisions are often the most vocal supporters, as their ringside seat has given them more time to come to terms with the changing market. They often know what’s coming and respect the tough decisions that must be made for the good of the enterprise. Leaders who implement tough decisions with compassion often find significant accretive value in sprinkling the market with alumni who maintain a fondness for the firm, a marked contrast to leaders who combine surprise announcements with midday escorts to the exits.
The most compelling rationale for a new strategic vision is, of course, economics. Ideally, leaders can clearly contrast the firm’s current financial trajectory with an improved trajectory resulting from adopting the new vision. It’s a serious misstep, however, to equate the strategic vision solely with economics. For example, “We will have 250 lawyers and $200 million in revenue by 2021” is not a strategy. It’s merely an aspiration. It provides no guidance to anyone as to what actions to take, or not to take, to achieve the strategic vision.
Nor can the vision focus solely on internal metrics. A vision of “We will increase our profit by 15 percent” is not an ideal headline to share with clients. The financials are the outcome of an effective strategic vision and a means of measuring progress.
It’s commonly understood that lawyers are resistant to change. This may be true. However, it’s more likely that lawyers are resistant to change that is not demonstrably better than their current path even when the current path is marked by uncertainty. The onus, therefore, is on leaders to articulate a vision rooted in improved financial fortunes. Few lawyers will reject a compelling opportunity to generate more income and create a more certain future even when it involves some discomfort.
It’s incumbent on law firm leaders to help all stakeholders—from partners to associates to business professionals to the most junior staffer—to visualize a better future so they know their role in achieving it. Some leaders help build a sense of community by identifying a common “enemy” (please don’t position the client as the enemy!) or by branding the new strategic vision (law firm 2022!), but whatever the tactic, it’s important to build a sense of common purpose.
Implementing the Vision
Many good strategies falter when coupled with ineffective execution. Since a good strategy isn’t developed independent of a firm’s resources and capabilities, understanding how to implement the plan should be an integral part of the planning process. The execution plan must have (1) a timeline, (2) financial and operational metrics, (3) a budget, (4) incentives, (5) internal and external communications plans and (6) regular checkpoints. Absent a comprehensive execution plan, the actions of management look like a game of Whac-a-Mole, where every new tactic, tool or administrative process looks to the stakeholders like management is flailing around aimlessly and recklessly.
It’s folly to underestimate the need for changed incentives as a catalyst to begin the process of change. Partners who are paid well to maintain the status quo will, not surprisingly, maintain the status quo. It would be too simple to characterize those partners as selfish when they pursue actions that are in their self-interest instead of pursuing actions that are in the firm’s best interests. Leaders who decry this behavior and who exhort partners to think of the firm miss a critical point: It’s the responsibility of leaders to align what’s good for the partners with what’s good for the partnership. Anything short of this is management malfeasance.
A strategic vision that requires new behaviors—examples might be pricing for profitability rather than simply to stay busy, staffing to keep prices down and generate profits from leverage rather than hoarding to prevent idle partners, embracing fee arrangements that improve client retention but decrease billable hours, launching a new practice or office that won’t be accretive for a couple of years, expanding cross-selling efforts, succession planning or a hundred other such tactics—must be accompanied by an assessment and possible reworking of the firm’s partner compensation plan.
An overlooked but critical ingredient for the successful execution of a new strategic vision is, unquestionably, delegation. The traditional—and generally ineffective—consensus-driven law firm culture is steadily shifting as partners cede authority to elected firm leaders and senior business professionals. For some firms, unfortunately, this manifests in a law firm leader who adopts a “directing” style, who feels the role of a leader is to make numerous, important, time-sensitive battlefield decisions on behalf of the firm. However, in management theory, such a role is roughly equivalent to the grocery store front-end manager who’s given the “special key” and tasked with constantly rushing between cash register tills to override cashier mistakes. At a recent conference, one managing partner of an 800-lawyer firm described with apparent pride how he responds to over 400 emails each and every day, making decisions from lateral hires to associate merit raises, from the formatting of an event invitation to which partners can use the firm’s sports arena box seats, and much more. This is tragically misguided.
Effective senior leaders establish the strategic vision and then empower managers to drive the implementation on a daily basis. The leader will, of course, participate in key operational decisions, but successful implementation requires the vision to be understood and then translated by line managers so every stakeholder knows his or her part. The leader, even one whose intentions are good and whose actions are benevolent, cannot and should not drive implementation of the plan across all levels of the organization. An organization with such a leadership model is unwisely sensitive to the whims of the next leader, and the firm will often lurch from one half-achieved strategic vision to another every time a new person occupies the corner office. Sustainable strategic visions survive leadership changes because they’re driven by a compensation plan that is aligned with the goals of the strategic vision rather than a dominant personality.
Of course, the effective implementation of a strategic vision requires competent management at all levels of the law firm. In many
Law firms routinely struggle with management succession planning. In large
A case study: A law firm struggling with leadership succession in one of its leading practices sought outside guidance. Upon investigation, the partners and associates were nearly unanimous in their dissatisfaction with the group’s top rainmaker, a senior and curmudgeonly lawyer who was known to hoard clients and credit. They were also nearly unanimous in their admiration for a young partner who was a competent lawyer but an even more capable client manager, team leader and confidante—and who was lauded for continually bringing out the best in others. Nevertheless, many felt that, as a top rainmaker, the senior partner deserved the honor of the practice leader role. Predictably, the executive committee appointed the rainmaker to the practice group leader position, and he accepted on the condition that only he would be authorized to decide how to dole out work assignments within the group. Not surprisingly, a number of promising junior partners fled to competing firms. This tragic result was entirely foreseeable and completely avoidable if management skill had been aligned with the desired outcome.
What Is Your Strategic Vision?
An effective strategic vision must be based on a comprehensive understanding of the markets in which the firm operates. It must include an honest appraisal of the firm’s capabilities and potential differentiators, if any, informed by internal stakeholder input. It must take into consideration what the market wants to buy and at what price, both today and
Setting and implementing a strategic vision is not easy, and it’s not for the faint of heart. Luckily, numerous resources, tools, advisors
The true test for any senior business leader applies to law firm leadership as well: If your ability to lead is based substantially on your relationship capital and your deep knowledge of the organization based on a long tenure, you have a good chance of being effective within your firm. However, if your leadership ability is measured by a recurring ability to understand and integrate external market forces with internal capabilities to develop a profitable and sustainable competitive advantage, you will assuredly be effective in any law firm.
When formulating a strategic vision, many variables are outside of the firm leader’s control. Factors well within the control of a firm’s leaders include identifying, grooming and promoting more qualified managers. Doing so will take time and investment, but the payoff is a more successful execution of the strategic vision. Now is the time for the true leaders to step forward and show us how it’s done.