Let’s consider a hypothetical. You and two colleagues hit the markers of success in BigLaw and, by all accounts, were on the road to success. You watched people you liked come and go, and from your junior ranks. Some of the decisions made by leadership were a mystery. After countless conversations, the three of you decided to leave and set up a boutique firm with the goal of aligning the values of your new firm with the life you wanted to live and the work you aspired to do.
You set out to do work you enjoy for clients you respect, and you wished to leverage technology to limit your work hours so that you could have a life. Before you knew it, you were successful in both the competition for clients and for talent. Clients appreciated your creativity and fresh approach. Talent sought you out to the point that your recruiting budget involved coffee, smoothies or yoga classes.
Your business has grown such that you need to make decisions about technology platforms, from artificial intelligence to blockchain, from accounting information (to inform your decisions) to streamlining your client information. These are expensive decisions intended to meet your ever-growing needs, and you are all feeling the pressure to get it right.
Your equal division structure is under some pressure, and the talent you hired in your second year is itching to join the partnership ranks. As soon as another person comes into the partnership, it will change the dynamic, and you all feel like victims of your own success.
BigLaw has been following your progress. A couple of BigLaw firms, including the one you left, have approached to get you and your innovative approach under its umbrella.
You Are Here
What are the questions on the table in your firm? First, what is impacting the strategic issues—generating revenue, retaining and growing the client base, your professional talent—and what is impacting your firm’s reputation and market position? Secondly, what are your management issues—solutions, technology and financial?
Third, what do you need to continue as the small firm you created? What are its advantages and disadvantages? What are the capital requirements, and do you have the financial resources to continue on your current path?
Finally, if considering a merger, a combination or some alternative structure, what must you consider? How do you surface and organize the questions in the minds and hearts of all your people?
How Might You Frame Your Future?
Begin by looking in the mirror. If you were a stock, would you buy, hold or sell? Consider the following:
- What are your most critical issues—the firm, practice groups or clients?
- What is your financial, cultural and talent profile?
- What are your organizational structure, technology platforms and unique solutions?
- What do you want to achieve?
- Who will be consulted? Who will be involved? What will the approval process be?
- Consider your internal bias in attempting to answer these questions and create both an accurate and compelling profile of your firm, what it has to offer and what you are looking for. What might you need to tidy up before you step out from behind the mirror?
Understanding Your Priorities
Individual lawyers faced with a transition are encouraged to review a list of priorities that professionals typically consider when presented with an opportunity. Things such as location, values and culture, the nature of the work, the pay and future earning or growth potential, to name a few, would be on such a list. Then consider, define and sort these priorities into deal breakers, nice-to-haves and trade-offs. By doing this, individuals guard against chasing every opportunity but rather triage them and negate those that don’t fit their priorities before they even apply.
It might behoove you to identify, define and sort your firm’s priorities and create a framework for considering potential opportunities and making decisions. This framework will allow you to be proactive rather than reactive. Reacting to opportunities brought to the firm consumes resources, time and emotional energy that take you away from client, firm and people leadership. In short, they are a distraction you don’t need.
Protecting Your Reputation
Once the firm has created a compelling situational report on where you are and what you are trying to achieve, and then considered what’s important, contemplate how to protect the firm’s reputation and yours as a leader. If not done well, you can end up losing your leadership role within your own firm and impacting your reputation and the firm’s. The after-market job opportunities for law firm leaders is very shallow.
When you are interested in further discussions with others—individuals, groups or prospective merger partners—consider the timing and importance of a confidentiality agreement that will guide your communications and framework for exploration, discussion, negotiation and decision making.
With a confidentiality agreement in place, you can then go further into the tall grass of making informed decisions. Items might include, but wouldn’t be limited to, the following:
- clients and conflicts;
- outstanding disciplinary matters;
- financial data, namely, clients by revenue, billings, partner incomes, salary grids and financial commitments;
- the structure of the firm, i.e., the partnership structure, levels and agreements;
- compensation, including the partner compensation system, current incomes and salary grids;
- practice management, including work in progress, accounts receivable and workflow;
- and the cultural inventory.
An exhaustive list of information is easily sourced and will help you to understand a clearer picture of your own firm—remember, the firm you started and built to align with your values—and how to analyze firms that might want you to join them. Do the analysis before you begin so that you feel like you are always in the driver’s seat
For our purposes, assume that you have several viable paths forward. You’ll need to assess the options, identify red flags and map out potential action steps. At some point you and your partners will need to consider two viable options. Perhaps looking back at the Taking the Lead column titled “Balancing Opposing Views” in the January/February 2017 issue of this magazine will help you at this juncture.
If you find yourself in a situation where you need to make a change to strengthen your firm, bolster its reputation and secure the future runway for your clients and your people, clarify the questions before the house, understand your priorities and the framework you will use for adjudicating opportunities and making informed decisions, and then you will be armed to consider your future. But remember, hope is not a strategy.