Leading Through the Economic Storm
In their recent report “No Chicken Little, The Sky Is Not Falling,” John S. Smock, John W. Sterling and Peter A. Giuliani consider the near- and longer-term future of the legal marketplace—and strategies for firms to implement in response. Here’s their essential advice for leaders.
It takes a steady hand to lead a firm when there is change and turmoil on so many fronts. In addition to the increasing complexity of law as a business, we are facing economic uncertainty, disruptive local and global events, and new leadership in Washington, D.C. The ability to understand the impact on your practice—and change or steady the course as needed—is a critical component of the law firm leader’s role. So what’s a firm leader to do? Here are six key ways to stay strong despite the economic storm and ready your firm to grab new opportunities—because, yes, there is plenty of good news for law firms.
■ Recommit to effective management at firm and practice levels. The evolution that’s been under way at many firms to get to good management practices must be stepped up to a revolution. Many firms still sub-optimize their management effectiveness. The marketplace will not allow it now or in the future.
■ Focus on executing the strategic plan. That is, do what you said you were going to do and be who you intend to be. A down economy gives a strategically focused firm an opportunity to dramatically improve its position, increase the bonds between the firm and its people and attract people who fit with the firm’s direction. Abandoning the strategy and hunkering down until the storm passes is not the way to deal with this marketplace.
■ Cull the practices. Now is the time to ensure that the firm’s complement of practices is the complement the firm believes it needs to be successful, now and, very importantly, in the future. This does not mean getting rid of the less-than-profitable practices and only keeping the more profitable ones. It means making conscious decisions about which practices fit the firm’s strategy and will be necessary to meet the needs of the clients it serves and desires to serve in the future. Carrying a non-strategic, underperforming practice serves little purpose in the present economy and could be truly damaging.
■ Cull the people. Many firms have underproductive partners and associates who drain resources from what the firm is trying to do and whom it is trying to reward. Now is the time to make those tough but essential decisions about people. Remember, every dollar paid to an unproductive partner above what he or she is worth is a dollar not paid to the productive ones.
Fix the compensation process. You need to ensure that you reward what’s
important to the firm’s survival and prosperity. Associate compensation needs to
be changed to reflect varying performance and get out of the socialistic/lockstep environment that currently exists. Partner compensation should also be reviewed and,
if needed, adjusted.
■ Increase marketing and business development. Marketing in law firms is too often seen as a cost rather than an investment, and when results do not meet expectations, marketing is cut. But in downtimes, effective marketing is even more important than in
the good times. Cutting or gutting the marketing program not only won’t work, but it may accelerate downward trends.
About the Authors
John Smock, John Sterling and Peter Giuliani are partners in Smock Sterling Strategic Management Consultants. To read their full report, visit www.smocksterling.com.