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Three Things to Think About Now as You Think About the Future
Law firm leaders and planners — indeed, all lawyers — are right to be concerned about the future of the legal profession. We can expect significant changes, powered by increasingly sophisticated client expectations and the more powerful service delivery capabilities of advanced technology, to redefine what a "law firm" will look like and how it will operate in the 2020s...
...which are only a few months away.
Why don’t they want to become partners?
This is not just something that we can blame on "the Millennials."
For the past 20 years, partners from law firms of all sizes, in almost every part of the world, frequently have told me that they can't understand why so many of their best associates and non-equity partners decline the offer of equity partnership.
“We have to get our house in order...”
Although rapidly-changing, intensely-competitive market dynamics will continue to shape the strategic context in which most law firms will operate in 2018, the new year is also proving to be internally challenging, especially for small and midsize firms.
We have noticed, beginning in the third quarter of 2017, a sharp increase in requests for advice and service with respect to three issues: partner compensation, governance, and succession planning.
The Value of Pessimism
Pessimism can be a valuable tool for getting things done.
The next time you say to a colleague, “Stop being so negative!” it might be helpful to make sure the benefit of their pessimistic thinking has been fully appreciated and used.
If it has, the better question is then, "How can we bring some balance to this discussion by using both pessimistic and optimistic thinking skills and behaviors?"
Are law firm “partners” obsolete?
In the past few weeks, I have enjoyed stimulating discussions with several Walker Clark clients about whether their law firms should have non-equity partners.
This subject leads to one basic question that has profound implications for many law firms today:
Should we have partners at all?
Confronting Cultural Realities
"Why don't we get the results we expect?"
This is a common frustration of many law firm partners and managers. One way partners can dramatically increase the likelihood of achieving satisfactory results is to incorporate cultural due diligence into their decisions and the execution of their strategic priorities and goals.
Should your law firm be thinking about alternative business structures?
The renewed interest in "alternative business structures" (ABS) is not something that applies only to the largest law firms. Given the right regulatory environment, client base, and practice areas, even small firms can realize substantial improvements in profitability and client satisfaction.
However, an ABS might not be right for every firm.
Are you a law firm or a condominium?
This is an important question, especially for small and midsize law firms that want to have a future.
Many smaller law firms are firms in name only. The partners share a common brand, office space, and expenses, but almost nothing else.
Beware consensus.
Do you and your partners pride yourselves on the fact that "as partners we never proceed unless we have consensus?"
Or that "we have voting rules but never need to use them, because we prefer to come to a consensus?"
So, what does this commitment to consensus actually say about your partners' decision making process, your professional and business culture, and the ability of your firm to adapt to, and respond rapidly and efficiently to, a changing business environment?
Surprisingly, very little and not what you might expect.
Too Many Good Ideas
A managing partner of a client law firm of Walker Clark recently told me, "The problem with our firm is that we have too many opportunities and too many good ideas. At the end of the day we are like dogs chasing our own tails."
This is a frequent phenomenon in successful law firms.
The Vortex Just Over the Horizon: Strategy, Succession, and Governance
Most of these firms are midsize firms (for their respective markets) that have enjoyed fast growth and financial success over the past 15 to 20 years. Their partners feel, with considerable justification, that they "are at the top of their games."
As these same partners look into the middle distance of 2020 to 2025, the most perceptive of them see serious problems ahead. Another of our clients recently referred to this as "our vortex — a place just over the horizon were several forces could come together in a way that could put in jeopardy everything that we have achieved and maybe even sink us."
The Succession Balance
First-generation law firms face a special challenge when planning and managing the transition of the firm from the founding partners to the "next generation.”
The Risks Within
The critical issues in a governance consultation can present themselves in many forms, such as: an outdated partnership agreement; a failure to think about succession until it is almost too late; disputes over compensation and the respective rights of partners; the absence of the flexible but reliable internal structures needed to manage change.
However, they almost all involve a profound need to identify and manage internal business risks, which are usually more dangerous than anything that the external market can throw at the firm.
What fuels your partnership: trust or suspicion?
Trust is one of the most prevalent governance challenges facing growing professional services firms today.
This is not just a "feel-good" issue or a matter of preserving an artificial collegiality that might have been more characteristic of small law firms one hundred years ago. The level of trust that exists among partners has a direct and measurable effect on the firm's business performance.
This post is not about the Chambers and Partners Awards for Excellence.
Like some of you, when I reviewed this year's short list for the Chambers and Partners Awards for Excellence for Latin America, at first I was a little surprised by some of the very good firms that were not finalists for these prestigious and coveted awards.
This post is not an attempt to debate or explain the short list selection criteria that the awards team at Chambers and Partners uses. Instead, I want to share two observations about the firms that did, and did not, make the list.
