Every law firm I have advised has really smart lawyers with great ideas about improving the business and moving their firms to the next level of profitability and performance. Discussions with firm leaders reveal no shortage of creative ideas and sound business strategies. So what prevents more firms from moving their practices to the next level? I have found that the most common barrier to greater success and more profit is that firms often lack what I have come to call the “Will to Act.”
Law firm partners are masters of identifying and discussing ad nauseam the factors and personalities that become barriers to achieving their business goals: partners who are coasting, highly paid partners with low productivity and no business development acumen, or, in some circumstances, lawyers with no practice who are doing downstream work or actively sabotaging firm efforts to increase profitability. Even firms with strong structures in place often lack the Will to Act and do the things that they know are essential to moving their firms to the next level.
Too many law firms acknowledge that there is not enough work for their present contingent of lawyers, but they lack the will to rightsize. Too many law firms permit underperforming partners or other senior lawyers to coast and to fail repeatedly to hit their firm’s productivity targets. Too many firms allow the same partners to ignore management injunctions to submit their time sheets; send out timely, accurate invoices; or collect aging outstanding receivables. These same firms routinely identify their internal issues at management and partner meetings, acknowledge the need to address their sagging profitability, express resolve to fix the problems, and then allow inertia or a fear of tackling the hard problems to allow their challenges to persist. To quote Dale Carnegie: “Knowledge isn’t power until it is applied.”
So, what to do? In advising firms who lack the Will to Act, I have shared some suggestions for converting their ideas to action. Here are some things that can advance the ball:
Acknowledge the Problem
Perhaps the hardest step in this process is acknowledging that there is a problem—not just a partner performance problem, but a management problem. Facing the fact that law firm management has permitted acknowledged problems to persist without correcting them is the first step to fixing the problems.
Set the Stage for a Productive Partnership
Most law firms struggle with partner management at some level. The concept of an ideal partnership, a collegial group of likeminded, talented equals, rests on the bedrock principle that each partner has a responsibility to act as an owner of the business. Equal treatment and pay requires equal effort and contribution. Once firm management allows chronic underperformers to continue underperforming with little or no consequences, the message is out that the management lacks the will to ensure a hardworking, productive partnership.
Lead by Example
Managing partners should lead by example. If the firm is serious about performance, management needs to set the tone by providing a positive role model for hard work and commitment to the firm and its interests. Nothing undermines a hardworking partnership more than managers who are not making a full commitment.
Make Your Message Clear, and Communicate It Often
Firm leaders with vision and a clear strategy for success are the most successful in achieving their goals. Vision comes first. Firm leaders can easily get lost in the weeds of granular management of details. Managing partners with a vision of a superior business model for their firms need to develop motivational messaging of their vision, and describe it clearly and often. Firms that get better are directed by managing partners who have a path to the next level of performance and communicate it effectively and repeatedly.
Don’t Tackle Every Problem. Select Two or Three, and Get the Job Done
I have personal experience with leaders who see every problem that the firm faces and try to solve them all at once. The result, inevitably, is confusion and failure. My advice to everyone in law firm management is based on lessons I learned managing a global practice group for 12 years: Pick two or three achievable goals each year. They should be goals that are feasible and not impossible to reach with some effort in a set time. If the partners recognize that you announce a few important goals each year and actually meet them, your management credibility will increase, and you will get more buy-in for changes each year.
Get Buy-In From Your Thought Leaders
A clear vision, a plan of action, and two or three set goals is the start of a campaign to move the needle in your firm, but partner buy-in is essential. Communicate your vision in person at partner lunches, weave your message into your addresses to the partners, and, most importantly, explain how it benefits EVERYONE. Before embarking on executing plans that might result in separating some partners, rightsizing practices, and enforcing fiscal hygiene for recalcitrant partners, it is critical to bring your message to firm thought leaders and explain clearly the benefits of taking the nasty medicine. A rising tide truly lifts all boats, but telling a compelling story of what the improved firm will look like and how the partnership will be strengthened and improved after the hard things are done is critical.
Be Determined to Do Some Hard Things
No one is suggesting that asking a partner with 20 years at the firm to step it up, work harder, develop more business, or face a compensation reduction is easy. However, I lived through the experience at a large, global firm, and the result was truly transformative. After announcing the goal of raising profitability, then articulating a vision of what the firm could be in terms of having better work and putting the firm on a sounder business base, the chair proceeded to get buy-in from firm thought leaders on the steps to get there. Encouraging a harder-working partnership, rightsizing some practices, and putting commonsense practices in place to ensure that partners billed their time, sent out timely invoices, and collected their receivables resulted in a dramatic increase in the firm’s net profits and more money in the partners’ final allocations in a matter of two or three years. The result motivated the partners to support continued efforts.
Align Partner Compensation With Your Strategies
I have written in the past on the need for law firms to develop a partner compensation program that will ensure that the right behaviors are rewarded and that bad behaviors are discouraged. To ensure that a law firm’s strategies are implemented, they must be supported by a partner compensation program that aligns their strategies with the allocation of the firm’s profits. Partners who are coasting need to be told that their refusal or inability to become more productive will be reflected in a reduction in their compensation, and then it actually needs to happen—simple as that. Partners who get the message, increase their practice, show initiative and leadership in developing and doing more work need to be rewarded, even at the expense of more senior partners whose longevity has resulted in income levels above their level of effort. In short, the resolve and the ability to act when it comes to deciding how to allocate profits is the measure of a law firm determined to show that it has the Will to Act.
Form a Resolve to Act, and Hold People Accountable
Inertia is one of the primary forces that can sabotage performance goals in law firms. Partners leave meetings feeling good about the identification and discussion of the problems that plague their firms. They return to their desks, get busy, and little or nothing is done until the next meeting. This cycle is pretty typical at the highest levels of many firms. There is a solution. At the close of the meeting, decide on the two or three things that must be addressed. Write them down, decide on the steps to correct the problems, and then, most importantly, write down the name or the names of the persons who will be responsible for getting the job done, and dates for status reports and final resolution. Then follow up, hold those people accountable, and pay them if they do what they promised to do. Actions speak louder than words. Lawyers are wordsmiths by training and often brilliant at analyzing problems. What is needed to get things done in a business is not just spotting the issues, but the Will to Act and the resolve to follow up to ensure that the law firm’s goals are accomplished.
Law firms that are unable or unwilling to take the steps they acknowledge are needed to be more successful and profitable are gambling with their future. Law firm managers who continue to bury their heads in the sand and take the easy road, may find their partners will seek others to provide the kind of leadership necessary to insure they can continue to thrive in an intensely competitive marketplace.
Before joining Bernero & Press last year, Jim Pagliaro was a litigation partner at Morgan Lewis where he served as Managing Partner for Client Relations and the firm’s first leader of its Global Litigation Practice
(A version of this essay appeared on Bloomberg Law’s Big Law Business )