By William G. Johnston

W. Johnston Associates, Inc.

Earlier this year, I wrote an article* that focused on some key characteristics of successful law firms.  Two of the topic areas – having an external focus and partner willingness to invest – relate clearly to strategic positioning and are essential drivers of long-term, competitive advantage.  So, it is not surprising that law firms spend many hours and significant dollars developing externally focused, long-term strategies geared toward achieving greater success.  Unfortunately, much of this effort and expenditure results in strategies that ultimately fail to launch.  In an attempt to change this dynamic, I think it is worth spending a bit of time considering effective strategies and, as important, best practices in implementation.

As a starting point, effective, firm-wide strategies should reflect the aspirations of the partners.  This is not to imply that every partner must have the same goals.  Clearly, different individuals have different aspirations – and those can change during the course of a career.  That said, there should be significant common ground in the goals of the “partnership body” as a whole.  Firms comprised of partners who have similar views about things like desired client types and industries, geographic markets and service offerings are far more likely to have effectively implemented strategies than firms where partners operate individually and lack commonality on clients, industries, markets and services.  

Effective strategies require common goals. That seems reasonable and should be easy to accomplish, right?  Not exactly.  To reach a point of common goals, a successful firm makes hard choices and regularly says “no” to concepts and initiatives that are incompatible with or unrelated to the firm’s overall plan.  At the end of the day, if a firm is willing to do everything for everyone, it has no discernible strategy and a weak market position.  How well a firm manages the “no” discussion with those who may disagree with the decision can have a lasting impact on the firm’s ability to implement the final plan.   Unfortunately, some firms still take the “do anything” approach, often due to a lack of understanding of market dynamics, an unwillingness to tell a partner or a group of partners that the firm is not going to pursue an idea or because the firm is simply pursuing growth above all else.

Of course, strategic growth can be beneficial and, during the process of strategy development, firms often identify growth needs.  Most will be forced to consider the “build vs. buy” issue – should the firm pursue its strategy using existing talent or is it better to hire laterally (or even merge) and thereby shortcut the process?  As with most things, there are pros and cons to both.  Building organically an existing platform helps the firm preserve autonomy (particularly when compared to a merger) as well as control hiring standards and processes.  The drawbacks, which can be significant, include the fact that it could take years to develop the depth needed to achieve the strategic goal and current client needs may exceed the firm’s capabilities in the short-term.  Of course, as has been well documented, lateral success is hit or miss and pursuing growth via laterals or merger is also risky.  Given the number of lateral and merger discussions that take place and ultimately collapse, firms may choose to look there, but should assume they are on their own when it comes to developing the talent required to achieve strategic goals.  

In sum, effective strategies reflect the aspirations of the owners, are based on saying “no” more often than “yes” and, finally, rely on a cautious approach to growth.  A firm that sticks with these three attributes is typically a more cohesive, focused partnership that can truly succeed in its pursuit of market advantage.

Once a firm defines its overall goals, the focus turns to implementation.  This is truly where the rubber meets the road and major obstacles may get in the way, including:

  • Ineffective Leadership – Some person or group needs to “own” the strategies and push them forward.  Choosing the wrong people to lead the implementation effort dooms most initiatives.
  • Insufficient Buy-In –  In order to implement effective strategies, partners have to buy-in to the message and the goals.  If they don’t buy-in, the effort will fail.
  • Resistance to Change – For some people, new or revised strategies can be both empowering and invigorating.  For others, they can be uncomfortable and even encourage sabotage.  Beyond communication and buy-in, the best way to overcome resistance to change is to ensure that every partner (in fact, every lawyer and employee) understands well where they fit into the strategies and how they can contribute to the firm’s success.  Having a clear sense of your important role in advancing the business can go a long way toward replacing resistance with assistance.
  • Short-Term Mentality – Generally, I recommend that firms create strategies that look out three years and roll forward as time passes.  Naturally, in a three-year plan, some successes may not be fully realized for years.  If partners are unwilling to commit to investing in initiatives that span multiple years, you probably need to question where they see themselves in the future.

Given the requirements for effective strategies and the obstacles described above, how do successful firms actually do it?  I believe there are a few key steps:

  1. Identify the fundamental drivers –  In essence, define clearly the target clients and industries, the service offerings and how services will be provided.  Regardless of firm size, failing to do this will result in a firm that looks like many others – essentially indistinguishable – and is forced to compete based on price, not value.  
  2. Institutionalize the strategies – Many law firms enjoy the benefits of having long-term clients who rely on the firm as much as the firm relies on the clients.  Your strategies should be treated much like you’d treat important clients – in successful firms, strategies and supporting initiatives are as important to the success of the firm as the most highly-regarded clients.
  3. Formalize planning and stress accountability – Firms often prepare interesting strategies, but fail to take the simple step of detailing what is required.  While it may not be necessary to detail, week-by-week, what is being done on implementation, it is important to define clearly “who will do what by when.”  Failing to take this step usually results in firms preparing strategies, everyone going back to work and then dusting off the plans a year later.
  4. Align internal systems – Quite simply, does the firm have the correct leadership, governance and operational structure/policies required to support effective implementation?  Are the proper people serving in the right places?  And, does the firm’s partner compensation system provide a means to reward those who help advance the firm’s efforts?  While it would be nice to believe that all partners are altruistic and simply work for the benefit of the greater good, we know that some people will only do something for something.  So, it is important to ensure that the firm’s performance management and compensation system supports strategy implementation.  If they don’t – for example, if a firm’s strategic goals require team-based business development, but its partner compensation system only rewards individual behavior – this misalignment will impair implementation.

Finally, successful firms maintain in-depth knowledge of the state of strategy implementation, are well aware of client and market dynamics and actively adjust strategies when needed.  For those firms struggling with strategy development or implementation, there are good lessons that can be taken from those firms who seem to have gotten it right.

* See “2017 Check-Up: Is Your Law Firm Positioned For Success?” Law360

William Johnston is founder and president of W. Johnston Associates, Inc., (www.wjohnstonassociates.com) a law firm management consulting firm. He can be reached at (203) 364-0293.

© 2016 W. Johnston Associates, Inc.