SOLUTIONS
Applied Strategies works with small to medium-sized law firms to develop practical solutions in the following areas:
Strategic planning has reached legendary status as a joke in many firms. This scorn is not derived from the quality of the "paper plan," as many are strategically brilliant. Rather, the joke is directed at the continued inability to effectively execute those plans.
Many law firms have invested considerable time and resources on the quest for differentiation and competitive advantage. We believe that effective execution of your strategic plan can be a real competitive advantage to differentiate your firm from the competition.
Alignment in partnerships is one of the most challenging tasks that partners will face as they try to manage a law firm. But in order to effectively execute any plan – strategic or otherwise – there must be alignment between the plan and the firm's major structural components including:
- Governance structure and mandate
- Management structure and policies
- Compensation systems
- Performance management systems
- Partnership agreement
- Will of the partners
Our approach to achieving alignment starts with an overall review of the firm's strategic thinking. We are looking for clarity, simplicity, and realism to ensure alignment is even possible and that it will drive all of the other desired actions and initiatives.
Next, Applied Strategies will obtain an understanding of the major structural components from management's perspective, as well as that of those whose behaviour it is meant to direct. If there are differences in perspective, we develop solutions to reconcile those differences, in order to achieve internal alignment of these key structural components.
Only after internal alignment is achieved do we begin to work with our clients to develop tactics that will execute their strategies and play to the strengths of their key structural components.
Applied Strategies has the practical experience to assist our clients in achieving both the internal and external required degree of alignment.
Over the course of a law firm's existence, one or more of the following situations may be faced:
- Under-producing partners
- Downturn in the economy and profitability
- Egotism
- Bullying partners
- Lack of strategic focus
- Sliding bar of excellence
- Departure of key partners
These factors individually or in combination can create a crisis. The fact that the situation has been allowed to occur is less important than how the firm reacts to the situation. A timely and measured response is critical. Applied Strategies is experienced in both the development and execution of such responses.
Our approach to crisis management is straightforward and practical:
- We work with our clients to fully understand and assess the situation.
- We explore all practical responses.
- We assist in developing an execution strategy for the client's chosen response.
- We advise on the execution of the strategy and monitor progress.
Applied Strategies has a broad range of hands on experience in dealing with the variety of critical situations that law firms face at one time or another.
Below are just some of the many unfolding developments in the legal profession that make proper organizational structure nothing short of mission critical:
- Unbundling of services
- ACC Value Challenge
- Death or decline of the billable hour as a basis of billing
- Continued commoditization of legal services
- Technologically driven legal services
- Generational gaps
Despite the nature, degree, and pace of change taking place in our industry, change in the status quo, including a firm's structure, continues to be a four letter word in many law firms.
To overcome resistance to change, Applied Strategies works with clients to assess and address the three components that are required to empower management to make the changes it sees as necessary to ensure adaptability to the evolving practice of law:
Dissatisfaction with the present situation: We measure this through the use of surveys and interviews of lawyers and staff.
Vision: We assist our clients in understanding what might be possible in the future.
Strategic first steps: We assist in the development of practical first steps that the firm can take towards achieving its vision.
The timely and effective management of change will be critical to the longevity of law firms for the foreseeable future. At Applied Strategies, our advisors have extensive experience in this critical area of law firm management.
Culture Inventory - New!
"Those firms that are most likely to survive and prosper in the new market environment are not necessarily the oldest or the strongest or the smartest, but rather those most able to adapt to the changes around them."
–
2017 Report on the State of the Legal Market.
The report, produced by the Georgetown Law Center for the Study of the Legal Profession and Thomson Reuters has a very clear assessment of what it will take to survive and win: "Those firms that are able to adjust to the new market realities, not by putting Band-Aids on the old models, but rather by engaging in a thoughtful review and (where necessary) redesign of their approaches to client service, pricing, legal work processes, talent management, and overall structure will enjoy an enormous competitive advantage. Those that do not will face an increasingly uncertain future.
Being able to "adjust to the new market realities" requires a culture that is agile and able to adapt. How adaptable is your firm's culture? We can help you assess your culture.
Utilizing the Denison Culture Survey, we gather input from various stakeholder groups in the firm and sort the results in ways that make sense to a law firm. In so doing not only do firms get a clearer understanding of their culture but also insight into positive ways in which they can change it so it aligns with today`s legal market.
If you are interested in exploring an approach to obtaining a real understanding and enhancing your firm`s culture, please download the culture inventory brochure that outlines our approach.
There is a growing body of work on the behavioural tools that those engaged in law firm management need to possess, understand, and be able to use effectively in order to steer their firms through some of the most challenging times that many senior practitioners, in the profession, can remember in their time as lawyers.
While it is important to know why people do what they do and how to motivate them to alter their course, it is equally important to know the direction the firm is headed and when to alter this direction.
When viewed collectively, Key Performance Indicators (KPIs) can provide law firm management with the information necessary to make informed changes in direction.
What is a KPI?
It is any measurement or statistic that a law firm tracks that meets all three following characteristics:
- It reflects the firm’s goals.
- It is seen to be key to the firm’s success.
- It must be quantifiable.
For example, if a law firm sets out as part of its strategy to be a transactional-focused firm – rather than a client-relationship firm — while the operating indicator of the ratio of active matter to active client is quantifiable, it would not reflect the firm's goal or necessarily be seen as key to the firm's success. As a result, this would not be considered a KPI.
It's a simple concept but critical for law firms to understand: All that can be counted may not count.
There are no best in class KPIs. Rather, your guide should be that as long as the KPI measures progress towards the goals set by the firm then they are the best ones.
Applied Strategies has in-depth knowledge of KPIs and will work with you to develop the appropriate business and financial analysis needed to determine and track the KPIs that make sense for your firm.
General Observations
Before you get too deep into discussion, it is helpful to put all compensation systems for partners in context. The following are four critical parameters that many working with compensation systems, particularly those for law firm partners, have observed:
• There is no magic system that will satisfy all partners, meet all strategic goals, and never need to be changed. All professional service firms must realize that a compensation system is a living and breathing beast. It will need to be adjusted to meet the demands of changing times — either to satisfy partner concerns or to reward compliance with ever-changing firm goals.
• A fair system can only be created when all those affected openly discuss the strengths and weaknesses of any proposed scheme. This type of brainstorming session is the only way to get the issues out and dealt with appropriately. Remember the old axiom: "They saw the consultant like a seagull flying in from afar. It circled their heads and dropped something white in their hands. They thought it was a report. Only after the seagull had disappeared from sight did they discover what it really was – it's true!"
• K.I.S.S. (Keep It Simple Stupid). A compensation system that leaves most partners scratching their heads over the calculation of their individual compensation is doomed to fail. You may think it is straightforward, but be sure others agree with you.
• A compensation system should be related to your firm's strategic goals. For example, if you think that the mentoring of Associates is a worthwhile pursuit, then your compensation system better have some form of reward for doing it. Otherwise, the message to your partners is that mentoring is valueless and, therefore, will only be done through their altruism and sense of teamwork.
Two Characteristics of Compensation Systems
While the degree will vary amongst compensation systems, there are two key types of criteria that that the systems will evaluate:
- Subjective
- Objective
The following chart captures this much better than words will:
As an initial starting point the first set is agreeing on where in the above chart you see your current system.
The chart serves to provide an overall sense of direction of changes being made to the compensation system, and enables partners on a macro scale to start to think about the direction they would like to see the Firm's compensation system evolve towards.
General Types of Compensation Systems
While recognizing that firms will have slight variations, firms generally lump law firm partner compensation systems into seven types.
While not advocating for any particular one for the Firm going into the partners' discussion, it is important to at least consider the perceived strengths and weaknesses of each as part of your deliberations.
The seven general types include:
- Equal Partnership
- Lock-step System
- Modified Hale and Dorr System
- Simple Unit
- 50/50 Subjective-Objective
- Team Building
- Eat What You Kill
As should be expected they all have pros and cons to them.
A good starting point would be to develop a consensus on: "What do we, as a firm, value most"? At the same time, before spending a lot of valuable time on change, make a list of what you and your partners do and do not want in a compensation system.
To help you do this critical step, we have developed a simple Compensation Gap Analysis. This exercise includes:
- Partners rank in importance the behaviour they want a compensation system to drive,
- Partners share which of these behaviours the current system does drive, and how it does (to ensure there is understanding), and
- An analysis is done to show the "Gap" between the behaviours desired based upon their rankings vs. those actually being driven by the current system
End Solution
Where the real innovation comes for most law firms is in taking one of the standard systems and tweaking it or sometimes wholesale changing it until it does what you and your partners need it to accomplish.
Times have changed and to not adapt will be terminal for your firm.
Nancy Koehn, the chair of business administration at the Harvard Business School, speaking at the last World Business Forum says:
"Currently we are in a time of great turbulence: financial, social, economic, demographic..." She went on to call it "punctuated equilibrium" and advised the "search for steady, a state, a system to which we will return is over... We are now in a new world in which the unexpected is the new normal, and we had all better get used to it."
I don't think anyone has described the state of the legal profession any more succinctly. Those lawyers not wanting to make any changes in the belief "the way it was will again be the way it is" need to take heed of Koehn — that era is over and it is not coming back.
While her solution is a refrain we have heard time and again — leadership — Koehn defines it in a way that had it existed may have at least reduced, if not eliminated, the possibilities of a number of firms like Heenan Blaikie going the way of the Dodo bird. Her take on leadership was:
"We don't need more information. We need leaders who can translate information into knowledge, knowledge into understanding, and understanding into wisdom so we can make smart choices."
For many Managing Partners and their Management / Executive Committees, their focus is divided between their personal practice, the firm's business, and their private lives. They don't always have the time nor the focus to either fully translate or understand the information they are being inundated with on a daily basis. This has resulted in many firms' management style having a strong crisis or reactionary aspect to it.
Applied Strategies provides proactive general management advice on a regular basis to clients; this enables them to minimize the crisis aspect of the management of their firms' operations. Some of the clients who have benefited from having access to our general management advice have described it in the following terms:
• "Stephen possesses a keen and analytical mind, enriched with a wealth of knowledge and experience. The result is great wisdom. He is engaging, confident, optimistic and genuine. All of these qualities forge the necessary trust which permits him to provide forthright advice"
• "He has the uncanny ability to deliver meaningful and effective approaches to the business of law, while maintaining a consistently fresh perspective. He has been a guide, a sounding board, and a confidante..."
• "Stephen came to assist our firm during a time of uncertainty and turmoil. He delivered blunt and practical advice in how to deal with both the issues that we asked him to help with, and the issues that he identified independently as important to our firm."
• "We asked Stephen to help us work through what to us appeared to be an endless list of intractable issues. He was knowledgeable, efficient, creative, and easy to work with and, with his help, we worked our way through the issues in short order"
To encourage making the best use of this general management advisory service, the fees are fixed and set for a minimum of a three month term. The fee schedule is on a sliding scale with the longer the term the lower the monthly fixed fee.
Applied Strategies works with its clients to ensure that the arrangement is mutually beneficial and the scope of the service is understood and agreed to up front.
Please don't hesitate to contact us if this service may be of interest to you or your firm.
Private
Coaching to Lawyers Involved in Law Firm
Management
Our private coaching program focuses on lawyers and other professionals who are in leadership positions in their firms. Our coaching services are designed to help them improve their value to their organizations.
Before proceeding with a private coaching assignment, Applied Strategies will obtain a full understanding of both the candidate and the events leading up to decision to retain us. This will be done by way of in-depth interviews.
If we determine that Applied Strategies can provide value, we will work in a collaborative way with the candidate to develop specific and measurable strategies and action plans. We are particularly careful to ensure that ownership of the action plan resides with the candidate and not the firm or Applied Strategies.
We will identify colleagues to provide periodic feedback on the candidate's progress. In the course of every coaching program, there are many personal and professional matters discussed, many of which are private and confidential. These matters will not be discussed with the firm. However, at agreed upon times the candidate and Applied Strategies will prepare a joint report to the firm that can form the basis for a discussion among parties.
Typically, we schedule two meetings a month, over the course of the program, to keep the candidate focused on his/her action plan and to provide objective, independent support in his/her pursuit of creating additional value for the firm. These meetings can be held in person, via Skype video conference, or over telephone. We are also available for telephone support on specific issues between these scheduled meetings.
Applied Strategies' private coaching program is normally six months in length. This gives us adequate time to experience sustained improvement. However, we will tailor the length of the program to meet the needs of each candidate and their firm. Follow up support is available beyond this point, depending on our client's requirements.
