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Richard G. Stock*

This article was previously published in Lexpert, September 2004.

The leadership of many Canadian law firms does not spend enough time developing, communicating and implementing business strategy. Even less time is spent assessing how business initiatives fit the firm’s priorities and then adjusting the business strategy. One wonders about the reasons for this.

It comes as no surprise to find most partners think that it is someone else’s job - usually an Executive or Special Committee or a Managing Partner - to decide what strategy is and what the firm should do about it. Partners would rather do almost anything else than strategic planning. Often planning is triggered by events in the market or in the firm - anything from the loss of a few important clients or partners, poor profitability, mergers of other local firms, and the aging of the partnership.

Smaller firms will hold a retreat, present background papers or readings and engage a facilitator. But scepticism reigns among the captive participants, primarily over the prospect that anything important will ever change. It is amazing to see how little information the firm brings to for consideration about:

• the business plans of the firm’s top 25, 50 and 100 clients, and their legal service requirements
• the profitability of the firm and of its practice areas and/or offices
• the personal and professional intentions of each of the partners for the next 5 years
• viable alternatives to the hourly-based business model
• how to cope with the disappearance of key clients and markets

Firms of all sizes must shift their focus from strategic planning as a process that consumes vast amounts of time and some money to creating a business strategy focused on results and effectiveness. Last year, I heard David Maister say that two law firms in the same market would likely study the same data and trends and then reach very similar conclusions about what their strategies should be. What would set one aside from the other is the ability to develop and execute an actionable plan. Every law firm must make a minimum number of basic choices. The stakes are high. The answers to the following questions should be good for 5 years.

• Who do we want our clients to be, especially our top 25 clients? What proportion of our business should they represent?
• If clients hire lawyers more than they hire firms, how can we position ourselves to do all the legal work for our anchor clients?
• What must we do to retain and recruit needed talent at every level?
• Is it time to fundamentally change the business model (hours, rates, leverage) and relieve the pressure for continuous growth?

Because of a well-entrenched culture of individuality, autonomy and self-sufficiency, a great many smaller and medium-sized law firms have little appetite to develop and debate the questions and then make the choices suggested by opportunities and resources. Even when some do choose, they still fail. They fail to implement because they do not have a strategy (and culture) of execution. The focus is on process rather than results. Failure to produce results has little short-term impact on a firm or on key individuals charged with business strategy.

Getting Results

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Much can be done to improve the odds of getting results

1. Make sure that all the questions are asked and that answers are provided. Do not skip over the hard stuff.
2. The devil is in the details. Decide who will do what by when and give them the time and money to do it. Ensure that there is alignment for every aspect of the action plan.
3. Performance must be measured. Business strategy comes off the drawing-board and takes flight when the indicators for success (the metrics) are set out in advance, when targets for reporting are set, and when the partnership is kept informed of success and failures.
4. The pace and speed of execution is often too little too late. There is rarely a sense of urgency unless the firm is in a crisis mode. This is a real challenge in firms that require partners to invest non-billable time that competes with their usual production. There are few instances when partners can scrape together more than 50 hours in less than a year to act on strategic business decisions.
5. Firms do not leverage the partner and associate compensation systems sufficiently to secure the results they need. Too often, there is only a peripheral acknowledgement of a partner’s contribution to the business strategy outside of that partner’s usual economic and business development activity.

Business strategy is not fuzzy if it is any good. It asks all the right questions, gets the partners to choose and to act on the choices. It does all this in an environment that favors teams, accountability, and results rather than process in an overwhelming orientation to key clients.

* Richard G. Stock, M.A., FCIS, C.Adm., CMC is a partner with Catalyst Consulting. The firm has been designated the Preferred Supplier for Legal Services Consulting by both the CBA and the Canadian Corporate Counsel Association. Richard can be contacted at (416) 367-4447 or through the website at http://www.catalystlegal.com.