Law firms that need help most are the hardest to help.
Like most of us I am a great admirer of Steve Jobs. For me the man was a genius, not only because he developed brilliant innovative products like the iPhone, the iPod, the iPad, the App Store and other products his critics predicted would fail, but also for his ability as a manager to push the people he worked with to go far beyond their limits and achieve the unachievable. As it came to his own health however Steve Jobs was a ‘total idiot’. The biography by Walter Isaacson details his weird dietary habits. The book describes Job’s occasional tendency to eat only one or two foods, like carrots or apples, for an extended period of time. After Steve Jobs was diagnosed with a rare form of pancreatic cancer in 2003, he allegedly delayed surgery to remove the tumor for nine months. During that period, he attempted to treat his cancer with alternative medicine, including a special diet. As we all know, it did not work out well.
Interestingly in our practice working with law firms in many different jurisdictions we observe from time to time similar patterns of behavior. We sometimes see law firms sliding down the path and finding themselves stuck in a bad situation with declining profits and with clients and lawyers turning their back on the firm. These firms do not necessarily have bad lawyers, on the contrary. These firms have over time developed a culture of management softness and diffusion. To our experience the culture in the partner group and the style of the management are strong indicators for the future success of a firm. Here are six pointers that might help you assess the situation in your firm:
1. Frequency of partner meetings Firms that have partner meetings once a month to discuss aspects of day-to-day management of the firm have a higher failure rate than firms that only have two formal partner meetings a year. Having a high frequency of hands-on partner meetings creates a culture in which all partners need to be involved in all aspects of day-to-day management. This will paralyze the decision making of the management and will lead to lack of action and to sub-optimal decisions. Managing a law firm on a once a month impromptu basis (partners rarely prepare for a partner meeting) is simply impossible. Partners should delegate all executive management decisions to the managing partner/executive team.
2. Deus-ex-machina solutions Instead of addressing an issue with a real solution we often wish for an easy way out. The term ‘deus-ex-machina’ refers to the crane that held a god over the stage in ancient Greek and Roman drama. This 'mechanical god' could solve all problems as by magic. Within law firm partnerships ‘deus-ex-machina’ solutions often arise when business is slow and revenue and profit are going down. The real solution would be that each partner doubles his/her efforts to bring in new business. Many partnerships find it too confronting to admit that the partners are at the core of the problem and resort to textbook deus-ex-machina solutions like replacing the head of marketing/BD, build a new website, invest in a new CRM system, anything to avoid ‘the hard way’ and change their personal behavior.
3. Consensus Wouldn’t it be nice if we would always agree on the best solution. In Steve Job’s case it has been well documented that all industry experts predicted the iPhone would fail. Prior to that Jobs had even been kicked out of his own company. These examples are not meant to illustrate that there should be no checks-and-balances, but that consensus leads invariably to bad decisions. Partnerships that have a culture in which consensus prevails tend to struggle to keep a competitive edge. Partnerships that embrace dissenting opinions and have the ability to have fierce discussions in partner meetings achieve better results.
4. Too much or too little autonomy For law firms to thrive it is paramount that partners have a reasonable amount of autonomy. Partners should have full ‘ownership’ and take responsibility for the development of their practice. This responsibility should not be delegated. At the same time every partner will need to align with the strategy of the firm. The most successful law firms manage to strike a fine balance between autonomy and centralization. Lawyers that are too fiercely independent doesn’t work and neither does an organization that is totally centrally managed.
5. Weak management Sometimes managing partners are unwillingly held hostage by their firm. Having grown attached to the perks that come with the job, many managing partners fear being voted down and having to return to practice. Others have lost their practice and would stand empty handed when being degraded to partner and having to bring in a certain amount of revenue. Fear of demotion will create weak management that will avoid any confrontation that might lead to major controversy. The most effective managing partners tend to be those who are ‘fearless’. A good managing partner will be an ‘iron fist in a velvet glove’. Respected, feared and loved at the same time.
6. Partners being ‘experts’ on everything Equity partners are from a legal perspective the owners of the firm. To be rewarded such position a person needs to be an excellent lawyer and a successful rainmaker. What is not required, nor expected, is that one is an expert on everything. Being risk averse and being focused on details, lawyers in general have poor management skills. Partners should not think themselves experts on copying machines, IT or the paper used for the stationary. Those things are, like many other decisions, better left to experts.
Aroma therapy or chemo therapy?
So based on this checklist, where is your firm? Obviously the six points mentioned above are not an exhaustive list. Trust among partners or prioritizing firm interest over personal interest are equally important. It goes beyond the scope of the article to discuss every aspect of the culture within the partnership that will foster bad results. As you have noticed none of the indicators involves legal qualities or business skills. It is all culture.
Over the past few years we have managed to help several law firms that were in a bad situation to successfully turn the tide and find their way back to inspiring matters and profitable business. Under-performance due to inadequate business skills or lack or a realistic and relevant strategy can be reversed.
Based on that same experience we know that the more affirmatives a law firm scores on the six indicators, the harder it becomes for us (or any other business consultant) to help. These law firms have ended up in a bad situation because they have systematically avoided to act, preferring ‘aroma therapy’ over ‘chemo therapy’ time after time. Like Steve Jobs, good lawyers can develop bad habits as it comes to their (firm’s) health.