Chapter 3
Characteristics of Successful Legal Firms
In any industry, at any time, there are some businesses that significantly outperform the rest. This applies in the legal services sector as much as any other industry group.
The common difference between the top performers and the rest essentially comes back to the quality of leadership.
Having worked with hundreds of professional firms and analysed the character of many more, we can say without fear of contradiction that the ones yielding the highest return to the owners and partners are those that have the following characteristics;
Leadership and Management
There is leadership and management of high order, which is reflected in a strong and clearly articulated vision of where the firm is heading.
Generally, there is one person with exceptional leadership skills who does little or no client casework but concentrates on managing the business. This is found in small as well as large firms.
There is a very clear distinction between ownership and the technical work that owners do.
These leaders recognise that people have different skill sets and that true synergy comes from focusing specific skills where they can have the greatest impact. For example people who are good “Rainmakers” are encouraged to do that than achieve high levels of chargeable time and vice-versa. These firms understand very clearly the difference between a firm acting as a real business, as opposed to one that is merely a coalition of sole practitioners simply sharing overhead costs.
Clients are viewed as customers of the firm not of the partner responsible. This is reflected in: (1) owner compensation that is not focussed exclusively, or not at all, on an individual partner’s productivity and , (2) client service managers (who are very often not partners) are responsible for client advocacy within the firm. They have a mandate to maximise value creation for the client by ensuring that all relevant services are made available to their clients, regardless of who within the firm provides those services.
Value Focus
They have a very strong focus on providing carefully selected clients with value-dense, strongly positioned services that attract premium fees relative to the cost of labour and other resources.
They have a value focus rather than a cost focus and only work with clients that they can add long-term value to. They understand better than most that the first major key to long running success is getting the right clients and keeping them. Client loyalty is critical and is a key to achieving sustainable competitive advantage.
Services are highly systematised, as is the process by which they are offered to clients. Management of service outcomes concentrate as much, if not more, on the client’s expectations as they do on the outcome itself.
Team Focus
They have relatively high levels of people leverage (team members to equity partner ratio). They invest time hiring and developing competent people and systematising their processes so that they can effectively leverage their firm’s expertise. They are not afraid to pay above average salaries. They give a high priority to creating a place of work that’s fun and where people enjoy working with each other.
Their productivity focus is on revenue yield per hour as well as the number of hours people work. But they have a very clear understanding that it’s not the number of hours that people charge that’s relevant, but what value is created for clients in that time. They concentrate on the outcome. They only monitor time for the purpose of job control and recognise that it is the limiting resource within the firm.
They give strong attention to training and delegation.
They get exceptionally strong referrals from existing clients as well as external sources such as banks, financial advisors and accountants.
They employ the best people and place a heavy influence on attitude. Their people are allowed high levels of client contact. They understand that people want to be involved and can be involved if the right conditions are created. They offer career growth opportunities because the firm enjoys profitable growth. They understand that the second key to long-term success is getting and keeping the right kind of team members.
Technology & Feedback
They utilise the latest technology (both hardware and software) to ensure high levels of communication within the firm and between the firm and it’s clients.
They listen to their clients and frequently conduct Client Advisory Boards. These are done with a view to identifying areas which they need to improve their services and to get clients’ feedback on proposed new service offerings. They see their clients as business partners as well as customers.
Characteristics of Successful Legal Firms
In any industry, at any time, there are some businesses that significantly outperform the rest. This applies in the legal services sector as much as any other industry group.
The common difference between the top performers and the rest essentially comes back to the quality of leadership.
Having worked with hundreds of professional firms and analysed the character of many more, we can say without fear of contradiction that the ones yielding the highest return to the owners and partners are those that have the following characteristics;
Leadership and Management
There is leadership and management of high order, which is reflected in a strong and clearly articulated vision of where the firm is heading.
Generally, there is one person with exceptional leadership skills who does little or no client casework but concentrates on managing the business. This is found in small as well as large firms.
There is a very clear distinction between ownership and the technical work that owners do.
These leaders recognise that people have different skill sets and that true synergy comes from focusing specific skills where they can have the greatest impact. For example people who are good “Rainmakers” are encouraged to do that than achieve high levels of chargeable time and vice-versa. These firms understand very clearly the difference between a firm acting as a real business, as opposed to one that is merely a coalition of sole practitioners simply sharing overhead costs.
Clients are viewed as customers of the firm not of the partner responsible. This is reflected in: (1) owner compensation that is not focussed exclusively, or not at all, on an individual partner’s productivity and , (2) client service managers (who are very often not partners) are responsible for client advocacy within the firm. They have a mandate to maximise value creation for the client by ensuring that all relevant services are made available to their clients, regardless of who within the firm provides those services.
Value Focus
They have a very strong focus on providing carefully selected clients with value-dense, strongly positioned services that attract premium fees relative to the cost of labour and other resources.
They have a value focus rather than a cost focus and only work with clients that they can add long-term value to. They understand better than most that the first major key to long running success is getting the right clients and keeping them. Client loyalty is critical and is a key to achieving sustainable competitive advantage.
Services are highly systematised, as is the process by which they are offered to clients. Management of service outcomes concentrate as much, if not more, on the client’s expectations as they do on the outcome itself.
Team Focus
They have relatively high levels of people leverage (team members to equity partner ratio). They invest time hiring and developing competent people and systematising their processes so that they can effectively leverage their firm’s expertise. They are not afraid to pay above average salaries. They give a high priority to creating a place of work that’s fun and where people enjoy working with each other.
Their productivity focus is on revenue yield per hour as well as the number of hours people work. But they have a very clear understanding that it’s not the number of hours that people charge that’s relevant, but what value is created for clients in that time. They concentrate on the outcome. They only monitor time for the purpose of job control and recognise that it is the limiting resource within the firm.
They give strong attention to training and delegation.
They get exceptionally strong referrals from existing clients as well as external sources such as banks, financial advisors and accountants.
They employ the best people and place a heavy influence on attitude. Their people are allowed high levels of client contact. They understand that people want to be involved and can be involved if the right conditions are created. They offer career growth opportunities because the firm enjoys profitable growth. They understand that the second key to long-term success is getting and keeping the right kind of team members.
Technology & Feedback
They utilise the latest technology (both hardware and software) to ensure high levels of communication within the firm and between the firm and it’s clients.
They listen to their clients and frequently conduct Client Advisory Boards. These are done with a view to identifying areas which they need to improve their services and to get clients’ feedback on proposed new service offerings. They see their clients as business partners as well as customers.
