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Stop Managing Your Law Firm From Crisis To Crisis

The best defense is a strong offense.

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For most of us, the past 12 months have been one long global crisis punctuated by a series of lesser upheavals. As COVID-19 began spreading across the planet, law firm leaders found themselves feeling like they were in a boxing ring with Mike Tyson — getting punched by a new crisis daily. Each week brought new challenges: do we send our workers home? How long should we stay there? How do we shift our technology to serve an all-remote workforce? How do we maintain productivity, business development, and budgetary discipline while our kids go to Zoom school across the dining room table?

Amidst all the chaos and strife, the best many firm leadership teams could do was hold on for dear life and manage for the moment. Handle what you can, kick what you can down the road, and take each crisis in turn according to your needs and abilities.

Frankly, my friends, that’s not good enough.

 Playing The Long Game

The decisions firms make today will define their existence for decades to come. The legal landscape has fundamentally changed since last year. Work from home is the new norm. Some sectors of the economy are booming as others fell flat, and entire books of business have risen and fallen in that wake. Real estate needs have changed, staffing needs have changed, lateral and summer-associate hiring needs have changed, and generally speaking everything we thought we knew is up for reevaluation.

Yet many law firms remain in a reactive stance. Defense might win championships in sports, but it’s a losing strategy in business. Firms that want to survive and thrive in the coming years need to go on the offense, and that means having a long-term plan for the firm’s development.

In fact, I’d go so far as to argue that without a long-term plan in place, a firm’s ability to handle day-to-day crises is almost nonexistent. If all we’re doing in an individual moment is reacting to new challenges, we’re not building toward anything or headed in any particular direction. At best, we’re standing in place, waiting for the current challenges to blow over. More often than not we end up watching what other firms do and playing follow the leader, because no one ever got fired for making the safe bet, right?

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If that sounds like an underwhelming strategy, it’s because it is. Firms that want to succeed need to be deliberate about developing short-, medium-, and long-term plans to guide them through whatever crises happen to come next. Here’s my best advice for firms looking to develop the vision they need to steer through 2021 and beyond.

Get Specific

Any strategy a firm sets down needs to provide a roadmap for how to position the firm for sustained competitive advantage. “Grow Profits” is undeniably a long-term goal, but it’s not a strategy.

Harvard Business School professor Michael Porter admonishes businesses to follow one of two options when formulating a competitive strategy: “Do what everyone else is doing (but spend less money doing it), or do something else no one else can do.” Can you honestly say your firm is doing either of these? If you’re like most Am Law 200 firms, you’re probably doing what everyone else is doing, but are you really finding ways to reduce overhead, salaries, or leverage technology to bring down costs in a meaningful way relative to competitors? Or are you fundamentally providing a service that’s different from any of the other firms in your market?

When starting out developing a firm’s strategy, it’s important to understand what it is your firm does, what it does best, and what makes it unique. You need to inventory your resources and capabilities in an honest way. Shaquille O’Neal and Michael Jordan were both dominant NBA players on championship teams, but they played wildly different styles of basketball. The 7’1” Shaq was both an unstoppable force and an immovable object close to the basket, but he couldn’t shoot a free throw to save his life. Jordan was fluid in almost every aspect of the game, but had to rely more on speed, smarts, and shooting than physical dominance to beat the other team. If Shaq had tried to play like Mike, or vice versa, hilarity — and turnovers — would have ensued. It was by building their games around their respective strengths that they each grew to be first-ballot NBA Hall of Famers.

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If you’ve got a young, agile partner base willing to take risks to grow, use that. If you have a robust, established client base, leverage your contacts and explore ways to get more work from them or their colleagues in the same industry. If your firm has a large number of attorneys and big geographic footprint, identify additional ways to capitalize on economies of scale. Lean into what gives your firm advantage in the marketplace and build from there. If you’re built like Shaq, don’t plan on threading needle-like passes to your teammates; just go dunk the dang ball.

Set Concrete Goals

 Once you identify who you are and where you want to go, how do you know if you’re actually making progress? For that, I’m a fan of the management concept of OKR, or “Objectives and Key Results.” It’s pretty much what it says on the label. Under the method, you set Objectives, the “why” behind your goals. You then identify one or more specific Key Results you’re going to use to accomplish them along with a fixed timeframe for evaluation. At the end of the time period, you can answer that you either hit your key result or didn’t. Think of OKRs like SMART goals on steroids.

Say for example your firm has a major client that generates 25% of the firm’s revenue. Your firm is in a precarious position. If that client hires a new GC and flips the work to another firm, you could find yourself facing an existential crisis with lots of salaried lawyers and legal professionals and nothing to do. Under the OKR method, a reasonable Objective — the reason you’re undertaking the effort — would be to promote economic stability within the firm. The related Key Result could be to grow business from other clients to a point where the major client accounts for 23% of firm revenue by the end of the year (and hopefully you can do that without reducing revenue from the major client). To achieve your Key Result, you could have other supporting Key Results related to pitching a certain number of new clients for work, increasing revenue from a smaller and more profitable client by 10%, or responding to three additional RFPs. Check back regularly, figure out what Key Results are being met, and reformulate new Objectives as needed from there. Assuming you’re successful, the next year you can set a new target of 21% of firm revenue and so forth.

It’s not rocket science. But unless you’re Elon Musk at the helm of SpaceX, you don’t need rocket science. What you need to do is systematically focus on the key drivers of success that will make your business take off.

Make More Than One Plan

Law firms are complex beasts facing complex times. No single plan will cover everything a firm might face in the coming years. Just for the changes caused by COVID-19 alone, the planning is dizzyingly broad and includes major changes to budgeting, technological adoption policies, employee oversight and retention, client development, pricing model blends, client-specific changes, and more. That’s before even considering the potential revolutions the legal industry was already heading toward before COVID-19 hit.

Each of the myriad challenges coming down the pipe needs its own plan for dealing with it, and all of those plans have to be crafted with an eye on the bigger picture of the firm itself. It’s never been more important to have strong, coordinated law firm leadership, and it’s never been more important that those leaders have a deliberate vision for the future of their organizations.

If you’ve got a long-term vision for your firm in place already, now is the time to revisit it, expand it, and develop quantifiable metrics to track your success. If you don’t have a plan in place, start working today to put one together.

Otherwise, you’re just planning for failure.

James Goodnow is the CEO and managing partner of NLJ 250 firm Fennemore Craig. At age 36, he became the youngest known chief executive of a large law firm in the U.S. He holds his JD from Harvard Law School and dual business management certificates from MIT. He’s currently attending the Cambridge University Judge Business School (U.K.), where he’s working toward a master’s degree in entrepreneurship. James is the co-author of Motivating Millennials, which hit number one on Amazon in the business management new release category. You can connect with James on Twitter (@JamesGoodnow) or by emailing him at James@JamesGoodnow.com.

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