3 Reasons Law Firm Strategy is BS & Why it Matters

What is a Strategy?

When you ask law firms or practice groups what is special about them, most will say something along the lines of “excellence and great customer service”.  Some firms may specify a niche or identify themselves as a global law firm, but few clearly differentiate themselves from their direct competitors.  This is a dead giveaway that they don’t have a real business strategy.  It is one of those terms that gets bandied about but which few people truly understand.  A business strategy is a deliberate choice made by a business regarding where to focus its resources, with the ultimate intention of distinguishing itself from the competition and becoming more profitable.  Although, many firms have documents entitled, “strategic plan,” that doesn’t mean it really is one.  Professor Roger L. Martin, an award-winning author, and consultant, asks a brilliant question that separates a real strategy from an imposter in the blink of an eye.  “Could you make the opposite choice without looking stupid?”  In our example, that would mean, “do you know of any firm that is deliberately pursuing the goals of mediocrity and lousy customer service AND making lots of money at it?” Not likely.

What would a real strategy involve? You need to choose a few areas that you believe are critically important to your clients (and potential clients) and you must be willing to commit time, energy and resources to achieving excellence in those areas.  Say you want to focus on great client service, there are myriad approaches to choose from.  You could aim to expand your firm to provide services in all areas the client is likely to need.  An equally legitimate, though opposite approach would be to remain as a boutique firm but create relationships with other firms so as to provide seamless service for the client.  Another area of possible differentiation is responsiveness and communication with clients, in which there are also multiple roads to excellence.  One firm could emphasize a team-oriented approach, where all members of the practice group could quickly and copiously answer client inquiries.  Of course, that would require a lot of coordination and exchange of information among team members.  An alternative would be pursuing excellence through exclusive client service, where one person handles all client communications and others at the firm stay out of it.  Such choices have consequences for the culture of the firm, the type of relationships that develop between the firm and its clients, etc.  Whether one or another approach is better depends on the values, goals, priorities and underlying assumptions that inform the strategy. The reason that genuine strategy is so rare is that it requires hard choices among viable options, where intelligent people could disagree and brilliant people could, potentially, make the wrong judgment call.

Why Law Firms Rarely Have A Real Strategy

First of all, lawyers, as a profession, are generally risk-averse. We like being right, and it is what we are paid for.  The thought of being mistaken is rather distressing, and most of us don't want to risk making the wrong decision; so, like most human beings when faced with a difficult choice, we stay on the fence and don’t truly commit to any of the options. Pursuing a path that is substantially different from other firms is well outside the comfort zone of most attorneys.  The second reason law firms rarely have a real strategy is the inherent challenge of partnership as a business structure.  Even in large corporations with a rigid hierarch in place, implementing a new, and therefore inherently risky idea is fraught with challenges.  In a partnership, with its loose management structure, flatter hierarchy and its tendency to resemble a herd of cats, getting an agreement for substantial change is exponentially more of an uphill battle.

The final reason that law firm strategy is usually BS, is that the consulting model is not as conducive to innovation as are more traditional product-based industries. If you are selling a software system, a table or a coke and you find a faster, easier way to run your business, the efficiencies translate into greater profit. In contrast, when you are paid based on the billable hour, efficiencies run the risk of translating into lower profits.  Needless to say, the legal restrictions based on firm ownership and structure further stifle innovation.  Of course, there are a few firms out there trying truly innovative approaches.  However, they are extreme outliers.  Most firms are approaching change much more cautiously.

Missed Opportunities

In the face of all these very really obstacles, why should a law firm bother with a “real” strategy?  It creates the possibility of a whole new level of excellence, satisfaction and financial gain.  Although the following example is not from a law firm, it demonstrates the opportunities available from pursuing a focused strategy.  In 1987, when Paul O’Neill became the CEO of Aluminum Company of America (ALCOA), he freaked out shareholders by eschewing the usual CEO rhetoric about value and market share and instead focusing exclusively on worker safety.  The interesting thing here was that ALCOA was already quite good in the area of worker safely, especially relative to other heavy industry.  Nonetheless, achieving O’Neill’s goal to make ALCOA the safest company in America necessitated an overhaul of almost every aspect of how the company did business.  For instance, within 24 hours of any accident, the president of the unit in which the accident occurred was required to report it to O’Neill and present a plan for preventing such accidents in the future. This meant not only did communication through the ranks need to be rapid, but, the leaders also needed to be open to ideas and recommendations from rank and file employees. This new requirement dramatically shifted the rigid hierarchy that previously existed in the company, leading to many more ideas moving up the chain of command, some of which led to substantial increases in profitability. By focusing on a single, meaningful goal, the company also overhauled its approach to teamwork, quality control, efficient work process, and ultimately became far more profitable that it had been prior to the focus on safety.  Creating true excellence in one area spills over into others and increased motivation and satisfaction across the board.

This is principle applies for individual lawyers’ business development goals as well as for larger firms.  For example, if you want to become a master of social media—not just get a twitter account and play around, but truly make this a keystone of your marketing—you will need to develop or expand a lot of other skills, as well.  You may need to increase your skill at delegating, become impeccably well organized, expand your service orientation, write more concisely, initiate and develop more partnerships, help more people, etc.  Such personal improvement initiatives can stay on the backburner for decades.  However, when we are motivated by a bigger goal, we are suddenly willing to do whatever it takes, even tackle things like delegation or organization that may have been plaguing us for a long time.  The pursuit of excellence sweeps away the cobwebs and pulls us forward in a myriad helpful ways regardless of whether we are an individual or a large firm.  That is the real gift of having an inspiring strategy.