Firm Leadership

Rants, Raves, Rebuttals, Reflections, Revelations & Ruminations

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Post #675 – Friday, July 26, 2013

Are You Developing A Star Culture?

In the wake of Dewey & LeBoeuf’s collapse last year, The American Lawyer published an article we had written about an issue that turned out be a major contributing cause of that implosion: the wide compensation spreads within the equity partnership of large law firms. With the release earlier this year of regular Am Law Daily contributor Steven J. Harper's book, The Lawyer Bubble, and a recent American Lawyer survey that detailed the compensation spreads at many large firms, the issue has gained even greater attention. 

Let’s cut to the core of what’s potentially problematic about these widening spreads.  Not only must a compensation system be presented and perceived as fair, a firm leader must ensure that it is as fair as can be reasonably expected, consistent with that firm’s unique culture. Any system that is patently unfair, irrespective of firm culture, is one that asks, indeed demands, that those within the firm embrace it. There will be examples where that is the case, either because partners and associates sign on to that expectation, or because they have no choice.  But remember, the best talent with the best business in today’s market does have a choice. And it doesn’t always vote with its wallet.

Individual power is related to dependence in most law firms.  Depend on a partner for his or her book of business, or even particular skills, especially if that expertise is rare, and that partner’s power rises.  When any individual acquires influence disproportionately greater than that of other partners, he or she can become almost indispensable to the firm. In many cases the individual can demand special perks or preferential compensation, or break rules others are expected to respect.  It does not mean that the firm will cease to exist if this lawyer leaves, only that such a loss would create palpable financial pain for some period of time.

This is where the concept of flexibility enters the picture, and where expedient judgments may dictate that it is in a firm’s best interest to provide a special accommodation rather than risk or even initiate the departure of an influential partner. As a consequence, if, as a firm leader, you are giving certain individuals preferential treatment or looking the other way when star performers behave contrary to firm culture, you are fostering a double standard. Will resentment ferment among other partners, creating a dynamic capable of undermining the performance of the entire firm?  It darn well should.  Trading doing “what’s right” for “what’s expedient and convenient” is not a viable option for those in leadership positions, yet it seems to have become standard operating procedure at too many firms.

Your final decision as a firm leader comes down to weighing the value of developing a star culture versus the costs of doing so—and those costs are more than simply hard dollars. In an earlier American Lawyer article, Sliced Too Thin, we warned about how widening compensation spreads can inadvertently weaken practice groups, especially when collaboration is required; foster tension between peers alienating by near or future stars; and eventually induce mid-level partners to leave—an occurrence that can serve as a leading indicator of potential firm failure.  Whether affirmatively adopting a star culture, or just allowing it to develop, there are other considerations for you to study . . .

Download the Complete Article - Here

Post #674 - Tuesday, July 23, 2013

Competitive Plagiarism

Ask most firm leaders to identify those business CEOs that they most admire and they would probably list a small group of highly entrepreneurial names that would include Jack Welch, Steve Jobs, Richard Branson or Warren Buffet. Ask why they admired these particular individuals and you would probably hear about the individual’s self-confidence, decisive boldness, the originality of their strategic direction, and contrarian beliefs. However, if you now inquire into what strategies these leaders were themselves advocating in their own firms, the answers you would receive would be depressingly unlike those of the leaders they admire.

To make this point even stronger, imagine the following scenario. All of your peer competitors are invited to share and read each other’s strategic plans. As firm leaders mull over and examine each competitor’s future strategies they put a check mark next to the actions that their firm is also following and an x next to those that are drastically different. What is the likelihood that there will be exceedingly more check marks than crosses on all plans? (And if my thesis is valid, the implication is that confidentiality of strategic plans is a waste of effort)

Many firm leaders view other competitors, their strategies, performance and experience as the benchmark from which to set standards for their own firm. That kind of competitive comparison makes sense, especially as your firm’s performance is often defined by what your peer firms are doing. Where this approach becomes an obstruction is when the logic behind what works for some other firm, why it works and what might work for you is not assiduously examined and thereby results in firms engaging in mindless imitation.

Some actions can render your casual imitation not only ineffective, but in some cases, downright dangerous. Consider these three common examples of competitive plagiarism . . .

Read my latest column - here

Post #673 – Monday, July 8, 2013

Is Your Firm Facing A Leadership Transition?

Few NEW firm leaders are as prepared as we, or they, might wish.  As one expressed it: "New firm leaders mistakenly believe that because they have served as a practice group manager, as an office head, or on the firm's executive committee they have the necessary background for taking on the role of leading the entire firm . . . Not even close!"

The good news is that there is an orientation program for new leaders that can make a meaningful difference and over 50 firm chairs and managing partners have already experienced and attest to the difference it can make.  We received these gracious comments from a couple of those attending one of our First 100 Days sessions:

"I was struck by the synthesis of the issues you presented.  It was amazingly clear and comprehensive, given the breadth of the topic and the short time available.  I was delighted to attend the event and I learned a lot from it."   Hugh Verrier, Chairman - WHITE & CASE

"Very good session.  A lot of good ideas to take away.  This Masterclass puts into perspective the scope of duties and responsibilities associated with the position and gave me a workable framework to deal with them."   Thomas J. Bender, Co-Managing Director - LITTLER MENDELSON

If you are (or know of a firm) facing a firm leadership transition or even having a new office managing partner taking the reins of one of your larger offices, please have a look at:  The next program is scheduled for AUGUST 15 at the University of Chicago and we are now accepting registrations.  Have a look at the day’s agenda, the faculty, the testimonials, the extensive course materials, the follow-up support and your total satisfaction guarantee.


"What might a new firm leader expect to learn during this one day masterclass?"

Here are just some of the content highlights that you may expect us to cover during our day together:

• Present some of the most comprehensive research on today’s firm leader – How they spend their time, how they are evaluated, to their re-entry arrangements;

• Take you through the 4 predictable stages of your transition process – from your initial eagerness to “what the hell did I get myself into” and identify the common traps and what to do at each stage;

• Review the 18 critical questions you need to ask of your predecessor to ensure a proper briefing;

• Identify your 4 point action plan for getting clarity with your elected Board / ExecComm in order to ensure the most effective working relationship;

• Show you how to discern your partners’ appetite for change – because you know that you can only move your firm as far as your partners are willing to allow it to be moved;

• Identify how to best communicate to your administrative professionals how to work with you;

• Identify the 10 elements of structural integrity that you need to manage with your practice group leaders in order to ensure results;

• Review the 25 strategic levers you have available to you to bring about change in your firm – none of which include trying to stimulate change by dictum or thru some artificial crisis;

• Confront 8 of the most difficult scenarios that any firm leader can be faced with, those where there may not be any easy answer, and talk through your various options;

• Introduce you to the same personality assessment taken by Fortune 500 CEOs, designed to identify your 'Dark Side' – a personalized assessment of those strengths you possess that, when under extreme pressure or stress, can turn into vulnerabilities and help you determine what to do about them; and

• Ultimately, we intend to help you develop your specific Strategic Agenda for your first 100 days and review the importance of and how to achieve early successes.

Post #672 – Monday, July 1, 2013

Your [Generic] Law Firm Mission Statement

Consultants engaged in helping firms develop their strategic direction too often assume that the delivery of competitive advantage requires little more than a statement of intent or a declartion of the firm’s mission.  This inane fetish for vision and mission statements is invariably deployed as a substitute for the much tougher discipline of discerning real market inisghts.  But for those firms who do not yet have a formal, written Mission Statement and feel a compeling need not to be left out, here is one just for you:

“We will be a leader in our marketplace, committed to delivering exceptional quality and service to our clients, building a highly motivated staff with improved prosperity for our partners, exemplifying the highest ethical standards and showing responsibility and contributing to the communities in which we work.”

What turned mission statements into a joke was how quickly firms embraced the concept but then didn’t follow up with consistent action.  

You don’t write a mission statement.  You live it and breathe it!

Post #671 – Wednesday, June 26, 2013

How To Engage Partners in the Firm’s Future

I am delighted to have contributed The Introduction to a new book written by two old friends, August Aquila and Robert Lees.  For those who may not be familiar with their work, August is a consultant, recognized as one of the “Top 100 Most Influential People” in the accounting profession, and the author of numerous books including his esteemed work, Client At The Core (John Wiley, 2004). Rob hails from the UK, served as Global Head of Human Resources for Ernst & Young, and is co-author of the best-selling book, When Professionals Have To Lead (Harvard Business School Press, 2007)

In their new work, How To Engage Partners in the Firm’s Future, they identify six major challenges that multi-partner, multi-office firms need to address to engage their partners and to ensure everyone moves forward together. They are:

1.    Un-motivational firm vision

2.    Lack of clearly defined core values

3.    Lack of clarity around what being a partner means

4.    Ineffective or non-existent partner performance reviews

5.    Performance systems not tied to strategic initiatives

6.    Lack of successful firm leaders.

Most firms consider these six challenges to be merely “touchy feely” aspects of running a professional services firm.  They take time to implement and the common response is that “we have clients to serve and this stuff just detracts us from our real job.”  But unless you embrace these challenges and get your partners actively engaged and performing for the firm and its future, you may find yourself without clients and without a viable future.

Access further information on this book - here

Download a 34-page PDF excerpt - here

Post #670 – Friday, June 21, 2013

Revisiting Partner Compensation Spreads  [Guest Editorial by Ed Reeser]

Above the Law is an internet news site that reports on the law profession.  It has grown to become one of the more widely read sources with a wide array of stories, some technical and academic, some current events and topical, and still others rather 'sporty' in their subject matter.  But, hey, it is what is happening.  Significantly ATL now often breaks news before many of the traditional services.  In no small part it is from the cultivation of their entire readership to be . . . contributing reporters.  That is pretty tough to beat out no matter how big a traditional news source one may be.  

About 18 months ago, starting in the fall of 2011 and ending in early 2012, Patrick McKenna and I outlined and then wrote an article (Sliced Too Thin) on the danger of wide compensation spreads in equity partnerships.  It took awhile to get interest, but when the collapse of Dewey revealed that there were issues of this type directly relevant, the article gained traction and eventually was released in the June 1 issue of The American Lawyer (for which we are very appreciative, as always).

Since that release, the article has had a steady, if not spectacular interest.  Recently, with the advent of Steven Harper's book The Lawyer Bubble, and now the AmLaw survey including this as an item in their research on law firm financial performance, the partner compensation spread issue is gaining more attention as one of relevance to a host of important issues in law firms, including governance, stability, etc.

Many will remember an article that came out in March of 2012, in Fortune Magazine, in which Dewey states its compensation spread was 6-1.  It was actually more than 30 to 1.  Remember, apart from a few editors at The American Lawyer, nobody else at the time of the Fortune Magazine article would have been aware of the content of our article on the dangers of wide compensation spreads, and thus felt compelled to address it as an important issue!

Leadership in large law firms is acutely aware of the importance of wide compensation spreads, and the dangers.  So much so that some may have gone to significant effort, and risk, to conceal it, or perhaps we should say 'spin it' to portray it as something it was not.  Everybody else that hasn't recognized the issue to date, because they weren't told of it, is beginning to understand just how critical that factor can be. 

What happens if you combine poor operating margins with wide compensation spreads, high capital ratios, large working capital lines of credit used to pay draws?  Should that be a concern to a partner that took out a loan and a second mortgage on their house to pay in capital to the firm?  If it didn't . . . would you want to have their judgment applied to the diagnosis and resolution of your complex legal problems?

Post #669 – Wednesday, June 19, 2013

Revisiting Efficiencies Versus Effectiveness

There is an interesting post on LinkedIn amongst the Legal Innovation group entitled: “Are Project Management and Process Improvement Just Fads?”  It generated a good number of comments most of which were strongly in favor of PM and PI, claiming that they were not fads. 

I felt compelled to share a few thoughts:

Are these fads?  Good question. I personally don't think they are but I do wonder whether we have tilted the scale too far and are now obsessing over finding more efficient ways to produce . . . better buggy whips.

Today, I don’t see any firms of any significant size (over 100 attorneys) who do not have, as one of the top three priorities in their formal, written strategic plan, to engage in PI and PM - improve efficiencies (and of course, whether they execute on that plan or not is an entirely different subject).  Concurrently, I see little effort, investment or attention being given to how they will identify new areas of opportunity or focus on niches where they will work to become the dominant /go-to player - effectiveness.

The only shortcoming of every firm chasing efficiencies is that they all slide inexorably into sameness and mediocrity.  Aiming to become more efficient than your competitors has the perverse effect of making all competitors more alike, as each tends to define “efficiencies” in identical ways.  Alternatively, the essence of developing an effective strategy is daring to think for yourself, instead of following the herd.

Here is a radical thought:  There is no surer sign of the inadequacy of firm leadership than to believe that cost efficiency should feature as the overriding issue facing the firm, and that short-term palliatives should be paraded as the main drivers of future profitability.  Strategy is the rare and precious skill of staying one step ahead of the need to be efficient.  As soon as your practice finds that it is attracting competitors and pressures on fees start to build, a winning strategy is not to find more efficient ways to deliver the service at cheaper rates.  That is the race to the bottom!  A winning strategy is to invest the time and resources to move your practice into a new and unassailable market position where demand once again exceeds supply.  What I’ve been saying is that time “over-invested” in strategies of cost efficiency is time stolen from the much more important, admittedly difficult, but wealth creating activity of innovation, differentiation and entrepreneurial growth.

When I attempt to define the difference between effectiveness versus efficiency, I harken back to the advice of one of the greatest strategist of all time – the late Jerry Garcia, founder of American rock band, the Grateful Dead, who said  – “You do not merely want to be the best of the best.  You want to be considered to be the only one who does what you do.”

Post #668 – Wednesday, June 12, 2013

The Outgoing Firm Leader’s Script

In a recent discussion with a soon-to-retire managing partner, I discussed a number of substantive issues he need to discuss with his successor including how he needed to handle communications with his various partners after he passed on the baton.  Here is the script he prepared for himself to communicate to his successor:

“I’ll always be here to help you, but you should expect that some of our beloved partners are probably going to go around you and come to me whenever you make an unpopular decision.  And, if you are doing your job as our new firm leader, as I know you will, this is guaranteed to happen.  I want you to be confident that I am not going to respond, in any way, to any complaints, so don't let the prospect of my responding, impact your decision making.  Even if you choose to fire someone who has worked closely with me for many years, you should proceed to take that action.  And rest assured that if I don’t agree with some course of action or observe you doing something contrary to the way I did it, I would not go to any partner to voice my feelings.  This is now your firm to lead and you may call upon me should you ever feel the need for a sounding board.”

If you are facing a firm leadership transition or even having a new office managing partner taking the reins of one of your larger offices, please have a look at:  The next program is scheduled for August 15th at the University of Chicago and we are now accepting registrations.  Have a look at the day’s agenda, the distinguished faculty, the testimonials, the extensive course materials, the follow-up support and your total satisfaction guarantee.

Post #667 – Saturday, June 1, 2013

It’s Time For Law Practice Management 2.0

Join me September 26 at the University of Chicago where I will be Chairing and Presenting at an important Conference on how to reach the next level in practice group management.

Building and maintaining highly effective practice management structures is perhaps the greatest challenge facing law firms today. Tasked with learning how to adapt and embrace new economic realities, sophisticated and demanding clients, constrained fee increases and a real need for practical efficiency - practice and industry team leaders have an ever-increasingly critical role to play in the future success and profitability of their firms.  Ark Group’s Law Firm Practice Management 2.0 is about taking practice management to the next level and reengineering it for profitability - designed to help identify and implement the structural necessities for effective practice management in today's complex and competitive environment.

Other speakers include:

Stephen Pike, Firm Managing Partner, Gowling Lafleur Henderson

Kristin Sudholz, Chief Value Officer, Drinker Biddle & Reath

John Ferko, Director of Strategic Pricing & Practice Management, Miles & Stockbridge

Frank LaManna, Chief Operating Officer, Thompson Hine

Patrick Johansen, Director of Business Development, Brinks Hofer Gilson & Leone

Steven Petrie, Chief Strategy Officer, Faegre Baker Daniels

Susan Brelus, Chief Marketing Officer, Thompson Hine

Tea Hoffmann, Chief Strategy Officer, Parker Poe

              Click HERE for full details and registration

Post #665 – Tuesday, May 21, 2013

Efficiency is Not THE Competitive Advantage

My latest co-authored article (with good friend and colleague Ed Reeser) appeared in last week’s San Francisco Daily Journal.  In it we reported that . . .

Efficiency in any firm, in and of itself, is not the competitive advantage.  There is a big difference between being efficient and being effective.  It’s not that becoming more efficient lacks importance, but far too many firms only seem to be investing significant time and resources about being more efficient – at the expense of being effective.

You may be interested in reading what we have to say about: efficiency at producing commodity work; efficiency at pricing services; efficiency in generating net operating income; and efficiency in satisfying clients. 

To download your copy – click here

In the final analysis . . . Are you being efficient or being effective, or do you even know?

Is your efficiency directed to the operation of the business and generating net revenue gains, or the consumption of your human resources for redistribution of a stagnant income pool, and thus hastening the demise of your firm?  It isn’t enough to be efficient on the right things, it is critical not to be efficient at doing the wrong things.

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