Five ingredients for law firm success
“My formula for success is to rise early, work late and strike oil.” Paul Getty
Even in the midst of growing uncertainty and upheaval in the legal sector, many law firms are managing to grow profits and create capital value. So what is it that makes these law firms successful and others less so?
Over the last few years we have worked with more than 80 law firms, from national giants to regional boutiques and, without spilling anyone’s beans, here are FIVE INGREDIENTS we see in those firms that are doing exceptionally well.
CULTURE EATS STRATEGY FOR BREAKFAST As management guru Peter Drucker once observed, the really successful firms appear to have an ultra-strong culture that drives direction, commitment and performance, no matter how tough the competitive storm becomes. That’s not to say the odd bit of strategy isn’t useful now and again but it makes a better slave than a master and a good plan well executed beats a brilliant plan poorly executed.
NOBODY GETS BETWEEN THEM AND THEIR CLIENTS The name of today’s game is securing a sustainable and direct route to market. Firms with layers of introducers between them and their clients lack control of their own destiny which makes forward planning all but impossible. The successful firms we see appear to have a clearly-defined market proposition that marks them out as tall poppies in a well-grazed meadow. The proposition is then bolstered by a marketing strategy that attracts new business enquiries direct from clients through a mixture of direct marketing and targeted media activity.
OWNERS AND STAKEHOLDERS SHARE A COMMON GOAL Law firms with internal disputes or issues with their funders or regulator more often than not see performance dip and value dissipate. They end up in a Groundhog Day merry-go-round, unable to move forward. Successful firms somehow manage to grasp nettles, however stingy they might be, and get all their stakeholders supportive of the firm’s objectives. But this cannot be faked. Funders, employees, regulators, buyers and investors have sensitive noses and disunity smells as strong as a country farmyard.
PEOPLE STILL DO THE THINGS PEOPLE STILL NEED TO DO There is a belief in some quarters that technology will one day take over everything and the entire legal profession will soon be replaced by grinning avatars that never need a comfort break. Technology is, of course, invaluable for many things but it can’t sense that a member of staff or a client is about to jump ship just by looking them straight in the eye. Successful firms seem to put a disproportionate amount of time and energy into leadership, staff development and client relationship management which are, and one hopes always will be, fundamentally human activities.
STRUCTURE SUPPORTS THE MISSION However clear a firm’s goal may be, its ability to achieve it can depend on the structure of the business. Sole practitioners, single-shareholder companies, traditional partnerships, limited liability partnerships, multi-shareholder companies, alternative business structures and even public companies each have their place. But the successful law firms we come across have one thing in common. They have all structured their businesses to enable leaders to lead, managers to manage and legal advisers to advise. Their partnership agreements and shareholder agreements create clarity on roles and responsibilities and enable those charged with delivering the mission the authority to press on with confidence.
O’Connors LLP is a Liverpool and London-based law firm that advises law firms, chambers and other providers of legal services on start-ups, structures, regulation, funding, mergers, acquisitions and disposals, contractual arrangements with third parties and insurance. For further information, please contact Nigel Wallis, Pamela Rafiq or Mark O’Connor.