http://www.patrickmckenna.com/blog

Firm Leadership

Rants, Raves, Rebuttals, Reflections, Revelations & Ruminations


Page << Prev  10  11  12  13  14  15  16  17  18  19  Next >>  of 81



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: www.first100daysmasterclass.com.  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.



Rant #664 – Friday, May 10, 2013

Critiquing Your Strategic Plan

I recently had the opportunity to review and critique a law firm’s strategic plan and present my findings to the firm’s management committee.  This was a plan that I had not been involved in helping formulate and a plan that was about to be presented to the partnership for approval.  The document I received was essentially four pages comprised of the firm’s Mission, Vision statement, 5 big-picture Goals with 28 Action steps and a number of concluding milestones identified to measure performance results.

Whenever I look at some firm’s strategic plan there are usually three components that I examine:

• The “Process” for how the plan was developed;

• The specific “Content” of the plan – the ‘macro’ big picture strokes and especially the ‘micro’ specific how-to action plans; and finally,

• The implementation or execution schematic

Now I don’t think it’s fair or effective to simply be a critic.  I think one should offer some thought provoking stimulation that has the firm assessing their own work to determine whether it meets expectations.  I’m reminded of something the legendary father of modern management, Peter Drucker once said: “One does not begin with answers, one begins by asking, ‘What are our questions?’”  The notion that questions may at times be more valuable than answers is counterintuitive.  But I find that our ability to reflect upon our answers to good questions is an opportunity to reframe the challenges in front of us.

I therefore posed a number of questions to these management committee members.  Here are some which you might find helpful for critiquing your own strategic plan.

PROCESS Questions:

• To what extent were partners involved, such that they can see their individual fingerprint somewhere on the final plan, and thereby enhance buy-in?

• How many clients (and prospects) were interviewed such that some components of the plan reflect the current thinking, views, and opinions of your clients?

CONTENT Questions:

• What aspects of your Mission and Vision would stimulate your lawyers to get excited about the firm’s future?

• Where are the specific growth niches that have been identified and are going to be pursued in each of your conventional and industry practice areas?

• How does the firm plan to effectively and profitably respond to clients continually wanting ‘more-for-less’ and transition from pricing differently to working differently?

• What aspects of this plan are future-oriented in that they look to how the profession might likely evolve by 2017 and propose specific steps to get to the future first?

• What are you doing or contemplating that would meaningful differentiate you from your peer firms?        

• What are your non-negotiable standards of performance – what aspects of this plan are you absolutely prepared to enforce?

• What are you doing, or contemplating in this plan that you would regard as truly innovative?

IMPLEMENTATION Questions

• Do your people really understand what is involved and how long it will take to implement some of these specific action steps?



Rant #663 – Wednesday, May 1, 2013

Does Your Practice Group Really Have A Strategy?

I read with interest, a guest posting on the Harvard website authored by Freek Vermeulen a noted business strategy professor at the London Business School entitled, “Corporate Strategy Is a Fool’s Errand.”  In it, Professor Vermeulen claims: 

“Most corporations (law firms in our context) consist of multiple divisions (read that to mean practice or industry groups), which set their own strategy – what we generally refer to as "business strategy."  But more often than not, these divisions have very little to do with one another.  Take Philips Electronics with its lighting, medical equipment, and consumer electronics divisions; ThyssenKrupp with its steel, elevators, and engineering services units; or smaller companies such as Trinity Mirror, which offers newspapers, printing, and digital services. They may not be like the big conglomerates of the 1960s — you can see how their portfolio of somewhat related business came about — but, in reality, the various divisions and business units do operate completely independently from one another.  Yet corporate top management invariably tries hard to force each unit into an overarching strategy.  It endeavors to stimulate cooperation across divisions, sets up corporate shared services, and gives a lot of lip service to creating "cross-divisional synergies."  I say, don't go there; don't even try.”

Now what is striking about the professor’s observations is how closely they parallel the real world of strategic planning as it occurs in most law firms.  Few firms recognize that what they are really managing is not one homogenous firm, but a portfolio of different businesses. And it logically follows that what you need to do to nurture, market and grow an employment and labor practice is very different from a commercial litigation practice – or a health care practice from an energy and natural resources practice.

My observation is that too many law firms develop a firm strategic plan with little real meaningful input from the various practice groups and then send the partnership approved document to each of the practice leaders with a request that they develop some kind of written plan of their own, specifically designed to support implementation of the firm’s plan. 

“Each practice group leader shall prepare and be accountable to an annual group business plan that establishes practice group goals and objectives consistent with the firm’s strategic plan.”

Perhaps even worse, in many instances I see the marketing department distribute their “template” to all of the practice group leaders to help them develop their plans.  I saw another one of these templates the other day.  This one was being distributed within a fairly sophisticated, 500+ lawyer firm, with offices from coast to coast, and to be completed by each of their national industry groups.  It included questions like:

• what are the key objectives for the group?

• what are the KM / CLE objectives for the coming year?

• what are the marketing and business development plans for the coming year?

• what resources can the firm provide to assist with these objectives?

• what is the competitive environment for the group from a national perspective?

• what are the opportunities and the threats that the group sees nationally?

• what new ideas is the group considering for the coming year?

• what are the longer term goals for the group over the next 3 years and should anything be put in place now to reach those goals?

The more successful firms have each of their groups work on developing their own strategic direction, separate and apart from the firm’s plan but included as part of the overall firm direction.  It may be just my view, but I think that we have a very long way to go in many of our firms before we get to anything that even resembles a sophisticated strategic plan . . . and that is before we have even begun the sad discussion about how much of these plans ever gets implemented.



Post #662 – Wednesday, April 24, 2013

8 Things Consultants Will Never Say

I came across this article today, authored by Jeff Haden (columnist for INC magazine) and which should be required reading for every managing partner and anyone holding themselves out to be a consultant:

Hiring the right consultant is tough, especially since in most cases there is no physical “product” to evaluate.  You often have to decide whether promises like “We can!” and “We will!” are likely to come true.   Aside from due diligence like checking credentials and references, your decision largely rests on what a consultant says – and on what you believe.   Here are eight things you’ll almost never hear a consultant say, especially during the wining and dining phase.  If you find one who does, consider it a great sign:

“Implementation will be more disruptive than you hope.”  All projects are disruptive.  In fact, the best projects are often hugely disruptive, as well they should — you’re making changes.  A consultant who downplays the disruption factor is inexperienced or fibbing.  A consultant who doesn’t sugarcoat things up front is much more likely to shoot straight during the rest of the engagement. 

“I don’t know.”  Consultants love to know.  Can you blame them?  A consultant’s job is to provide answers, especially answers you don’t have.  A consultant willing to say, “I don’t know, let’s figure it out,” is more likely to take a collaborative approach than one who pretends to be omniscient.

“No solution is ever turn-key.”  There are no turn-key solutions unless the consultant is providing very simple equipment, hardware or applications.  Even then some amount of training and process modification is usually necessary.  There will always be more involved on your end than you expect, so the more you know ahead of time, the better your plan, and the more likely you’ll end up on-budget and on time.

“I’m not sure I understand the requirements.”  Some consultants love fuzzy requirements because “misunderstandings” or “gaps” create wiggle room later. Good consultants want to know as much as possible since the better they understand your expectations the easier it is to deliver those expectations.  T

“You don’t need us to do that.”  (My Favorite!)  Great consultants are willing to point out ways clients can save money.  Losing a little revenue is better than losing clients who realize they purchased services they didn’t need.  Great consultants operate just like you do; they try to build long-term business relationships.

“Your team is telling me something different — let’s sort things out.”  What you want and what your colleagues want, can be two very different things.  Look for a consultant who tries to reconcile various perspectives and needs so the project scope is clearly defined.  A clearly defined project protects you.

“We’ll want to come back a month or so later, at no charge, just to see how things turned out.”  All consultants focus on successful project completion.  The problem is some feel “successful completion” means “final payment.”  Good consultants care about how the project turned out for you.  The best consultant I hired stopped by or called every three months to check in.  Great for us, but something in it for him too: Identifying problems helped him improve his processes.

“No.”  Rarely can a consultant provide everything you request for the price and schedule you need.  “No” is disappointing but is often the answer you most need to hear up front.  Would you rather create a plan based on reality or on empty promises?

Some consultants work on the “agree now, modify later” principle.  Find one who doesn’t.



Rant #661 - Wednesday, April 3, 2013

Spring 2013 Issue of International Review Is Now Available

Here’s my newest issue of International Review – an issue that I hope contains a balanced blend of thoughtful insight and practical contributions on law firm strategy and leadership.

Today, I believe we face a time when doing things fundamentally differently will ultimately trump doing the same things more efficiently.  To succeed firms will need to focus increasingly more attention on how they might differentiate themselves in ways that client value.  My Six Elements of Meaningful Differentiation is intended to provoke your thinking on this important topic.  And you may note that while this may not be the most comprehensive piece on this subject I have deliberately not identified costs as a significant differentiator.  For those who engage in predatory pricing, you might win the fee-cutting race . . . right to the bottom - but the real strategic issue is whether you will have a sustainable practice after you get there.

I am delighted to include an article that American Lawyer magazine agreed to publish an excerpt from earlier this year.  Malignant Leadership reflects upon some lessons from the Dewey catastrophe and has probably garnered more responses from readers than almost any other article that I’ve written over the years.

Be sure to have a look at the results of my latest research into the dynamics of being a managing partner as conveyed in Inside The Corridors of Firm Leadership.  This expose represents the responses from firm leaders of AmLaw 100, AmLaw 200 and other firms on everything from their job descriptions and how they spend their time to their leadership priorities and intentions for when they leave office.

Finally, I am observing a trend wherein more firms are starting to hit the Reset Button on their practice group management efforts and trying to start fresh. Practice Group Leadership 2.0 is my attempt to prescribe some fundamental structural recommendations for what firms absolutely must do to make their practice management efforts successful.

I sincerely hope that you find some practical ideas, tips and techniques here that you can put to use immediately.  To obtain your complimentary PDF copy simply click on the cover of the magazine.  Please send me your observations, critiques, comments and suggestions with respect to any of these articles.


Rant #660 – Monday, April 1, 2013

Once More On Cross-Selling

The other day on the Managing Partner discussion site (LinkedIn) I came across a posting wherein some member was informing us all that “cross-selling within law firms is broken” and lecturing the readers that “If a firm is truly serious, an organizational system should be put in place, driven by the management board, to facilitate the process straight from the top.”

I couldn’t contain myself . . . I was compelled to rant:

I could easily wallpaper my offices with all of the articles that have been written over the past twenty years on cross-selling, and yet the behavior doesn’t ever seem to change. And firm leadership taking control or issuing ultimatums hasn’t worked in the past and is unlikely to work going forward.

Here are two observations worth exploring.

One is that I rarely see cross-selling being quite such an issue within industry groups. Industry groups, by their nature, tend to focus much deeper into all of the various legal issues that clients face, such that it never feel like you are “selling” anything; but rather endeavoring to prevent or solve the client’s problems. But unfortunately, we still tend to structure our firms based on what we studied at law school rather than what the client wants – us to really know their business.

The second may lie in understanding how to motivate competent and conscientious lawyers. The process that is most often used in cross “selling” is that firm management asks the members of some practice group to go to the other groups and “tell them what you do” because instinctively we know that product knowledge (knowing what the other lawyers in our firm actually do for our clients) is pathetic!

The only shortcoming to this approach is that I do not, frankly, have the patience to listen to you ramble on about all of the various services that your group provides. And I don’t really understand most of it either. What would get my attention though, is if you could: 

(1) succinctly identify only ONE hot, topical legal issue that my clients might be facing now or in the very near future;

(2) identify the type of client (perhaps by number of employees) that this issue is most likely to impact;

(3) tell me in a very brief manner why and how this issue is going to impact my client; 

(4) tell me what the downside or consequences might be if my client does not take some remedial or proactive action; and

(5) give me a written cheat-sheet/script on what I should say to my client to make them aware of this issue (because frankly, I didn’t go to law school for all those years to now come across like some used-car salesman and I don’t know what to say to my client so as not to embarrass myself).

In other words, give me the tools to look competent in serving the best interests of my clients and I “might” be more interested in engaging in your cross-selling crap!


Page << Prev  10  11  12  13  14  15  16  17  18  19  Next >>  of 81

 
Copyright PatrickMcKenna.com 2002. All Rights Reserved.
Patrick J. McKenna Ashridge House 11226 - 60 Street Edmonton, Canada T5W 3Y8
Phone (800) 921-3343 or (780) 428-1052 Fax (780) 426-4182
patrick@patrickmckenna.com
Site produced by Austin PR