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Post# 632 –
Thursday, November 1, 2012
You’re Working On The Wrong Thing
According to Michael
Porter, the leading teacher, author and thinker on competitive strategy, while speaking
about what he thinks is the epidemic inclination of most firms - to try and
win, by doing what they do better than their competitors . . .
Michael says: “The worst error in strategy is to compete
with rivals in the same dimensions.
Don’t compete to be the best.
Compete to be unique.”
It’s NOT about focusing ALL of your attention on executing a
strategic plan that calls for things like: increased lateral hiring – like every other
competitor – but rather it is about creating competeive differentiation that
matters and adds value for clients.
Post #631 – Monday, October 29, 2012
The BigLaw Banker’s Bloomberg Interview
with Dan DiPietro from CitiBank at a Webinar this past January (entitled The
Future of Legal Services), I have great respect for his insight. In a rather somber (and
well worth watching) interview on Bloomberg TV last Friday, Dan describes the
decline in confidence and
overall uncertainty that he is seeing in the marketplace, how there are
only pockets of demand for legal services and that he is expecting, at best, a
flat growth year for 2012.
He reports on the excess capacity that he continues to perceive
in the industry and how that has manifested itself in his observing some law
firms making “really bad pricing decisions.”
Dan relates one example, of an AmLaw 50 firm, where they are pricing
work at extremely discounted levels in order to get the matters.
Perhaps most importantly, Dan indicated that he is
expecting to see some additional law firm failures. The danger season for
law firm failure is third quarter 2012 through first quarter 2013. He notes
factors to watch and stated that as a Banker he “looks hard” at departures of
quality partners being a leading indicator of distress and also the
productivity numbers (average hours of equity partners) to see if they are far
below other firms or the current norm.
The law firm 'watch list' according to Citibank is
"robust." And in particular Dan has concern about the
firms that have in recent years gone global. He observes that the global firms are a
'watch list' item, especially with a number of newcomers to the arena and the
higher costs, plus some question of how much capacity for service the global
market really needs – “this space has gotten very crowded.” He reports that the old logic of having a
portfolio approach and being in multiple locations, believing that if things
slow down in the US they will keep going elsewhere, is not working anymore.
Post #630 – Tuesday, October
Strategic Planning Research Study
This week a colleague pointed me to a new research study that you might want to take a look at.
The title of this study is "Strategic Planning In Law Firms” and it consists of responses from 79 of the
AmLaw 200 firms to 31 different questions.
Now, I’m not sure how these questions were formulated, but only about 5
of the questions really deal with strategic planning: do you have a plan; who
developed it, what resources were used; what growth options are being pursued;
and how aggressively. The remainder (26)
of the questions deal primarily with five areas: various metrics, information
sharing, staffing, client satisfaction, and managing profitability – all
important issues; but all operational in nature (looking at the here and now)
not necessarily looking at the future or at the strategic nature of how one’s
firm and one’s profession may evolve over the next few years. In other words, it would appear to me that
neither LexisNexis, nor ALM Media really understand what strategic planning is
It is my strong belief that
a true strategic plan (rather than one that is strategic in name only) should
• focus on the future (“what
will our profession look like in 2016 and how do we get to the future first?”)
not obsess about the present;
• exploit opportunities and
build on strengths (“how do we further enhance the value we provide clients?”)
not simply solve problems and correct weaknesses; and
concerned with the external environment (“how do we operate in an economic
environment that may be very different in the coming years from the continual
growth economy that we all grew up in?”); not circle the wagons and firing
One of the findings that
jumps out of this report: “When pressed, many of our follow-up interviews revealed that
implementation is not as rigorous as it could be.”
Big surprise? This is an affliction that I’ve seen many managing
partners suffer from, something I’ve come to call seeing SPOTS – Strategic Plan
On The Shelf. One of the central reasons
that this happens (certainly not the only reason) is because the ‘strategic
planning group’ does not then become the ‘strategic implementation group’ once
the plan is finalized. Many firms behave
as if the intelligence required to draft the strategy should not be sullied by
actually having to roll-up-their-sleeves and now execute their strategy. Thus the strategic plan is delegated to
someone else; anyone else – the busy managing partner and/or COO, the marketing
department, some newly formed committee, the practice group leaders and so
One of the other reasons
this happens is because partners have not really been actively involved in the
creation of the strategy such that they can see a glimmer of their own
fingerprint somewhere on the final plan.
And we all know (don’t we?) that no partner buys in to, gets
enthusiastic about or willingly supports any plan, direction or change that
they have not had some small part in formulating.
I’ve actually witnessed executive committees go off for a weekend to
develop the firm’s strategic plan and then spend the better part of the coming
year trying to sell it to their partners.
One section of this report
deals with ‘Client Relations” and in the survey they asked law firms: “Which aspects of your firm’s relationship with
clients would you most like to change in 2012?”
They then proceed to report that just over half (56%) of respondents
reported they have a plan to track client loyalty and satisfaction. This may all be very interesting information
. . . but what does it have to do with strategic planning?
planning is NOT about determining your client’s satisfaction (looking
backwards); it’s about discovering what your client’s unmet needs are and what
is frustrating the hell out of them in achieving their business objectives. It’s not about you. It is about how much you know about them, and
what their future expectations and aspirations are. Have they used AFA’s, are they inclined to
offshore any work, what do they think of certain technology applications, and
I could go on at some
length, but in the final analysis, consider: Does your latest strategic plan
show you doing anything different from the three or four significant
competitors in your marketplace; provide for specific ways to improve your
firm’s profitability (not just PEP); and cause other competitive firms to see
you as a leader in some particular market niches?
Post #629 – Monday, October
Some Surprising Findings
About RFP Responses
Between July 23 and August
3, LexisNexis conducted an extensive survey measuring the
level of RFP activity underway within law firms. After all, many corporate
legal departments have embraced the use of RFPs and other competitive bidding
mechanisms to identify, vet and engage outside counsel.
One of the more revealing
finding of this survey was that 146 (41%) of 359 survey
participants simply did NOT know the level of RFP activity underway at their
firms – how many RFPs, pitches or proposals their firm responds to on a monthly
basis. Given today’s economic climate,
you would expect that RFP-type activities would be more top-of-mind for every
law firm – and especially for firms of over 500 attorneys in size!
0 – 50 Attorneys: 9% of Respondents / 11% Didn’t Know RFP
51 – 100 Attorneys: 24% of Respondents / 21% Didn’t Know RFP
101 – 300 Attorneys: 42% of Respondents / 30% Didn’t Know RFP
301 – 500 Attorneys: 9% of Respondents / 14% Didn’t Know RFP
Over 500 Attorneys: 16% of Respondents / 24% Didn’t Know RFP
Overall, firms are responding to an average of 5 to 16 proposals
each month with larger firms engaged in a higher volume of RFP activities than
their counterparts in smaller firms. Meanwhile, responding to RFPs, pitches and
proposals puts a strain on practice resources.
Number of Proposals By Firm
Size and Average Hours Per Proposal
101 – 300 Attorneys: 96 Proposals / 22.39 Hours Per Proposal
301 – 500 Attorneys: 132
Proposals / 24.61 Hours Per Proposal
Over 500 Attorneys: 192 Proposals / 25.00 Hours Per Proposal
It’s interesting to note that, on average, larger firms tend to
devote more time to each proposal activity than smaller firms. There don’t
appear to be any efficiencies or economies of scale for handling proposal work
attributable to larger firms.
Other survey highlights
• For all the time and effort devoted to RFPs, pitches and
proposals, only 58% of respondents verified they bother to track wins and
losses. 25% placed themselves in the “don’t know” or “maybe” category; and 17%
were willing to admit they do NOT track.
• 42% saw an increase in RFP activity at their firms over the past
12 months; and an identical 42% believe the volume of RFP activity has stayed
Post # 628 – Monday, October
Advice On Incentives And
A great little tid-bit on
Bob Sutton’s (Work Matters) blog is well worth thinking seriously about. According to Bob:
I heard something last week at the dinner in
Menlo Park that especially caught my ear -- from none other than Brandi Chastain, the Olympic Women's Soccer
gold medal winner and world champion, who still plays soccer seriously and now
often works as a sports broadcaster for ABC and ESPN. The award winners
at Menlo Park were each asked to describe the best advice they ever
received. Brandi began by talking about her grandfather and how crucial
he was to her development as a soccer player and a person. Brandi said that he had a little reward
system where she was paid $1.00 for scoring a goal but $1.50 for an assist --
because, as she put it, "it is better to give than receive."
I love that on so many levels. I helped coach girls soccer
teams for some years, and getting the star players to pass was often
tough. And moving into the world of organizations, as Jeff Pfeffer and I
have been arguing for years, too many organizations create dysfunctional
internal competition by saying they want cooperation but behaving in ways that
promote selfish behavior. Chastain's grandfather applied a simple
principle that can be used in even the most sophisticated reward systems -- one
that I have seen used to good effect in places ranging from General Electric,
to IDEO, to McKinsey.
Post #627 – Monday, October
The Sad Truth About Housing
Last week an interesting
little news piece caught my attention. Federal
Reserve Board governor Elizabeth Duke is reported to have said that the U.S.
has an “extraordinary” level of abandoned properties that will inflect heavy
costs on the wider community and government aid may be needed.
Now if you are like me,
we’ve all been reading recently about how the housing industry has finally hit
the bottom and how things are starting to rebound . . . and how this rebound and
raising real estate prices are indicative of an improving economy (have another look at my Post #618 - Hope For The Best, Prepare For The Worst). So, what’s this all about and what does an
“extraordinary” level of abandoned properties mean?
Well, digging deeper, Ms.
Duke informs us that vacant homes for sale have fallen. (At first blush one would conclude that that
sounds like good news.) They have fallen
from a 2 million peak in 2010 to 1.6 million in the second quarter of
2012. But, Ms Duke also points out,
“there are still 2½ times as many vacant homes available in the US, just not
Now that concluded this
little news report from Reuters, but let’s do some math to determine what this
all means to our economy going forward.
Let’s imagine a best-case
scenario in that when Ms. Duke referred to 2010, we will assume she was
referring to the end of 2010, (18 months ago) and not the beginning of 2010 (30
months ago). If, as she reports, they
were able to dispose of 400,000 vacant homes for sale over the course of 18
months, that would amount to roughly, 23,000 homes per month. We now have 1.6 million plus 4 million (2½
times) or 5.6 million total vacant properties remaining to dispose of. If we were to maintain disposing of 23,000
per month (highly doubtful, but this is a best case scenario after all) we
could rid ourselves of this inventory in . . . (wait for it) . . . about 243 months, OR in 20 years, OR by July 2032.
And, by the way, this does
not take into account those properties still occupied (not abandoned) and in
foreclosure proceedings, or those properties that continue to remain financially
Post #626 – Thursday, October 4, 2012
Looking At It From
The Client’s Perspective
In discussions this past week with the members of a newly
formed practice group, we were exploring the various ways in which to
effectively market their offerings. From
those discussions we concluded that there are at least five ways in which you
can start to identify your clients’ unmet needs and create opportunities for
What makes your clients most frustrated when they are trying
to use you or some competitive firm’s legal services?
What compromises do clients have to make in order to get the
results that they are after, and how could you innovatively address those compromises?
3. If Only
What would absolutely transform your clients’ experience, if
only you had the means to make it happen?
4. Haves and
What can Fortune 50 clients afford to do, that those of your
clients on tighter budgets can not afford?
How could you help these clients turn a dream into reality?
5. Technology and Convergence
What changes in technology are emerging, and how could you
link them with your services to create entirely new client solutions?
Post #625 - Tuesday, September 25, 2012
The Firm Leader – COO Team
Following on my last Webinar
in July covering the subject of how to go about ‘Selecting Your New Firm Leader,’ I’m delighted to be following on
that theme with a new event, scheduled for November 13 to discuss the sensitive
balancing act that every firm leader faces in sharing management responsibility
with their COO/Executive Director.
web-based discussion draws on in-depth research exploring approaches and behaviors
that build and maintain highly effective teams - including real life, concrete
examples, tips and tools for bringing the key ingredients to life in your firm
- including analysis of what this research reveals as being the critical
missing elements in cases where the relationship is "something less than
This webinar will cover:
• The importance of the
Firm Leader and COO developing a shared understanding of where each other's job
begins and ends - and what they each need to do in order to back each other up.
• The 14 distinctive
characteristics of highly effective Firm Leader - COO teams grouped into three
areas: communication, common approaches and shared relationship
• Establishing effective
working protocols and coordinating approaches so you aren't stepping on each
other's toes; and
• How to manage your
respective egos - from taking your bows together even though you may feel that
you did the lion's share of the work
Joining me for the Webinar
will be John Michalik, former Executive Director at the Association of
Legal Administrators and author of The Extraordinary Managing Partner:
Reaching the Pinnacle of Law Firm Management.
information is available from Ark Conferences
#624 – Wednesday, September 19, 2012
Be A Meaning Maker
is popular folklore these days to insist that our firm leaders be some
kind of visionary, or strategic thinker.
Maybe we would do better by simply asking them to be meaning-makers!
is a meaning-maker?
Those are firm leaders who . . .
continually talk about the importance of each professional. They find ways to honor the unique strengths
of each individual while coaching that professional and helping them find
opportunities to become even more successful.
continually talk about the future of the firm in ways that makes others not
want to be left behind. They use words
that re-define the future as one of exciting possibilities and beckoning
continually talk about the contributions that the firm makes to its
communities, to pro bono endeavors, to the economy, and how it enhances the
lives of clients, partners, staff and their families.
are the firm leaders who talk about the firm's work as a "calling," a
calling worthy of its members' very best efforts and talents.
Post #623 – Wednesday,
September 19, 2012
Student Loans – Another Bubble Ready To Pop!
Get Ready. The
fallout from the student loan crisis will hit in mid-2013, four years after the
volume of government-funded student loans surged. Like the infamous option ARMs (adjustable-rate
mortgages) during the housing bubble, these loans have precisely timed fuses:
Four years after the loans are made, borrowers must start making payments.
So, imagine it is May 2013 on an ivy-draped college campus.
Your child just graduated with a degree
in English. In 2009, your child borrowed
$50,000 from the US Department of Education’s Direct Loan Program. Job searches for teaching and journalism
positions have been fruitless. Within a
matter of weeks, your child must start making loan payments on a waiter’s wages
Signing up for a huge student loan was a mistake. Everyone had assumed a certain type of job
market would exist four years into the future. The lender — the US government — has long
subsidized unsustainable activity.
According to Labor Department statistics, 1.9 million Americans between
the ages of 20 and 24 not in school are officially unemployed. The size of this age group working part time
is the biggest since 1985.
Unless recent college grads hold degrees in
high-demand fields like computer science, engineering or geology, they aren’t
finding jobs; they aren’t buying new cars; they aren’t starting families; and
they aren’t buying houses, absorbing the excess supply in a sluggish housing
The US Department of Education has become the
Countrywide of student lending. After a
lending binge started in 2009, it now holds a massive $452 billion portfolio of
student loan receivables, according to Federal Reserve data. This so-called “asset” will become a liability
by next year. A huge percentage of these
loans will go bad or have to be restructured.
When that happens, Congress will have to appropriate money to make up
for the loan-payment shortfall. What was
quietly off budget will soon make a big splash on the federal budget. You may expect defaults on government student
loans to reach tens of billions of dollars per year starting in late 2013.
Like Countrywide, the government is not honestly
accounting for its portfolio risks. This
$452 billion portfolio doesn’t even include a few hundred billion more in guaranteed
student loans. The exploding deficit
will force the Federal Reserve to not only keep rates at zero for the rest of
the decade, but also to print trillions more dollars in order to buy the
Treasury bonds floated to fund these deficits.
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