Word Count: 908 words
Time to Read: 2-3 minutes
While it is, of course impossible to predict the future with complete accuracy, it is possible to make very precise 'educated guesses'. In an article in the Economist, entitled "A less gilded future", we learned the tale of a storied law firm, Howrey, that in a period of just two years went from one of the world's biggest law firms by revenue, to complete collapse.
You would be right to wonder how such a catastrophe could befall a previously immensely successful firm - in what was essentially a blink of an eye. In reality the story is an old one – they simply got caught up in massive and, most tragically, unforeseen changes in their market that they were not prepared to deal with. We know that changes happen in the legal environment. There will be cycles. There will be new firms that arise with innovative ideas or business models that can make older, established firms feel like the buggy whip makers in the early age of the automobile - still making an excellent product, but no longer having a market for it.
So, how can firms avoid the fate of such respected giants such as Howrey this year, or Thelan and Heller Ehrman in the recent past? While there is no easy answer, the solution seems to reside in the realm of strategy. There is a great deal of data available which firms can tap into that would give them ample warning of disruptive changes in their marketplaces. Firms that have a solid strategic planning process in place, and who rigorously adhere to the results, can do much to avoid the mistakes of other firms who have become victims of the vagaries of market, regulatory, and political changes, or business cycles.
A good strategic planning process should include an environmental scan which, if done properly, will reveal where both dangers and opportunities exist. By closely examining this data and correlating it with their strengths as a business, firms can begin to make decisions that are data-based. Advantages are quantifiable – if firms take the time to articulate them.
A critical component of the environmental scan is the surfacing and examination of the assumptions held by the Partners in the firm. Assumptions are powerful forces that can and will drive a firm's strategy.
Many years ago, I was consulting with a company in the public transportation business. In working through an assumptions exercise with the senior leadership team, it became clear that a number of the team thought of the company as a 'ward of the state'. They saw a company that had to go to the legislature each year with their hands out to get the monies they needed to fund operations year to year. Their assumptions and mindset was that they were an expense that needed to exist to get people around the city. Once we surfaced that assumption and challenged it, everything changed for them. They altered their thinking from that of an overhead cost to that of an investment in the region's economic future. This led to innovative ideas and strategies that fundamentally changed their relationship with the legislature, their competition, and their marketplace.
Many of the things that made your firm successful in the past may now prove to be nothing more than time-worn beliefs about what clients really value, what services remain worthwhile offerings, what constitutes profitability, or what ensures quality performance. You need to rigorously and constantly examine your firm's various assumptions to see if they are still viable.
A warning - Many law firms equate a solid strategic plan with being as effective as they can be internally. You really need to think of being maximally effective and efficient as the 'price of admission' - the basics you must get right in any firm to have a chance to be successful. Lawyers are trained to resolve concerns, remove barriers, correct obstructions and generally deal with the immediate – all time spent in looking inward rather than focusing on the future, exploiting openings, and building on strengths. Strategy must include both an internal and an external focus, prepared in equal measure.
As you create your overall strategy, it is also important to keep in mind that it is not an 'if you build it, they will come process.' If you want to have a realistic chance of controlling your future, you will have to work to change the dynamics of the market in ways that will contribute to the realization of your plans. By understanding the forces at work in your market, and focusing on the key players and key dynamics, you can concentrate scarce resources in the right places, at the right time, and thereby shift these key leverage points, or centers of gravity in ways that will enable your plans.
Finally, you can use your enhanced understanding of your market to create very accurate scenarios that can give you sound alternatives as your plans unfold, and as the market changes and reacts to events.
Strategy is not for the faint of heart. Done poorly, or not done at all, you are leaving your firm, your clients, and your legacy entirely to the mercy of an unforgiving marketplace. Done right, it can yield enormous benefits. It is indeed possible to see the future as prologue; a beginning – you can see it, you can create it, and you can profit from it.
Wolf Management Consultants can help your firm create solid, executable strategic plans that will help you not just survive – but thrive. Contact us today at (858) 638-8260 or email firstname.lastname@example.org.
Leadership insights in your inbox.