A successful law firm is one that will sustain business long-term. As a legal practice owner, you have to prepare for the future, from weathering a potential economic downturn to competing with a new firm on the block. While this can be undoubtedly hard to achieve, a strategic plan is the best place to start, argues Mark Haddad, the General Manager of Thomson Reuters Legal’s $600 million Small Law Firm business.
In the inaugural post in this series, I argued that creating an effective strategic plan is central to achieving overarching financial health. Long-term business stability necessitates an ability to manage change and competition, which requires an effective strategy. And strategies do not come together haphazardly.
When you think about it, it’s surprising that more lawyers don’t incorporate really solid strategic planning in their practices. Lawyers are skilled at applying reasoning, logic, and deduction — the raw ingredients of effective strategy — to their everyday work. Strategic planning for law firms requires essentially the same skillset.
I think many small law firm leaders are reluctant business owner-operators. Consequently, they may not have placed the same emphasis on developing their business management skills that they placed on building their practical lawyering skills. But we know they possess all the necessary foundations.
Improving your business requires an ability to improve upon core skill sets with a reasonable amount of effectiveness. That begins with identifying the goals you need to accomplish at intervals, then dedicating the resources necessary to meet those goals.
Identifying your goals
Identifying your goals can and should be more than one thing. In fact, I advocate setting goals in intervals, with no more than two or three discrete goals per interval. Each of these intervals begin with a question.
What do I need to accomplish for my business in the next 90 days?
Often, this interval focuses on “How do I deliver the revenue I need to stay in business?” That is, “How do I keep enough cash on hand to meet my budget, cover my expenses, and pay myself?” This interval also requires you to run the math and allocate sufficient resources to ensure that your collections against your accounts payable will allow you to meet your immediate needs, including a reasonable salary for yourself.
Most law firms understand this interval, but too many stop there. A planful approach to running a law firm requires more thought and planning, over longer intervals.
What do I need to do to be successful for the rest of the year?
This interval should bring your focus to “How do I get into something new?” That is, what should I be doing from a prospecting or business development perspective to drive growth in my book of business for the rest of the year? It could be targeting a new potential client or obtaining a new piece of business from an existing client. A good question to ask yourself at this phase is “What are the more addressable opportunities out there that I haven’t chased?”
For example, have you tried to meet people in the industries or businesses in which you want to become involved? Strategic plans during this interval should look at logical extensions of your existing practice that will help create a runway for your firm’s growth.
Your goals should be measurable and attainable. Perhaps you set a goal of making a certain number of new connections per week or of attending one relevant bar association or industry event per month. Remember, effective goals are SMART: Specific, Measurable, Attainable, Relevant, and Timely.
What long-term trends might influence my practice three years out and beyond?
When looking three years into the future and beyond, examine the megatrends in the legal industry. Where is the law going? What does the regulatory environment look like? Where is there likely to be opportunity in the future to provide needed advisory and legal counsel? Then apply those same questions to your target clients and their industries.
For example, the opioid epidemic regrettably shows no signs of abating. There will undoubtedly be no shortage of legal work to be had, and this could influence the long-term direction of your practice. This may be an area ripe for the type of high-volume litigation practices we have seen with similar large-scale product liability issues in the past. What can you do to potentially position your practice to serve clients with these kinds of needs while at the same time evolving the way you practice to improve profitability?
Asbestos litigation presents another example of a shifting megatrend that may impact a large number of firms. While it has been lucrative in the past, it is now showing signs of dwindling. Future success may depend more on increased specialization. Being an asbestos litigation firm may not be specialized enough but being a niche expert who specializes in asbestos cases against government contractors, ship builders, or some other subset of potential defendants would allow you to position your firm for more business.
Here’s another way to think about longer-term goals: are there goals that would require you to take risks that might be a model-breaker for you? Those types of paradigm-shifting goals are the types of goals to focus on for three or more years in the future.
Be honest with yourself
For every phase of goal-setting, you have to be brutally honest with yourself. Don’t just look to shore up things you think you already do well and don’t give yourself credit for being better at something than you really are. Don’t be afraid to identify and address weaknesses.
Remember — the point of your business plan should be to make your business better. And in making your business better, you make yourself better. After all, you are the business and its growth and yours are closely linked.
This article was originally published in the Legal Executive Institute, which brings together people from across the legal industry to ignite conversation and debate.