The past few decades have seen dramatic changes in the legal profession, including the rise of the megafirm, the demise of firms of all sizes, influx of Big 5 firms as legal practitioners and the reinvention of the practice to include nonlegal services. Amid this turmoil, a number of firms have distinguished themselves by thriving in this chaos.
Is there a "secret ingredient" for creating wildly successful law firms in this brave new world? The answer is, yes.
Well-respected management pundits describe the "complicated formula" as one thing - leadership. What qualities, if any, do the leaders of the top-ranked firms have in common? Some firms have thrived in recent years with conspicuously charismatic leaders at the helm, but those managing partners and firm chairpersons may be hard acts to follow in the next few years. Indeed, with the massive consolidation occurring in the legal industry today, it is possible that even these great law firms will be less memorable than the individual managing partners who figured out how to run them well.
On the other hand, some managers have institutionalized business models that will allow their firms to thrive, in good times and bad, after the successive generations take over.
Lawyers in the role of firms` chief operating officers have improved in the last decade, because they`ve been allowed and encouraged to improve. This is because partners are starting to recognize the importance of a strong leader. They realize that if they do not delegate power to individuals with leadership skills, their practices and their firms will pay the price.
Good law firm leaders know more than a few management skills, however. They keep the firms` vision, the 30,000-foot view of what the firm is and where it needs to be to best serve its clients. This is a very difficult task. Leadership is anathema in law firms because lawyers don`t like to be corralled or led. However, it is particularly important in law firms because it is so hard to induce. And if law firms are to survive in the current economic environment, their managing partners must have the power and will to lead their firms` lawyers and staff.
In order to have this power, however, managing partners must have credibility. And, in order to have credibility, they must have the courage to make unpopular, but necessary, decisions. Embracing this model could be slow in coming. While lawyers now are acknowledging the need to cede power, powerful cultural forces exert an equally irresistible resistance. Power, after all, is a wild card at most law firms, since it originates largely from books of business, although rainmakers generally make lousy law firm leaders.
The job as managing partner is hampered further by the job`s uncertain fate; he or she must survive the inevitable popularity wars and term limits. Many managing partners, therefore, hedge their bets. Unfortunately, many of the most promising ones are not willing to stake their careers on their ability to succeed as managing partners, so they hang on to client responsibility and half-heartedly convince everyone that they can service both their clients and the firm. However, one can`t lead a $100 million-plus business these days on a part-time basis. The incredible obstacles facing managing partners is shown by the relative invisibility of even successful law firms. In spite of years of double-digit profitability growth, few law firms are recognized by anyone outside of their peer groups as "great businesses," although they often are known as great lawyers. Those firms that are recognized at the top of the legal profession feature chairs who have become both internal and public leaders.
In the end, great law firm leaders must weigh the mix of their firms` client base, offices, practice groups and service offerings; identify their strengths and weaknesses; and then determine how to bring those strengths to market while de-emphasizing or divesting the less profitable areas. The leader repeatedly must convey the inescapable logic of the strategy and somehow salve the bruised feelings of those who feel left behind.
Great law firm leaders also must be unconventional, particularly when it comes to generating new revenue sources. It is no longer a novel idea for law firms to invest in ancillary businesses. Strong firm leaders anticipate tomorrow`s nonlegal, as well as legal, business possibilities. They understand how innovative and uncommon thinking support their firm`s vision.
Finally, great law firm leaders recognize and will make their partners understand that the leverage well is running dry. Utilization and ever-mounting volumes of billable hours cannot drive profitability forever. More shrewd models must be devised; clients are demanding it.
Elizabeth Lampert, an executive vice president at Levick Strategic Communications in Washington, D.C., can be reached at email@example.com.
Deborah McMurray is a strategic marketing consultant to the legal industry. She can be reached at 214.351.9690 or firstname.lastname@example.org.