Business decisions – especially those involving marketing and branding – require careful consideration. But they also require timely action. Are law firms hurting themselves by being too slow and cumbersome in making business decisions?
Within administrative and outside provider circles, law firms are notorious for their slow reactions and lengthy decision-making processes. It is for this reason that so many administrators who are hired from outside of law firms fail to last more than two years in this difficult environment. And increasingly, I’m hearing about consultants and suppliers who are opting to steer away from law firms as clients.
Generally, we exhibit behaviour because it’s worked for us in the past, and because we’ve fostered an environment that supports our continued use of that behaviour. There’s no doubt that in the past, a slow, methodical thought process has helped law firms to make the right decisions. But we have reached an age where decisions must be faster-paced. I recall attending a conference over 15 years ago where in-house counsel from major US corporations told the room to ensure no law firm meeting took over an hour because they didn’t want their lawyers to be over an hour away from responding to a phone call or email. This same panel also advised that they preferred a best guess legal opinion today rather than a 100% opinion three days from now when the deal will be dead. Even back then, speed was important and that desire certainly hasn’t reversed over time.
Still, most law firms take far more time and data to make a business decision than almost any other industry. Why is that? Part of it stems from the lawyer personality but also from the traditional environment of law firms.
- The lawyer personality is averse to risk. In their mind, change is always riskier than the status quo. But the status quo could actually be hurting the firm. Lawyers seldom consider (or are honest as to) whether current behaviours are resulting in deterioration such as client loss or internal morale issues. They may be blind to the potential that money is being left on the table. They may be less likely to consider opportunity loss as part of the equation. Business people, on the other hand, ensure those three considerations are part of any decision-making process.
- Lawyers like to see evidence: that change needs to happen, that a particular change will work, that nothing bad will happen with the change, etc. They obtain this evidence through examples of other firms successful implementing the change. The problems with waiting for precedent are numerous. No two situations are exactly the same so no other firm example will truly be a guarantee that your firm will experience the same results. Timing, individuals involved, skill, economic and political climates, and how quickly you came to the table can all be variation factors. Additionally, fortune in business tends to favour the bold. The first three or more to a new idea reap the rewards. The followers get the left-overs. And finally, good business decisions often occur at key times. A great outcome may be far more reliant on speed than the volume of similar events out there. A good action can turn into a bad one if you miss your moment.
- Law firm partnerships (and increasingly, law firms in general) continue to believe that everyone (or nearly everyone) must be on-side with a decision before it proceeds. Accounting firms, which are more profitable than law firms, learned long ago that this consensus managing was less agile, and resulted in more watered-down solutions, with delayed decisions made by people who had little experience or know-how on the issue in the first place. But law firms still put law firm administration and strategy to a vote and if there are a couple of naysayers, those opposing parties can actually railroad the agenda and force delay or compromises that might not ultimately be in the firm’s overall best interests.
- Every law firm has a few lawyers who remember an instance where a decision was made and action taken, but the result was less than stellar. These lawyers can be counted on to bring up these stories at every decision-making meeting as their contribution to the process, which usually results in delay and further research.
I’m not saying that this is all bad behaviour for a firm. I like consensus management. I like careful consideration of issues from all sides. Plans can greatly benefit from engaging opinions from dissenting forces. But you can see how the environment outlined above can result in a painfully slow decision-making process that can get watered down to the lowest possible common denominator before any action is taken.
Partners want to have a say in the running of a firm. This doesn’t mean that they need to make every decision, or that they need to be part of every step of every decision. There is a better way that will still place them in the driver’s seat.
If the decision on the table is about something significant like a major expenditure (for example a new computer system or office renovation), a merger or take-over, a change to the list of practice areas or the like, I can appreciate the need for careful prep, a strong consultation process and a consensus-based decision process. Where law firms go wrong is to apply such a process against ALL decisions: staff hires, marketing plans, compensation systems, website content, etc.
I favour an approach where the firm obtains full consensus on the big picture longer-term goals – what I call a strategic plan – and then allows designated parties to make that plan happen. These parties can include administrative heads (such as for accounting, marketing, IT), practice leaders, client team leaders, head of associates or recruiting, etc. These parties are then required to develop and implement secondary, annual plans such as operational, marketing, HR, etc. I also believe in regular communication to the partnership and the firm as a whole on the progress of each of these plans.
This process is favourable because:
- Leaders and administrators have a defined end-game so everyone is “singing from the same song book”.
- It is understood that individuals responsible for various departments or teams helping the firm to achieve those goals will each have a roadmap to get there, and will be reporting on their actions and results regularly to the partnership. This isn’t a free for all. It’s a closely monitored system that holds teams and committees accountable.
- This enables administrators and team leaders some leeway to make decisions affecting their own area of responsibility. If such a decision doesn’t go beyond the team’s authority or budget, those decisions do not need to be approved higher-up.
- It allows those closest to the issue and context to determine solutions for that issue within that context. Who better to make those calls?
- Those making decisions feel greater ownership of the issue and its solutions. They will care more about the outcome because they’ll be wearing it.
It is possible that department or team leaders can fall into the same traps that partnerships do, but it’s less likely. Partnerships carry with them a partnership dynamic that promotes the behaviours outlined earlier. They can also tend to delay decision and action, micro-manage when action does occur, and yet personally distance themselves from any failures afterwards. Smaller teams tend to like action, trust individuals with responsibility, and more closely equate their success (or failure) with that of their team or department.
I’m not suggesting firms stop operating as partnerships. Simply that they understand the value of the difference between what needs to be guided by or agreed upon by the partnership, and where a firm is better served by handing authority and responsibility over to smaller accountability teams.
Remember that ultimately, the value of a lawyer to a partnership is their ability to do legal work, and to bring in more legal work for themselves and others. Their value as leaders or business people is more limited. Business people understand that a key to success is to spend your time where it is most valuable, and to get help and delegate in areas where you are less valuable. Is it more important to the members of the partnership to be involved in every decision, or to have a more successful and profitable firm?