We know the facts: The U.S. economy has seen 11 years of growth, unemployment is at an all-time low, and deal flow continues at a steady pace. Still, CEOs and heads of law and other professional service firms report concern over the next recession. And now with the coronavirus being center stage, it’s imperative to do a self-assessment.
History tells us that economic downturns are often sparked by political events or even crises such as a pandemic, but why wait for troubled times to ignite?
There are several things law firm leaders can do in advance to strengthen their organizations to enable them to meet the challenges ahead, regardless of where our economy leads us.
Strengthen Your Inventory
It’s said that what makes professional services different from consumer products is that in professional services, the inventory goes down the elevator every night, only we hope to return the next day.
But if that inventory is essential to the operations of the firm, we need to determine if it is strong and stable. Do we have a community of well-trained professionals and administrative staff whose expertise is reinforced through a curriculum of ongoing training and development? Not only does training help build skill sets, offering opportunities for growth increases loyalty to an institution.
Ask, are we certain that our lawyers are providing the right level of service to their existing clients? We know that during economic hardships, brand loyalty often falls by the wayside as financial pressures factor into decision-making. Law firms are less able to fall back on the fact that they’ve built a prestige brand when hard times hit and in-house counsel need to make tough decisions. Price becomes an even bigger determinant in purchasing decisions when the economy is rattling.
Before there is a downturn or a firm hits hard times, it’s important to look at the organization’s portfolio of lawyers and other professionals to ask if they are deployed to do the right type of work. It’s also essential to look at their lawyers’ business skill to see if they’ve had experience in project management, business development, and innovation.
Consider this: if the firm’s lawyers were left out on their own without a firm to provide backing, how many would be enabled to build and run a practice? A commercial mindset of innovation and client service is an essential investment at all times, but particularly as one prepares for market shifts.
Firm positioning is more than brand. It means placing resources and attention into those practices that are most likely to succeed. While this requires hard decision-making in terms of resource allocation, having a goal in sight and an actionable work plan should be part of every firm’s management agenda. If it’s not, this is the time to work on it.
A firm’s strategic plan needs to incorporate both internal firm data, where revenue has come from in the past, as well as its existing resources. But an actionable plan needs to dig deeper, to ask how a firm differentiates itself and what factors are changing in the business environment that may play a part in forecasting its future.
A good plan is based on research from various sources, and a timetable and action steps will be part of the process. By having critical areas of development within sight lines, you’ll be better able to hit the target.
Employ Smart Technology
While firms are abuzz talking about innovation and the firm’s technology abilities, many still lack the basic building blocks necessary to become true innovators. It’s crucial for firms to take a step back and look at those basics, the core systems they have in place to help the business conduct its daily work.
Returning to the consumer product model, before you add enhancements to your product, make sure your assembly line doesn’t break-down.
Look at all of your systems, particularly those that your support staff use to ensure you’ve removed double entry.
Address frustration by asking individuals in the organization about what they do that they feel may be a waste of their time. For example, talk to the folks who handle your conflict system and ask them how long it takes the firm to decide to clear a new client in advance of sending out an engagement letter.
Is your marketing department comparing lists by hand with spreadsheets provided by your finance department? If your records department needs a report from your finance group, do they need to wait several days to receive it? Information can be easily captured and professionals should have the ability to gather it quickly once it’s made accessible from multiple parts of the firm.
Today there are advanced technologies that will capture information such as time entry, revenue tracking, and client contacts, to bring them together. By using technology in a way that is smart, by using systems that link together, you will cut down on wasted time and be better able to use your staff in a way that maximizes their value to the firm.
Only by ensuring that your systems are genuinely operational, and that all of your key employees can work remotely, can you think about offering innovative solutions, measuring success, and creating better ways to provide extraordinary value to your clients.
By reviewing your current planning and systems and paying close attention to those who come up on the elevator every day, you’ll be better able to take on the future.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Deborah B. Farone is founder of Farone Advisors LLC. She is the author of “Best Practices in Law Firm Business Development and Marketing” (PLI 2019) and is the former CMO of Cravath Swaine & Moore LLP and Debevoise & Plimpton LLP, where she was responsible for building both firms’ marketing departments.