Contact the author, Nick Jarrett-Kerr  

 

Financial budgeting should receive a more strategic focus in law firms. It should also have leadership involvement - not be viewed as the annual nuisance exercise when partners are asked to commit to and sign off on targets they and the managing partners have no confidence will ever be achieved or any attempt be made to make good on them.

This is even more relevant as financial trend data in the US and elsewhere is pointing to client dissatisfaction with their return on investment in law firms. There is:  

• declining demand for law firms to do legal work (clients have choices),
• gaps between standard billing rates and collections are widening alarmingly,
• partners are doing less work (at their higher rates clients don't want or need them),
• and at the same time firms are struggling to maintain financially viable qualitative leverage rates, one key to profitability.

For a start, and as one step, the health monitor should be placed on both the budgeting process and firms' approach to budgeting. It is a wonderful opportunity to do much more than simply get the numbers together. It is a time for leadership communication, listening, coaching, and focusing your people on the key thinking, behaviours and processes that are critical for success, as well as aligning strategies within your firm, all with a view to supporting the overall firm vision and strategy. It should not be relegated only to support staff or the partner who "happens to have a good feel for the finances." It is too important for that.

 

Budgeting is also about building true accountability on the part of partners. Budgeting done well is also a fantastic stress-tester of many other activities in the firm. To name a few:

• whether partners are building capital fabric™ (things that contribute to long-term, foundational strength);
• the partners' understanding of critical issues around pricing and its impact;
• whether partners understand and are countering insidious habits like "eating time" and "leaking time";
• how partners are doing in relation to people. Are they keeping what should be the most important financial cog (the partner-lawyer team) well-oiled?
• the status of partner brands and thought leadership. Are they constantly re-building true value for money for clients?
• whether partners have a true understanding of and strategy to tackle the critical financial variables the firm is targeting for attention.

This is strategic, not administrative. It is therefore vitally important. You have partner focus. I suggest you take the opportunity and use it to absolute best advantage.

 

 

In a recent EIC article, I discussed the frustrations law firms experience in successfully recruiting desirable lateral partners; i.e., relatively few quality laterals willing to move for the large number of interested firms. The previous article laid out some strategies firms can adopt to be more successful in the recruiting land grab for lateral partners; however, once recruited, what do the law firm and the recruited lateral need to do post-recruitment in order to be successful? How can both firm and partner set, and have fulfilled, expectations that will cause each to ascribe unambiguous success to the relationship?

The below checklist lays out a framework firms might consider adopting in some form to create a track record of success with lateral partner integration efforts, and in so doing, make it easier to recruit the next desirable lateral partner. These checkpoints are relevant during the recruiting process, and become operational tactics during the onboarding process.

  

"It Takes a Village"

• Establish shareholder commitment to an ongoing intentional level of lateral partner support and awareness
• Is lateral partner success important enough to us that we'll actively participate in causing it to occur? 

Clear definition/articulation of why the firm is unique; the "Value Proposition"

• Define, educate, document
• What makes us special?
• How does our differentiation translate into reliable and practical commercial advantage? How does it make it easier to bring work in the door? 

Establish lateral integration committee

• Small is desirable
• Sends clear message that firm is serious about lateral success
• Allows for ongoing feedback from lateral, particularly in early stages; two-way communication and managerial channel 

Best practices intake

• Have dedicated discussion with lateral recruit about organizational and managerial approaches he/she has seen at previous firm that "work" that he/she would like to see adopted

Synergy analysis

• Assessment of practice group/sector/partner synergies to be jointly developed by firm and the recruited partner
• Exchange information on, and educate about firm clients and recruited partner clients
• Identify target rich clients; identify synergistic sectors/practice groups
• Assess collaboration appetite of relevant firm relationship partners/synergistic practice group partners/synergistic sector partners; create core list of clients, sectors, practice groups, and partners related thereto based on
• Validate presumed synergies through meeting with relevant partners

 Integration/synergy plan

• Create opportunity-specific tactical plan
• Post-recruitment: how will recruited partner and firm collaborate on identified opportunities after recruited partner moves over?

Law Firm Partner Accountability

• (synergistic) Partner-specific concurrence
• Ongoing commitment - what is the nature of the accountable partner(s)' commitment?
• Bonus construction - how can the accountable partner benefit financially from providing desired support?
• The "collaborating partner commitment" - can the accountable partner(s)' commitment be documented?

Communication Strategy

• External
•  Website
• Non-website external communication of announcement
• Internal communication of successes along way

Lateral Partner Objectives/Plan

• Separate from the integration / synergy plan, the recruited partner creates this document to define success over a meaningful period of time-specific objectives, strategies, and tactics, and the resources he/she will need to accomplish them

Documentation

• "What makes (law firm) different?" one pager
• One page description of the law firm lateral partner integration philosophy/elements
• Collaborating partner commitment document
• Opportunity plan
• Synergy analysis checklist
• Lateral partner objectives/plan