Beyond People, Value & Clients: Elements for a Successful Law Firm

Originally published for Thomson Reuters Legal Executive Institute on January 20, 2015

All who knew him were saddened when Don Robinson, a legendary New York lawyer and law firm leader, passed away last June at the age of 79. I was blessed to be Don’s partner during the last 15 years of his career. During those years he provided me some of the most sage and valuable mentoring I ever received.

From time to time I think of Don and how he would have dealt with the ground-shaking challenges law firms face today. Don was fond of saying that a great law firm consists of “great lawyers, doing great work, for great clients.” I am pretty sure Don would agree that to deal with today’s world, much more is required. I think he would agree that law firm leaders need to take stock of at least 10 elements, including his three basics.

Here is my list of the necessary elements:

1. People

People represent the fundamental building block of any firm. There was a time that meant only lawyers, and mainly partners. In today’s world the people that make up the law firm are much more diverse in their preparation, skills, and range of duties. And that will become ever more so as firms embrace new ways to deliver service.

As it always has been, however, to be successful, a firm must select, train, and nurture its people with great care, and build a genuine and stable team. In the end, the old saying is true: A firm is only as good as its people.

2. Value delivered to the clients

Don’s reference to lawyers’ “work” must be understood today to mean more than just completing the “legal” assignment. In every sense, a law firm must deliver value to the client, measured by the client’s objectives, not just the lawyer’s professional standards. Law firms are chosen not for their excellence in the abstract, but for the benefit they confer on their clients.

3. Client relationships

To have a sustainable law practice, a firm must have meaningful and mutual relationships with its clients. This can only be accomplished over time, based on results and much more. It requires a sincere concern for the welfare of the clients, a genuine understanding of the client’s business and objectives, and a personal connection between the human beings of the firm and of the client.

Don was right that these three elements are bedrock. But they won’t be enough in today’s changing legal environment. In addition, firms will need the following:

4. Shared mission

To navigate our turbulent times, it is more important than ever for a law firm to have a shared mission among all of its people: What the firm is trying to accomplish, what its strategy is to get there, and the culture that defines the conduct of its people.

5. Process design

To meet the market’s increasing demand for value, firms must focus thoughtfully and persistently on how best to organize the process of delivering legal service. Past practice will no longer do. Firms must find the ways that deliver what the clients need, as efficiently and reliably as possible, taking full advantage of all the tools available to the firm.

6. Technology

Technology enables increasing portions of legal work to be done better, faster, and more cost effectively. The successful law firm must embrace the emerging technologies, which will mean investment, re-allocating work among personnel and machines (process design), and re-examining the law firm’s own business model. The difficulty of the related changes that technology will require will cause many firms to be slow to adopt them. The most successful firms will rise to the challenge.

7. Cost management

Firms must manage the cost they incur on behalf of their clients with the utmost care. This includes not only how much they spend for the resources they deploy, but the way those resources are deployed (project management). It will also include the way in which firms elect to collaborate with new entrants in the market, and choosing which of those new entrants will be able to do some elements of legal work more efficiently than the law firm itself can.

Not only is cost management a fundamental element of a lawyer’s duty to clients, the market increasingly will demand it. And, with declining fee levels being paid for most work, so will the profit objectives of the law firms.

8. Output pricing

Successful firms will need to find ways to price their services based on their output, not their input. The trend away from billable hour-based pricing is irreversible. The so-called “alternate fee arrangements” will take many forms, but, in the end, successful law firms—like nearly every other business in the world—will charge their clients based on the benefit conferred, not the time and effort they spent to confer it.

9. Marketing

Firms will need to do an ever better job of communicating their value proposition. Given the increasing segmentation of the market, it will be harder for the clients to distinguish among law firms, making it all the more important for firms to get their messages out effectively.

10. Other systems

Finally, firms must adopt a set of effective systems to enable them to make the most of the other elements they assemble and maintain. Particularly important among these will be the metrics by which firms measure their performance, the incentives they create for the performance of their people, and—perhaps most importantly to firms’ survival—the ways they manage change.