This is the second in a series on practical, low-cost options to improve performance and profits amid tight budgets and layoffs. Be sure to read the first piece, Before Layoffs Look, to Collections.
Demand for legal services has shifted dramatically and quickly from two years of unprecedented growth and profitability to deep uncertainty and threats of recession.
Firms have responded with tightening budgets, direct or indirect reductions in talent, and delays in large firmwide transformations and initiatives.
All the while, firm leadership and partners expect improved performance and even in times of recession, clients will demand certain types of legal services.
Layoffs are a common headline from technology companies, law firms, and others, an unfortunate reversion to the mean of talent norms after rapid recent hiring.
Law firm leadership teams are being forced to review all potential options to deliver high-quality service to clients, grow revenue, and do so in an efficient manner.
No/low-cost solutions: To help firms focus and remain competitive, there are a handful of places where firms can implement no/low-cost solutions that will set them up for immediate success.
Where to invest: Beyond the (hopefully) short-term economic headwinds, firms should keep their eye on the areas where continued investment is necessary for long term relevancy and growth. Yes, budgets are tight, but they are not completely gone.
Firms of any size, but particularly larger firms, are a collection of lawyers with specialty areas of practice, organized, whether formally or informally, into groups (by clients, practices, sub-practices, offices, industry groups, etc.). While having many practices, geographies, and types of clients in a firm is healthy for diversification, it can be difficult to organize and manage dozens of these groups.
While the practice leaders, partners and lawyers in the practice know their clients best, they focus most of their time and energy on being legal experts. This is where practice, operations, and firm-level leadership need to provide focus, process and resources to help their legal experts deliver their unique value to clients.
There are a number of low-investment solutions to common challenges that can make a firm more responsive to client needs, more profitable and more productive.
CLIENT FOCUS: In a highly competitive, uncertain economic environment, client service should be the primary focus for any firm. Without a stable client base, there is no firm. Like law firms, clients are trying to navigate current uncertainty, so they need the best advice and guidance from their firms to grow and protect their businesses. Likewise, with finite resources, law firms need to make informed decisions as to how best to allocate those resources among client teams that vary in production, profitability and stage of development.
CLIENT FOCUS TACTICS:
Assess the firm and practice/geography’s client list: Understanding which clients are the best candidates to develop in line with firm strategic goals, and able to be best serviced by existing capabilities is crucial to developing a “target client profile.” What makes for a good client/potential client at the firm level? What about at the practice/geographic level? What criteria are used to assess clients? Is the firm/practice investing too much into certain clients? Missing opportunities with others?
Categorize clients into sunset, maintain, grow: Not all clients are the same, so a firm should know how much to invest to best align opportunities with a client. Some clients cost more to serve than they are worth. Some are likely not to grow but are still valuable to the firm. And some are poised to grow and need increased focus. Using firm data, analytics and aligning to target client profiles can help firms focus their efforts. The most advanced firms leverage core firm data and predictive algorithms—like www.orgaimi.com—to identify undiscovered potential and how to best serve target clients sets.
Look across the firm for collaboration opportunities: The practice/geographic focus of many firms helps to organize, but often times creates silos, cutting off opportunities to collaborate for firm and client benefit. A coordinated, full-service/collaborative firm will likely retain more clients over longer periods of time. Leveraging similar analytics to understand client growth trends, firms can see likely next-matter types by client, industry and by practice. This helps to arm firms with information about additional/new resources and people to introduce to clients for additional matters and best practices behaviors that have led to this growth.
TALENT FOCUS: To deliver the best work to clients, firms must have and develop the best people. Both high- and low-performing people can get lost in big firms without processes to maximize the firm and individual’s experience.
TALENT FOCUS TACTICS:
Catalogue existing talent (capabilities, demographics, experience, etc.): Understanding the skillsets, characteristics and experiences of your talent will help to align work that fits the right people and gets better results. This improves the client and employee experience. Plus, the firm now has the information to properly plan future talent-related strategies and develop and retain its most valuable asset (talent).
Defining client needs and expectations for firm talent: Conducting a similar audit as cataloguing existing talent, understanding client needs down to the skillset, characteristic and experience level will help firms align their talent to client needs. This will further enhance client and employee experiences and thus revenue, retention and productivity. Identify gaps (or excess) in workforce capabilities or other characteristics—conducting the gap analysis between the firm’s existing talent and client needs/expectations will inform the firm’s approach to recruitment, employee experience, training and development. This will also help firms organize the right combination of skillsets to staff on matters to align with client needs and also provides the data required for an informed cost-benefit analysis when determining whether an expansion into a new practice area or retreat from one is best advised.
Minimize unwanted attrition: All of the above tactics are aimed at providing a better client and employee experience. Outcomes include higher employee retention and productivity, that translate into better client experiences, revenue, rates and retention. These benefits are built on a foundation of data, likely data the firms already have. Organizing and analyzing these data points will allow firms to see what works for client/employees, why, and what actions to take for a more consistently high-performance experience.
Identifying key client accounts: Key client accounts are those where there is high value for the firm, in terms of profitability, prestige or revenue, and/or potential future growth. They aren’t necessarily the firm’s largest client relationships, but collectively may also be of a size where losing the client would have a big impact on the firm. Thus, it is worth investing in the planning around how the firm can serve, retain and grow those key accounts that are part of the firm’s long-term growth.
Aligning resources for key client accounts (dedicated team, customized approaches, introductions across the firm, additional time/energy/research to serve): Beyond identifying key accounts, creating and investing in the right resources and capabilities for clients will help ensure retention and growth. This may mean new skillsets for existing people, new offerings, new ways of delivery, and more resources dedicated to serving and growing clients. All these “news” mean investment is required to get this right.
Clarifying the talent capabilities needed to serve key accounts and aligning workforce strategy to reinforce those capabilities (recruiting, training, etc.): Similar to the talent inventory detailed above, identifying the skillsets, resources and talent clients need to remain with your firm is important. This may require dedicated training, outsourcing or bringing in new people.
Develop processes to identify and export best practices from client teams throughout the firm: To realize long-term value from the ideas above, the firm will need a dedicated process to scale learnings from the highest performing teams and clients. The unique combinations of skills, situations, client, team members, etc. will always be somewhat different, but the more a firm can provide a high-value and high-return experience for clients and the firm, the better.
Originally posted on The American Lawyer (law.com), February 2023