Survey's authors recommend seeking client insight and focusing on shorter time frames
While law firms tend to have developed a strategic plan, very few ultimately implement it, according to a new survey of US and Canadian law firms.
The survey, executed by Patrick McKenna of McKenna Associates Inc. and Michael Rynowecer, president of The BTI Consulting Group, found that while 78.5 percent of respondents said they had a written strategic plan, and 69.8 percent had spent at least three months developing it, only 18.6 percent had instituted the plan.
“There's a problem around implementation,” says McKenna. “There's a problem that they're having around the amount of time being invested and not getting a return out of it. It illuminates a number of issues that, I think, would be important to firms, especially firm leaders, to look at.”
The survey found that while 68 percent of respondents paid outside consultants to develop a strategic plan, only 23.5 percent said they had successfully implemented the plan they paid for. Almost half of respondents said, “strategic planning is more important than ever,” and another fifth said it is “tremendously important.”
The survey polled over 200 law firm leaders, including leaders from 30 Canadian firms.
As a consultant, McKenna says he has seen those in his industry “couch strategy in terms of fluffy positives like ‘vision, mission, and values’” without undertaking the onerous work of analyzing a firm’s growth challenges and making difficult choices. He says law firms should focus their strategic planning more on how to differentiate themselves from competitors rather than growth and size.
“Your firm and the individual business units have to work at making themselves distinctive and making themselves more valuable to clients,” says McKenna.
“If you're doing what everyone else is doing, you don't have an advantage.”
In the white paper detailing the survey’s results, “Dissecting The Processes of Law Firm Strategic Planning,” the authors, McKenna and Rynowecer, suggest that firms focus too much of their attention on internal issues. Law firms are preoccupied with enhancing morale and efficiencies when they should concentrate on how to win in a competitive market. The authors said a firm’s chief operating officer should conduct regular operation plans and compare the firm’s total billings to its productivity, its discounts to its realized rates, and compare the firm’s investments to its return on knowledge management. The COO should also focus on leverage ratios, cost management, diversity, and website attractiveness.
“Will predictive analytics, artificial intelligence, robotics and automation replace many of the things that lawyers traditionally were paid to do?” said the authors. “To remain competitive in tomorrow’s marketplace, law firms may need to embrace external and disruptive innovations.”
McKenna and Rynowecer also said firms tend to try to plan for too long a timeframe. Most survey respondents said their strategic planning looked more than three years down the road. The authors said it is impossible to plan with certainty when the environment is uncertain, and planning over a shorter time span allows for flexibility and adaptability as circumstances change from unexpected trends and new competitive and technological disruptions.
McKenna and Rynowecer recommend firms draw the client’s voice into the firm’s strategic development. One survey respondent encouraged the use of client surveys. Another said that they regularly meet with prospective clients to ask about trends shaping their industry, the risk factors potentially impacting their growth and whether the firm’s strategic planning made sense. Clients have crucial insight to share that will assist in the development of the most relevant plan, said the authors.
