The whole world as we know it has changed and continues to change. Adapting to that change in order to stay competitive is essential in 2013 and beyond. The common thread is that lawyers will need to pay close attention to the new and constantly changing needs and wants of their clients if they expect to attain and then retain client loyalty.
Still, some law firms continue to hang on to the old ways of running their practices, perhaps with the idea that someday the partners will wake up and find that the world of 2005 has returned. Until then, they will cut equity partners and staff in order to bring short-term balance to their finances, kindling dissatisfaction among their ranks while failing to address the clients’ cost and service demands that create financial pressures.
The simple fact is that, to survive in the new normal, firms must identify their strengths and play to them. There are very few organizations that can be all things to all people. With limited resources available, it is important to emphasize those resources and expend them in a focused manner for greatest benefit to the firm and its clients.
Historically, the catalyst for change often has been money. With a cushion from past successes, there is little motive in many firms to alter their business patterns. But when a cushion narrows or evaporates entirely, and when collections become an issue because clients with their own financial problems fail to pay, firms must assess and change the way they operate.
There are two ways for firms to make such an assessment: Examine revenue and figure out what the cost structure should be, or look at current costs and services and determine how much revenue is required for those services to turn a profit.
In either model, the question becomes: “Can I sell enough widgets to cover all my costs and have something left over?” Replace “widgets” with “hours,” and you have the question that goes to the heart of surviving in the new normal.
Most firms find that there is no easy way to adjust costs to revenue. The strategies for doing it – eliminating lawyers and staff, shedding clients, and reducing services – all have drawbacks that are hard to overcome.
By contrast, determining how much revenue is needed to cover costs requires making explicit the tie between individual compensation and the firm’s overall revenue.
Firms that service major clients with teams instead of a single rainmaker can identify and provide needed practice specialties that reflect a full range of client concerns. Coordinating team service provision according to a strategic plan can give clients a complete and virtually seamless service package.
As a result, the client receives “one-stop shopping” from a group of lawyers who are chosen to address specific needs, both in terms of practice specialties as well as billing rates. That focuses the firm’s resources where they should be – on what the client needs and wants – and creates a practical model for surviving and thriving in the new normal.
Edward Poll is a speaker, author and board-approved coach to the legal profession. He can be contacted at [email protected] Also visit his interactive community for lawyers at LawBizForum.com.