Characteristics of Successful Law Firms
by Ezra Tom Clark, Jr.
Hardly a week goes by without reports about partners or groups of partners abandoning their firm to start a new firm or join another. Some lawyers justify their departures by citing disputes about compensation, lack of direction or vision, management conflicts, clashes regarding values and philosophies, and concerns about firm productivity and profitability. Of course, these may be a lawyers ostensible reasons for bolting a firm, but the deeper reason, which should concern all attorneys who practice in a law firm, is the growing perception among successful lawyers that their firm provides little or no value to them. The problem can be stated simply: "How does a firm offer value in excess of the sum of its parts?" In other words, can a law firm as an institution acquire a measure of value that is independent of the skills, talents and contributions of its partners?
This question can be answered only by analyzing the advantages that a law firm has over a sole practitioner or a group of lawyers who share only overhead. There are a number of possible answers, including the following:
Few firms provide all of these advantages effectively. However, without the "firm," advantages that a partner believes are important, it is unlikely that he or she will stay with the firm.
Most successful and dynamic law firms have certain characteristics or hallmarks that distinguish them from their competitors. Some of these are listed as follows:
Competent, Hard-Working, Focused Lawyers
A law firm cannot operate as a collection of practices that have no interaction with one another. When individual practices merely exist under the same roof, internal competition, hoarding of work, jealousy and suspicion develop. Successful law firms must have a focus or raison detre, and each lawyer should develop specialized expertise consistent with the firms mission. Focused law firms will have significant marketing advantages because they will know what they are marketing. They will also be able to use technology, personnel, value pricing more effectively and will be able to respond to changing economic and political considerations much better than firms that continue to have a general practice or full-service mentality.
Commitment to Quality
Successful firms recognize that "quality work" has a dual meaning: technical quality (how good is the work?) and service quality (did the client have a positive experience dealing with the firm?). Unfortunately, quality work in most law firms is like Justice Potter Stewarts informal definition of obscenity, "you know it when you see it." This ad-hoc and subjective approach to quality legal work exists because no standards or evaluation procedures exist in most firms. Service quality, which clients are increasingly demanding, can be determined only by regular client and matter performance evaluations. Clients value lawyers and law firms who know how to communicate and are sensitive to their needs and concerns.
Collegiality and Esprit de Corps
Successful firms have a team attitude and spirit, including a willingness to share work and clients. Firms with this attribute are composed of lawyers who care about and respect the persons for whom and with whom they work, trust their employees to be smart and use initiative, and ask for genuine input regarding changes or challenges.
Fragmenting firms are plagued by declining allegiance to the firm and its lawyers and the failure to keep confidences and build relationships. Loyalty is strengthened when individuals are respected, trusted, involved in the process of making decisions that impact them, when credit and decision making are shared, when there is recognition for a job well-done, and when there are honest, fair and consistent relationships. Loyalty evaporates when secrecy, poor communication and pseudo caste systems exist among associates and partners or among staff and lawyers. The symptoms of disloyalty and distrust typically are a lack of interest in the firm, reduced productivity, high turnover, poor attendance at firm meetings or activities, lack of cross-selling and a fear of expressing opinions because of possible retribution.
Leadership (More Than a Title)
Most flagging law firms have poor or weak leadership. Effective leadership involves spending time to articulate firm goals and objectives and motivating partners and employees of the firm to embrace those goals and objectives. In addition, it requires example, consensus-building, fairness, patience and good communication skills. Many firms have leaders, but lack leadership. Leaders who exercise leadership must establish a sense of direction and maintain the firms focus. Leaders must avoid the temptation to place themselves above others. Conversely, leaders must provide for succession and their own eventual replacement. Most important, effective leaders subordinate their own interests to those of the firm.
Successful law firms encourage and demand responsibility for their members positive and negative acts. A lack of accountability breeds apathy, sloth and frustration. Accountability is illusory until firm policies and standards have been defined and each partner and employee is willing to voluntary abide by them. In many firms, lawyers, particularly associates, simply do not understand what is expected. Successful firms have written partnership agreements established, yet fair, criteria for partnership and written policies and procedures.
Financial Generosity of Most Productive Lawyers
In many firms the most productive lawyers do not always receive all the financial rewards they have earned. The concept of a firm necessitates sharing with others. This attribute is frequently weak or missing in firms with an "eat what you kill" compensation system or one that primarily rewards individual performance and profitability.
Sense of Fairness or "Rough Justice"
Successful firms realize that not all decisions can be made objectively. Many decisions must be based on subjective factors including a rough sense of justice. A law firm cannot ensure that everyone is happy all the time. Disagreements occur in healthy firms. Most important, however, is that everyone feels that he or she is being treated fairly most of the time. Subjective compensation systems are essential components in firms with a "rough justice" philosophy.
Willingness to Place the Interests of the Firm Ahead of Personal Interests
Selfishness and an unwillingness to compromise weakens and ultimately destroys law firms. Individuals must subordinate individual interests and personal aspirations for the good of the whole. Consensus legitimizes important decisions. However, consensus-building can go too far and paralyze a firm. All decisions do not need unanimous consent or agreement. In too many firms, an individuals willingness to place the good of the firm above more parochial interests is declining.
An Understanding of What the Firm is and Where it is Going
Lack of direction is a serious weakness in many firms. There must be common goals and aspirations which lawyers and staff understand. In addition, there must be a sense of vision or direction. Yogi Berra understood this principle when he said, "If you dont know where you are going, you might end up somewhere else."
Progressive Attitude and Spirit
The status quo often stymies creativity, new opportunities and new challenges. A proactive approach must be used to resolve problems and react to opportunities. In many firms there is a reactive approach to resolving most problems and disputes, an "if it aint broke, it doesnt need to be fixed" attitude. In a competitive marketplace, firms with an entrepreneurial spirit and a willingness to take reasonable risks will thrive and prosper.
The well-known business maxim "the client always comes first" applies to law firms. All decisions and efforts must be focused on what is in the best long-term interests of clients. Client communication, service and needs are paramount concerns in firms with this attribute.
The firms culture is a complex but usually cohesive amalgam of a firms ideas, customs, values, personalities, backgrounds, relationships and skills. It is honed over time, reshaped periodically by internal and external factors, and manifested in its lawyers and how they practice and relate with each other. It reveals itself in how decisions are made, the work ethic, communication styles, how information is shared, the ethics of the firm and individual lawyers, attorney relationships, significance of meritocracy in advancement, morale, the reward system and how employees are treated and recognized. In many firms it is difficult to define the culture because of this amorphous mix of components. Not all cultures are perceived positively. Some firms are termed "sweatshops," "clubby" or "whiteshoe." The failure of a firm to define its culture is often one of the reasons for high turnover, lack of direction or internal conflict and disputes.
Firms must have a respect for diversity regarding ideas, gender, age, ethnic background, religion and education. Excessive diversity may pose a threat to some firms, particularly if differences undermine core values or the culture of the firm.
A group of lawyers becomes a firm to the extent there is some sense of common purpose, common approaches and shared values. They must be willing to help each other out in the many small ways that are the essence of a legal practice, i.e., assistance, cooperation, support and mutual encouragement. This does not mean that everyone has to be best friends and have similar interests and personal goals. However, unless a firm is more than a compensation arrangement, it is doomed to have many problems and defections.
Ezra Tom Clark, Jr., is a former practicing attorney and managing attorney of a major Phoenix firm. He is president of E.T. Clark, Inc., a law firm management consulting firm in Mesa.