Leading From the Sum, Not the Parts

Is your 2010 recovery strategy being led by the firm or its departments?

One bountiful article subject over the last 18 months has been the excellent advice from law firms to businesses on how to develop a strong recovery strategy.

The reason not many 'business advisor to law firm' articles exist is that your advice can of course be self-applied. Many of the options and opportunities that you've pointed out to your client base exist for you as well. Yet there is one crucial difference that professional advisors sometimes lose sight of - an issue of structure and power that we thought warranted a few words as firms consider their objectives for the next 12 months or so.

Firm Divisions

As advisors, we can sometimes suffer from less regimented cohesion between departments. In comparison to a manufacturer, where each department is an integral part of a progressive production sequence, professional advisors (as individuals and teams) largely operate as satellite concerns - each servicing their own client base and reporting progress to a central management unit. During up economic cycles, when work is generally stable across all departments, growth strategy is often devised by the departments themselves and passed up the line to central management. After all, who knows the individual markets better than the professionals that advise them?

In a recession, the fluctuation and crashing of markets unseats this cross-departmental stability. The last 12 months have witnessed many bleary-eyed, over-worked law firm dispute resolution and insolvency teams, whilst tumbleweeds move silently across the plains of corporate and banking. And yet a classic mistake is to leave the strategic fate of the firm in the hands of its individual departments, rather than passing control to the objectivity of the central management unit.

Individual concerns and priorities sometimes cloud the fact that a professional services firm must ultimately strategise against a recession as a whole. We must lead our recovery strategy from an objective consideration of all market sectors in which we operate - not from a disconnected set of market-specific strategies. The workload across the firm transforms in a recession, and so must its strategic leadership.

However, our structure also harbours another inherent pitfall. Many central management teams are of course made up of senior representatives from each department - some of whom may be keen to fight their corner for investment and protection. Subjectivity can often triumph again.

Objective Flexibility

Flexibility remains the number one recession-proofing quality of any business - something that you've almost certainly repeated a thousand times to your clients over the last 18 months. As professional advisors, we must add the prefix 'objective'.

A successful law firm's recovery strategy can only come from a truly objective analysis of its position - one in which each member of the management team sets aside their individual departmental hats and considers the fate of the firm independently and with an open mind.

Comparative Analysis

The analysis upon which your strategy should be based must be a snapshot of the law firm as it exists today - and we stress the importance of 'today' because much has happened over the last three months.

All law firm departments must of course feed into the crucial intelligence gathering process, which should cover aspects such as the billing of clients over the last two years; current 'health status' of clients; vision of the next 12 months; and associated strategies for capitalising on any identified opportunities. Consider the health of your competitors as well. Have any new or lateral opportunities been made available by those that haven't traversed the recession so well?

Objective comparative analysis across the entire firm and its client base delivers a stronger and more cohesive recovery strategy - one where priority is awarded to core practices, clients and cross-selling opportunities. With objective flexibility, you will also be able to make more effective decisions with regard to growth in 2010 - be it following in the footsteps of the Lovells merger, or expanding head-count under short-term contract within a department where recovery strategy critical mass is essential.

Colin Farmer is an auditing and strategy specialist working with a range of professional partnerships.

Email Colin Farmer at colin.farmer@alliotts.com

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