Finding the Perfect Firm for a Merger

So you’ve decided you want to find a merger partner. The trouble is there are a lot of prejudices out there and a good deal of misinformation. So you need to adopt a rigorous approach to data-gathering on the potential candidates.

Here’s the checklist I used for what is considered today to be one of the most successful law firm mergers.

With the target firms across the top of the matrix, I obtained the following data, most of which was easily available online, either from legal directories or other sources:

Size (from legal directories)

  • No of partners
  • No of equity partners
  • No of fee earners
  • Total staff
  • Leverage (fee earners divided by equity partners)

Geographical spread (firm websites)

  • Locations of offices
  • Locations of affiliated offices
  • Networks

Financial performance

  • Gross fees (published)
  • Net profits (published)
  • Profits per equity partner (calculated)
  • Fees per fee earner (calculated)

Quality of practice areas (rankings in directories and any notable specialisms)

  • Finance/PE
  • Corporate
  • Disputes
  • Real Estate

Notable clients (from directories and media mentions)

Culture (assessed from early discussions)

  • Values
  • Strategy
  • Style of management
  • Partner remuneration
  • Partner appraisal system
  • HR policies
  • IT capability

Once all the data is gathered and verified, you then need to see which of the firms best meets your strategy. The firm we merged with wasn’t on most people’s radar at the start of the process – and the merger worked out really well.

But beware of culture clashes. There will be differences. But the merger will work if there is a deep respect for such differences. Some firms are better farmers. Others are better hunters. Most successful firms need both.

Beware though! Most mergers fail to deliver on expectations. Here’s why…

https://tonyreiss.com/2012/05/16/why-most-mergers-fail-to-deliver-on-their-promises/

Posted in Business Development and Selling | Tagged , | Leave a comment

Handling the Media – What to do When a Journalist Contacts You

Maybe you are working on a case where there is a lot of public interest. Most people panic, feeling nervous about how best to handle the call to avoid the wrong thing being said in the media.

But it can be important to develop good relationships with the media, so here are twenty tips for handling journalist calls well:

  1. Consider whether it really is a journalist, or whether they are trying to sell you something
  2. Is it someone you know? If not, take their number and call them back in 10-15 minutes after checking their identity
  3. If you can’t handle the question immediately, offer to call back within an agreed timescale.
  4. Be aware that if you delay calling back, you may not be asked to comment again
  5. Ask what the journalist wants to talk about and ask for sample questions
  6. Is it a news story or a feature? This may affect your response
  7. Consult your colleagues and prepare written notes to minimise the risk of any false words or misunderstandings
  8. Don’t just say ‘no comment’. If possible, explain why you cannot comment and when you might be able to respond
  9. If you don’t know the answer, say so and offer to get back within a set time
  10. Keep your response simple. Don’t wander off the point or try to dazzle the journalist with your technical brilliance
  11. If you don’t like the area of questioning, try to switch to something relevant that you would rather talk about
  12. Volunteer any information you want to come across – don’t wait to be asked
  13. Never be rude about the opposition
  14. Don’t mention clients without their permission
  15. Avoid emotive language
  16. Keep calm, but not smug. Avoid being goaded into an ill-judged reply
  17. The journalist might read back your statement over the phone, but don’t bank on it
  18. If a deadline allows, a technical publication might send you a proof to check, but again, don’t bank on it
  19. Anticipate. If you suspect you, your firm or your client might be in the news, rehearse possible questions and answers and keep your script by the phone
  20. There is no such thing as ‘off the record’, unless you know what you’re doing
Posted in Business Development and Selling | Tagged , , | Leave a comment

Is Client Service Going Out the Window During Lockdowns?

It’s not easy delivering outstanding service at the best of times. But now, with so little fact-to-face time? There are just so many pitfalls. Let’s analyse the situation to show where these potential traps are.

First, there’s knowing what the client is looking for from their supplier. Actually, and I’m not trying to be clever here, a related issue is knowing who the client really is! For big ticket projects there are probably several individuals involved, such as:

  • The contracting client
  • The person with the purse strings (eg CFO)
  • Some technical bods who might have an important contribution
  • The boss or even the owner

You get the picture. It can be complex and harder to sort out as a supplier when you are not having face-to-face meetings.

Added to this is the fact that the client might know in their head what they want but how good are they at expressing that and how good are you at teasing it out and clarifying?  Some good questions at this stage can be:

  • “What would a good outcome give you?
  • “Can you give me an example please?”
  • “Could you explain why that’s so important to you?”
  • “Is there anything you don’t want?”
  • “What is important to you in terms of service delivery?”

I reckon that if you’re doing a great job at this contracting stage, you will be 98%– 99% accurate in terms of understanding how a client will be judging the quality of your service.

The next problem is briefing the team, so they have an accurate understanding of the client need. Again, even brilliant communicators and listeners can only get this 98% – 99% correct. The chances are that whoever briefs the team will use slightly different words and phrases to the client or miss one or two little things out.

Then there are the changes in client needs over time. Assuming the work takes a few weeks or even months, whatever the brief was at the outset will probably change somewhat. Suppliers often talk about this as the client moving the goalposts!

How important it is to keep checking the objectives. But it’s harder when working virtually. Again the final client needs might be at least 1%-2% different to those expressed at the outset. Sometimes the changes are much greater.

So, just looking at these core elements of communication, you can see that there’s a good chance you’ll only be delivering 95% of what the client is looking for. And that’s if you are doing a good job of questioning and listening. Clients will notice if you’re 5% out!

So, what can we do to address these challenges? We need to make extra efforts and be more rigorous at communication and checking in with all concerned – the client and the team.

Here are some specific suggestions:

  • It might help to use checklists when receiving client briefs, to avoid any omissions or misunderstandings.
  • Asking team members (in a non-patronising way) to restate their understanding of what is being expected from them.
  • Perhaps more frequent feedback from the client will help. Asking “Is there anything you’d like more of or less of from us?”

Posted in Business Development and Selling | Tagged , , , , , | Leave a comment

Post COVID 19 – Your Firm Probably Needs a New Strategy

I can always tell if a firm hasn’t got a working strategy. All I have to do is ask a partner what the strategy is. What I typically then hear is a list of activities – and that isn’t a strategy. Of course, the firm might have one, but it’s not much use if the partners can’t articulate it! Because that means that partners aren’t enacting it. They’re just ploughing their own furrow.

Firms now need to reflect on their future and undergo some kind of strategic review, asking important questions, such as:

  • What markets should we focus on?
  • Which clients should be given particular care and attention?
  • How are we going to stand out from the crowd and ensure we deliver best value?
  • How can we better use technology?
  • How should we address under-performance?

Most firms have only partially addressed these questions to date.

Also there appear to remain some misunderstandings about how to develop and implement a strategy.

Here are some important things to bear in mind about strategy.

  • Let’s start by reminding ourselves why strategies are important. Strategies are needed because firms benefit from enacting a series of coherent actions. If Rome can’t be built in a day, a profitable new practice can’t be built overnight either! Too many one-off initiatives don’t work. They don’t create a sustainable change.
  • Strategies should be based on market intelligence. You should base a strategy on facts not whims, flights of fancy, a list of ideas generated late at night at a retreat or personal egos.
  • Strategies act as a decision-making guide for partners. They help tell partners what to do and what not to do. They help partners determine what’s important and what the priorities are. They also relieve partners of a good deal of stress. Instead of partners having undue anxiety about what other partners think about their actions or performance, a strategy gives partners clarity and permission to take action.
  • Developing a strategy is fundamentally a relatively simple process; it involves analysing the market (what’s growing, profitable etc) and reviewing where you stand in terms of what you’re good at, who you know etc. It’s a matching process, comparing external trends with internal capabilities. It’s not a wish list!
  • Don’t make the mistake of thinking that low fee rate work is unprofitable. Many firms make more profit on low charge out work, through developing efficient processes and appropriate leverage, than on the so-called sexy deals with higher charge out rates, but lower utilisations. The relevant questions are what kind of work is needed and what are you good at?
  • Where strategies can add a lot of value is through aligning the strategy for the firm as a whole with the strategies of each of the practice groups with the personal business plans of each of the partners. This helps avoid partners ploughing their own furrows in separate fields and increases the chances of synergy being created.
  • It’s much harder getting partners to enact the strategy than to put one together! And this is, in the end, what determines whether your firm generates a sustained competitive advantage.
  • Getting buy-in to the strategy is absolutely key. And don’t make the mistake of thinking that a partner nodding in agreement really is agreeing. They might just be nodding ‘yes – I hear you!’ You’ll need at least 9/10 on the commitment and enthusiasm scales for a strategy to be enacted successfully.
  • Strategy should be an ongoing process. Don’t get your slabs of marble out and chisel! In an uncertain world, a strategy needs to be a living, breathing thing and adaptable. Smaller firms can have huge advantages over bigger firms because they can be nimbler.
  • Management needs to be fair, but merciless in driving your partners to deliver. Under-performance should not be tolerated. It can be hard not focusing on immediate, operational day-to-day issues. But I advocate less time being spent by management choosing Xmas cards and more time on the bigger issues, such as:
    • New project management processes to deliver work more efficiently
    • A pricing survey
    • Competitor analysis
    • Client satisfaction reviews
    • Etc

How about the board fixing agendas every three months or so to look just at these important issues?

I hope firms find this review helpful. If you’re interested I can provide several case studies on how I’ve helped firms make progress on important strategic issues.

Posted in Business Development and Selling, Leadership and Management, Strategy | Tagged , , , , | Leave a comment

Is Your Firm Measuring the Right Things?

You’ll most likely have heard the saying “What gets measured gets done!”

If you set people targets, and reward them when they meet these targets, they’ll often do all they can to achieve them.

This is great in principle, but can backfire in practice: One problem is that it’s much easier to measure financial results than it is to measure progress in other essential areas (such as staff or client satisfaction). This leads to an over-reliance on financial measurement. A second issue is that people will, quite rightly, drop other activities to meet challenging goals.

So, many firms focus too much attention on short term financial results and neglect other important factors.

This is where the idea of the Balanced Scorecard is important – as a tool for improving the performance of a whole firm, a large department or a small team. The Balanced Scorecard or Weighted Scorecard helps you measure and improve performance in an integrated way.

Understanding the Theory

Developed in the early 1990s by Robert Kaplan from the Harvard Business School and David Norton, the founder of an IT consulting firm, this management system has been applied to many organizations and across many industries with great success.

The original article in the Harvard Business Review (“The Balanced Scorecard – Measures that Drive Performance”, Harvard Business Review, Jan/Feb 1992) starts with the adage we quoted at the start of this article, “What you measure is what you get”. The whole system is based on this premise.

Elaborating on what we’ve already said, companies have historically used financial measurements to gauge their success (eg improved margins or lower costs). The problem with this narrow approach is that it encourages short-term activities, at the expense of quality of service, staff attrition, loss of clients etc.

Balanced scorecard – definition

What exactly is a Balanced Scorecard? A definition often quoted is: ‘A strategic planning and management system used to align business activities to the vision statement of an organization’. More cynically, and in some cases realistically, a Balanced Scorecard attempts to translate the sometimes vague, pious hopes of a company’s vision/mission statement into the practicalities of managing the business better at every level.

A Balanced Scorecard approach is to take a holistic view of an organization and co-ordinate what are called metric-driven incentives so that efficiencies are experienced by all departments and in a joined-up fashion.

To embark on the Balanced Scorecard path an organization first must know (and understand) the following:

  • The company’s mission statement
  • The company’s strategic plan/vision

Then:

  • The financial status of the organization
  • How the organization is currently structured and operating
  • The level of expertise of their employees
  • Client satisfaction level

The following table indicates what areas may be looked at for improvement (the areas are not exhaustive and are often company-specific):

Balanced scorecard – examples of factors

 DepartmentAreas
 FinanceGross margin
WIP/Cash Flow 
Utilisation/Recoveries
Internal Business Processes Knowhow generation
Matter management/efficiency
Cross selling
Learning & GrowthEmployee turnover 
Job satisfaction 
Training/Learning opportunities
ClientQuality performance for client 
Client satisfaction rate 
Client retention rate 

Once an organization has analysed the specific and quantifiable results of the above, they should be ready to utilise the Balanced Scorecard approach to improve the areas where they are deficient.

The metrics set up also must be SMART (commonly, Specific, Measurable, Achievable, Realistic and Timely) – you cannot improve on what you can’t measure! Metrics must also be aligned with the company’s strategic plan.

Posted in Leadership and Management, Strategy | Tagged , | Leave a comment

Is Asking Clients for Feedback a Sign of Weakness?

Sadly, many professionals think it is! Perhaps they believe that clients will think you lack confidence, or awareness.

But I think this view is sorely mistaken.

Imagine this situation: you have halfway through your first piece of work with an important client. The enlightened leader will have the view that it will be important to know if the team are delivering on all fronts:

  • Are we responsive?
  • Giving you regular updates on progress?
  • Commercial advice?

In no way is this saying you are lacking confidence. If delivered with a strong demeanour, it’s saying this,

 ‘We know we are good. We know all clients are different and have different service requirements. We are dedicated to client service and will pull out all the stops to ensure we deliver on those. So please tell us…’

With markets becoming increasingly competitive, I believe that adopting such an approach will reap dividends. It’s such an easy way to provide evidence that you really do care about client service.

Just don’t do it all the time! That’s potentially irritating and could show a lack of confidence!

Posted in Business Development and Selling | Tagged , , , | Leave a comment

Improving Margins in a Downturn for Professional Service Firms

COVID-19 is bound to be affecting workflows and margins.  Here’s a programme of activities to address this. Some are strategic and fundamental and others are tactical and operational.

These are the questions that need to be answered together with the steps that can be taken and the output from these actions:

  1. Are you doing the right kind of work? To answer this, review your financial data on profitability by work type.
  1. Are you doing the right kind of work, for the right clients? Review your financial data on profitability by client

The output from addressing these first two questions should help you generate a strategy for finding and delivering profitable work. You might decide to drop certain clients that are draining your profits. You may decide to focus on certain legal services and drop others.

  1. Are your partners selling the value of the work well (eg benefits to clients, risks mitigated etc)?To answer this I recommend analysing your financial data on profitability by lead person and I would talk to individuals to assess their approach. I have found wide variances in profitability in the same practice area.

The output from this analysis could be a best practice guide. Also training workshops could be offered on selling skills.

  1. Are your partners pricing the work properly? To answer this, I would talk to partners and review engagement letters

The output from this review could be a pricing manual showing how much this work has cost before. I also recommend brainstorming some creative pricing propositions. Again a training workshop could be devised to skill up key team members.

  1. Are your partners negotiating well at the outset and renegotiating if events cause the scope to change (eg review all leases rather than a sample etc)? To find this out, I would talk to the partners to assess the need. The output would be a training workshop to develop skills. 
  1. Are your partners managing the work efficiently? This requires a review of how the work has been resourced and I would talk to partners and associates. I find that the associates tend to be good at revealing what inefficiencies there are in the day-to-day activities.

The final output would be an improved matter management toolkit.

This may seem like a lot of work. To be honest, it is! Trusted outside consultants can help. They should be seen as objective and have no hidden agendas. The truth is that, given the drastic downturn in the economy, drastic actions may be needed.

Posted in Business Development and Selling, Fee Negotiating, Leadership and Management, Managing Change, Strategy | Tagged , , , , | Leave a comment

How to Price Your Legal Services

In the old days we weighed the files to gauge the price.

Then accountants were hired by law firms – timesheets were introduced and the majority of lawyers charged on the basis of time spent. This easily leads to over-charging because firms get paid for any inefficiencies, or under-charging where the client would have been happy to pay more.

Timesheets are good for management information (ie how much time was spent), but not good for pricing decisions.

To help you judge an appropriate fee level, here are some clues as to whether work should be given premium pricing or discounted.

Premium pricing clues 

  • Urgency of work to the client – if you need to work people through the night or weekends or bring them back from training courses, most clients would accept that it might cost more
  • Importance of work to the client (what Americans call ‘you-bet-your-ranch’ work) – if the benefits or risks inherent in the matter are greater than normal, most clients would accept that it might cost more. Sometimes the work is urgent and important!
  • Expected savings to the client (tax work in particular can provide such savings) – makes it easier for clients to pay more
  • The dominance of the firm in the category of work – where your firm has the established brand name, or a distinctive way of delivering the service
  • Successful previous experience with the firm – the client will find it less stressful to work with you and their boss won’t be surprised at the selection
  • Low level of competition for the work – for whatever reason
  • Low level of experience working with lawyers – the more experienced buyers can drive a harder bargain

Discounted pricing clues

  • High level of competition (eg beauty parade) – though clients don’t always choose the cheapest.
  • Fixed client budget – though there are ways of dealing with this, such as staged payments
  • General market expectation from experience of similar work – so it will help to make clear where your contribution is not equivalent to similar work in the market
  • Lack of realisation in the client’s mind as to the value of the work – this occurs where the lawyer has failed to explain the benefits and risks inherent in the matter
  • High level of experience working with lawyers – or really good buyers, such as Procurement functions
  • On-going relationship (eg Key Account) – there may be a volume discount or you are fearful of letting a rival firm start to work for them

I urge firms not to be slaves to timesheets and think about flexing their pricing depending on circumstances.

 

Posted in Fee Negotiating | Tagged , , , , , | 1 Comment

Matter Management Matters – Improving Quality and Efficiency

I’ve delivered dozens of workshops on this topic and always get the same reaction to the question ‘Who is responsible for what aspects of a matter?’ There are blank faces, because there is typically no clear answer.

The implications of this lack of clarity are significant:

  • There are bound to be some overlaps – which mean that some tasks will be duplicated, either leading to clients being over-charged or margins being squeezed if the time is written off
  • There will probably be some underlaps – where we might hear ‘I thought you were doing that!’. If this happens, it risks having an unnecessary delay in progress and potentially compromises work quality

So it’s clear to me that we need clearer roles for matter management purposes. Here’s my default list of roles for Matter Partners and Matter Associates.

Role for Matter Partners

  • Assemble an appropriate team and select an associate to be Matter Associate
  • Generate a project plan, with assigned tasks and deadlines and keep this updated
  • Provide leadership and supervision
  • Agree fee estimate with client, issue invoices, and collect cash
  • Agree principal point of contact with client
  • Debrief team upon completion
  • Capture and disseminate useful knowhow
  • Undertake a client satisfaction review

Role for Matter Associate

  • Assist the Matter Partner in fulfilling their responsibilities (see above)
  • Produce and maintain a list of documents and key issues
  • Take responsibility for the day-to-day communication within the team and with any external parties (surveyors etc)
  • Arrange regular team meetings
  • Ensure all deadlines are met
  • Monitor costs of the matter against the original estimate and brief the Matter Partner regularly
  • Arrange the completion meeting, preparing the agenda and post completion steps

Looks like there are a lot of key tasks for the Mid-level or Senior Associate.

Most firms will benefit from having greater clarity on matter management roles. If Associates are ever unclear, I highly recommend that you suggest roles for yourself or at least ask the Matter Partner. The potential implications if you don’t are serious!

Have I missed out any key roles? Or assigned them wrongly?

Posted in Business Development and Selling | Leave a comment

Research Findings on What Motivates (and Demotivates) Lawyers

Source: pinterest

Lockdown is clearly leading to motivation at work issues. I’ve asked more than a thousand lawyers over the last ten years what motivates them at work. To what extent is it a high salary? Or is it status, congeniality, security, achievement, recognition, autonomy, responsibility?

The results are somewhat consistent and perhaps not surprising. What is surprising is the extent to which their supervisors are behaving in ways that demotivate them!

What Motivates Lawyers

A minority claim that what motivates them is a high salary or bonus. US lawyers have money as a higher priority – maybe because of the high cost of their legal education.

But the vast majority confirm that the main motivators relate to the work itself. It’s receiving challenging work that provides a sense of responsibility, autonomy and ultimately achievement. And it’s being appreciated and recognised for their contribution

What Demotivates Lawyers

A surprising number of lawyers say they are not given stretching work. Their workload seems trivial and mundane. They also say that they don’t feel valued or appreciated.

I receive comments that there seems to be an unequal allocation of work and they sense others are not pulling their weight.

Other aspects that demotivate lawyers are:

  • Not receiving any constructive feedback
  • Others taking the credit for your work
  • Inefficient matter management
  • Poor work-life balance
  • Supervisors who are overly nit-picky

Advice to Supervisors

  1. Try finding out what motivates and demotivates junior lawyers in your team. Ask what matters they’ve enjoyed most and least.
  2. Consider more carefully what stretching work you can delegate. Try to avoid the view that ‘it’s easier to do it myself!’
  3. Delegate thoroughly so juniors know how best to carry out the work. This minimises the risks of work needing to be redone.
  4. Give constructive feedback so junior lawyers can learn. This is particularly important for Millennials.
  5. Say ‘well done’ more often. And make these real by being specific about what was good.

Remember, all your new hires almost certainly started off very motivated to be great lawyers. Let’s try to keep it that way!

It’s more challenging motivating team members during lockdown. Let’s get better at it!

Posted in Leadership and Management | Tagged , , , , , , , , | Leave a comment