Not waving but drowning

Train journeys offer an excellent opportunity to catch up on reading, both professional and management. Travelling to London recently, I re-read Rob Millard’s The Strategy Executioner (you will find it in Edge International September 2008 Law Firm Strategy Newsletter).

Millard sets out ten easy steps to ensure your firm’s strategy never sees the light of day; number seven particularly caught my eye,

7. REWARD PEOPLE ONLY FOR PRODUCTION

The successful strategy executioner pays no heed to ridiculous ‘balanced scorecard’ approaches to performance measurement and reward. They keep the focus squarely on production and only production. Measure and reward billable hours only! That way, people are discouraged from poking their noses into areas where they don’t belong. If anybody asks about strategy, smile and wave and tell them that their own interests would be better served by simply working harder. An added bonus is that this approach tends to maximize short-term profit, which your partners will appreciate when they make their drawings. As to the long term: leave that up to the poor idiot who comes after you!

So now you know.

How others see us

Somewhat late a comment on the article Meet the rich some weeks ago in The Guardian, which John Malpas posted about in early August, and in particular on the description of the group of lawyers and bankers interviewed,

technically able but less intelligent, less intellectually inquisitive, less knowledgeable and, despite their good schools, less broadly educated than high-flyers in other professions.

Whether or not this is true (and my experience is that this is not the case), what we should be worried about is the perception that people have about the law and lawyers. This is an age old problem, but one we cannot just shrug off.

On a slightly different tack, but worth the read, see Matthew Taylor’s Greed is good, but only in its place, in his eponymous RSA blog.

Dormant clients

In a recent post, Not quite such a simple solution I argued that time may be better spent looking at ways to develop your active clients; or re-activating your dormant clients.

Others think the same. See Reactivate past clients in Matthew Homan’s The [non] billable hour, which in turn links to John Jantsch’s Seven Tips to Dig out from a Recession. At the risk of repeating it,

Reactivate past customers – Where did I put that customer anyway, I know they are around here somewhere. Sad but true, sometimes we don’t bother to communicate with current customers unless they call with an order. By the time they have decided someone else appreciates their business more, it’s too late. Reach out to lapsed customers and make them an apology, promise to never ignore them again, and make them a smoking hot deal to come back.

Staying alive

If you haven’t read Rob Millard’s post The Greatest Banking Crisis of our Generation on his blog The Adventure of Strategy, you must.

It is very sobering stuff ~ but absolutely spot on

If you have not yet switched the focus of your strategy to creating contingencies to deal with the very serious possibility of survival under the worst possible economic scenarios, then do so now. Do not delay.

1. Make sure that you have jettisoned all non-essential costs (but not the essential ones)

2. Make sure that you are getting accurate and objective information from the market …. keep especially close to your key clients

3. Make sure that you have a plan based on the “What If?” scenarios that you have identified might emerge

4. Keep your eyes peeled for opportunities as well as threats to be warded off

5. Unless absolutely unavoidable, stay true to your core strategic intent

This time will pass. Right now, a clear mind and strong leadership are absolutely essential.

But what of the lawyers indeed?

I suggested to one of my colleagues this morning that he should read The Lex Column, and in particular The law of diminishing returns. The question it put was

But what of the lawyers? As private partnerships, they are shielded from close inspection, but some pain probably lies just around the corner.

The answer?

But there are already signs of forced consolidation, especially among US firms overexposed to a sickly domestic market. Anecdotal evidence from European firms with big overseas networks suggests that several American outfits are desperately seeking mergers. Expensive offices in Hanoi and Bahrain used to be seen as a drain on partners’ takings; now they may be mandatory to survive. Charge-out rates fell, in real terms, during the recession of the early 1990s. Newly qualified lawyers should nail down those six-figure salaries while they can.

The comments were directed at the global players, but they hold good for most law firms. There is little doubt in my mind that consolidation, and pain, is coming. The current economic climate is yet one more accelerator.

It was not all doom and gloom

The good news is that, unlike banking, the industry generally bills on a time-spent basis, so failed deals and falling transaction values won’t annihilate takings. Insolvency and litigation practices, too, should provide a buffer, as businesses fail and claims mount. And there are a few cost levers to pull: routine word-processing and finance functions could be dispatched to cheaper locations worldwide.

Yes and no: time based billing is already under threat (see previous posts) and it is rare that there is not an element of contingency in deal fees.

Legal Week’s poll today is ‘Will a major law firm go the way of Lehman?’ (and see Charon QC’s post Law review; sackings, shortselling and stupidity. . .) And the voting? Currently 68% are saying No – law firms will tough it out and 32% are thinking we are all under threat.