Page 51 - Leaders in Legal Business and The 1000 Leaders and Influencers - Draft 1
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continue to offer practices that contribute little to the firm’s bottom line and provide minimal
cross-sell or upsell potential. While allocating capital to a different practice may generate a better
return, there’s nothing wrong with maintaining a legacy practice that is closely tied to a firm’s
history or that occupies a longtime partner who is nearing retirement. Adopting sound business
practices and relying on data to inform decisions does not mean that all decisions must be based
solely on short-term financial benefits.
It is often the role of the consultant to advise leaders when their data infrastructure is
lacking… and it often is. Still, a good strategic planning framework can help both to analyze
external and internal forces and to generate reasonably informed outcomes. But nothing replaces
building a data-driven culture where information, and the processes and tools necessary to
capture the information, are deemed critical to the organization’s success rather than costly
distractions.
Revisiting Incentives
The challenge of aligning and realigning incentives is greater in law firms than in law
departments. A partner who has learned over time how to maximize the firm’s compensation
plan to generate a healthy income year after year is generally resistant to any change, even one
that on paper can be demonstrated to be more lucrative for the partner. The inherent risk that a
change might reduce a partner’s take, even balanced against the corresponding potential to
generate greater rewards, more often than not leads to stasis. A good consultant understands that
when an organization’s compensation plan is in conflict with the firm strategy, the compensation
plan is the firm strategy. Devising a strategy requires an examination of current and potential
incentives to determine where there is alignment and where there is conflict. Conflict must be
resolved, and this can be done most effectively by demonstrating with reliable data the positive
outcomes associated with new behaviors.
Law department incentives are also in play, however. In corporations where legal costs
are allocated to the business units, the executives in charge care deeply about the management of
legal spend. When these internal business clients participate in some variation of a 360-degree
performance evaluation of in-house counsel, their satisfaction influences in-house lawyer
compensation. It’s now a fairly common factor in general counsel compensation that adherence
to a budget has financial benefits or consequences. When devising a strategy to better serve
internal clients, aligning the incentives of those managing the effort will help maintain focus.
Sustainability
As with any strategic plan, a law firm or law department must revisit it periodically.
However, while tactics will surely change, and market dynamics may change the emphasis and
direction of investments over time, the fundamental and underlying strategy rarely lurches
dramatically in every three- to five-year cycle. A good consultant can help minimize the impact
of short-term concerns and maintain the focus on matching the organization’s long-term
capabilities to the relevant sustainable market opportunities. The secret to effective strategic
planning is not all that elusive. It requires a rigorous process, data to guide decisions, wide
stakeholder participation to help pave the way for implementation, and thorough communication
to ensure transparency. A seasoned consultant can help legal organization leaders adopt this
approach and can contribute to the analysis and recommendations. Done well, the impact of a
37
cross-sell or upsell potential. While allocating capital to a different practice may generate a better
return, there’s nothing wrong with maintaining a legacy practice that is closely tied to a firm’s
history or that occupies a longtime partner who is nearing retirement. Adopting sound business
practices and relying on data to inform decisions does not mean that all decisions must be based
solely on short-term financial benefits.
It is often the role of the consultant to advise leaders when their data infrastructure is
lacking… and it often is. Still, a good strategic planning framework can help both to analyze
external and internal forces and to generate reasonably informed outcomes. But nothing replaces
building a data-driven culture where information, and the processes and tools necessary to
capture the information, are deemed critical to the organization’s success rather than costly
distractions.
Revisiting Incentives
The challenge of aligning and realigning incentives is greater in law firms than in law
departments. A partner who has learned over time how to maximize the firm’s compensation
plan to generate a healthy income year after year is generally resistant to any change, even one
that on paper can be demonstrated to be more lucrative for the partner. The inherent risk that a
change might reduce a partner’s take, even balanced against the corresponding potential to
generate greater rewards, more often than not leads to stasis. A good consultant understands that
when an organization’s compensation plan is in conflict with the firm strategy, the compensation
plan is the firm strategy. Devising a strategy requires an examination of current and potential
incentives to determine where there is alignment and where there is conflict. Conflict must be
resolved, and this can be done most effectively by demonstrating with reliable data the positive
outcomes associated with new behaviors.
Law department incentives are also in play, however. In corporations where legal costs
are allocated to the business units, the executives in charge care deeply about the management of
legal spend. When these internal business clients participate in some variation of a 360-degree
performance evaluation of in-house counsel, their satisfaction influences in-house lawyer
compensation. It’s now a fairly common factor in general counsel compensation that adherence
to a budget has financial benefits or consequences. When devising a strategy to better serve
internal clients, aligning the incentives of those managing the effort will help maintain focus.
Sustainability
As with any strategic plan, a law firm or law department must revisit it periodically.
However, while tactics will surely change, and market dynamics may change the emphasis and
direction of investments over time, the fundamental and underlying strategy rarely lurches
dramatically in every three- to five-year cycle. A good consultant can help minimize the impact
of short-term concerns and maintain the focus on matching the organization’s long-term
capabilities to the relevant sustainable market opportunities. The secret to effective strategic
planning is not all that elusive. It requires a rigorous process, data to guide decisions, wide
stakeholder participation to help pave the way for implementation, and thorough communication
to ensure transparency. A seasoned consultant can help legal organization leaders adopt this
approach and can contribute to the analysis and recommendations. Done well, the impact of a
37
