Page 53 - 2019 - Leaders in Legal Business (q)
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outcomes, however, result from a participatory and cross-functional process in which stakeholders
from across the organization are involved; when there is a clear communication plan about the
effort underway that helps those not involved in the details stay abreast of progress; and when
those who are impacted have the opportunity to see both how decisions are made and what data
supports the various conclusions. This is often contrary to the paternalistic mindset employed by
many managers, where information is closely guarded. The rank and file, perhaps via designated
representatives, can and should have the opportunity to offer insights into the day-to-day
operations of an organization, and to illuminate and often dispel beliefs leaders have about “how
the sausage is made”; this creates more informed analysis and acceptance on implementation.
Building a Data-Driven Culture
Good business leaders and consultants rely on objective data to inform decisions. Even
when data are limited, such as understanding how a competitor’s cost structure impacts its pricing
strategy, there is still a framework for plugging in whatever data are available and assigning a
corresponding confidence level. Many legal organizations lack data. Law departments are
beginning to understand the power of analyzing years of electronic billing records to identify
quality and performance metrics and to distinguish between reliable and unreliable service
providers. Law firms who have long treated “knowledge management” as a document archiving
exercise now embrace cost accounting and experience tracking in order to better staff and price
future services. Even so, data often still take a backseat in the strategic planning decision
framework.
In a recent strategic planning effort for a mid-sized U.S. law firm, there was strong
resistance to including any voices other than management committee members and top rainmakers.
The partners felt that sharing any financial data, revealing any organizational “dirty laundry,” or
even exposing strategic deliberations to anyone outside this group would likely generate disastrous
consequences. These partners had yet to learn what corporate strategists have long known:
Insulating those who devise strategy will create an echo chamber. Strong opinions will override
sound analysis; political considerations will gain undue influence; confirmation bias will lead to
analysis that supports the status quo and minimizes negative input; and, not surprisingly, few
decisions will be made that negatively impact the leaders devising the strategy in any material
way.
In a law firm this challenge is particularly acute: Partners are also owners, and they feel
they have a right to assert their voice in business strategy, so a common result is that partner
preference prevails over sound business judgment. The largest waste of time in a law firm strategic
planning process is to allow partners to endlessly debate esoteric concepts when neither side has
supporting data, and no matter what’s decided the partners have veto power if they don’t like it.
The single greatest approach to overcoming uninformed partner input is to have relevant data on
hand that supports a conclusion.
To be clear, partners may make decisions that are not in their economic self-interest, and
many do, but these can and should be conscious decisions. For example, many law firms 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
38
from across the organization are involved; when there is a clear communication plan about the
effort underway that helps those not involved in the details stay abreast of progress; and when
those who are impacted have the opportunity to see both how decisions are made and what data
supports the various conclusions. This is often contrary to the paternalistic mindset employed by
many managers, where information is closely guarded. The rank and file, perhaps via designated
representatives, can and should have the opportunity to offer insights into the day-to-day
operations of an organization, and to illuminate and often dispel beliefs leaders have about “how
the sausage is made”; this creates more informed analysis and acceptance on implementation.
Building a Data-Driven Culture
Good business leaders and consultants rely on objective data to inform decisions. Even
when data are limited, such as understanding how a competitor’s cost structure impacts its pricing
strategy, there is still a framework for plugging in whatever data are available and assigning a
corresponding confidence level. Many legal organizations lack data. Law departments are
beginning to understand the power of analyzing years of electronic billing records to identify
quality and performance metrics and to distinguish between reliable and unreliable service
providers. Law firms who have long treated “knowledge management” as a document archiving
exercise now embrace cost accounting and experience tracking in order to better staff and price
future services. Even so, data often still take a backseat in the strategic planning decision
framework.
In a recent strategic planning effort for a mid-sized U.S. law firm, there was strong
resistance to including any voices other than management committee members and top rainmakers.
The partners felt that sharing any financial data, revealing any organizational “dirty laundry,” or
even exposing strategic deliberations to anyone outside this group would likely generate disastrous
consequences. These partners had yet to learn what corporate strategists have long known:
Insulating those who devise strategy will create an echo chamber. Strong opinions will override
sound analysis; political considerations will gain undue influence; confirmation bias will lead to
analysis that supports the status quo and minimizes negative input; and, not surprisingly, few
decisions will be made that negatively impact the leaders devising the strategy in any material
way.
In a law firm this challenge is particularly acute: Partners are also owners, and they feel
they have a right to assert their voice in business strategy, so a common result is that partner
preference prevails over sound business judgment. The largest waste of time in a law firm strategic
planning process is to allow partners to endlessly debate esoteric concepts when neither side has
supporting data, and no matter what’s decided the partners have veto power if they don’t like it.
The single greatest approach to overcoming uninformed partner input is to have relevant data on
hand that supports a conclusion.
To be clear, partners may make decisions that are not in their economic self-interest, and
many do, but these can and should be conscious decisions. For example, many law firms 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
38
