Page 54 - 2019 - Leaders in Legal Business (q)
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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 strategic plan will
be meaningful and material. Done poorly, however, strategic planning can be a costly distraction.
39
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 strategic plan will
be meaningful and material. Done poorly, however, strategic planning can be a costly distraction.
39
