Characteristics of Successful Law Firms
by Ezra Tom Clark, Jr.
Editor’s Note: This was originally published in the Nebraska Lawyer Magazine © 2006, reprinted with permission.
Hardly a week goes by without a partner or group of partners abandoning one firm to join or start another. Some lawyers justify their departure by citing disputes about compensation, disagreements on the firm’s direction or vision, conflicts with management, clashes regarding values and philosophies, and concerns about firm productivity and profitability. Beneath these ostensible reasons for leaving a firm, however, lurks a deeper problem, one that should concern all attorneys who practice in a law firm: the growing perception among successful lawyers that their firm provides little or no value to them. The problem can be phrased as a question: Can a firm offer its lawyers a measure of value independent of the skills, talents and contributions of its partners? This question can be answered only be recalling the advantages that the best law firms have over sole practitioners or groups of lawyers who share overhead and nothing more.
These advantages include the following:
Few firms offer all of these advantages, of course, but a lawyer is unlikely to stay with a firm that does not offer at least those he or she considers most important.
Hallmarks of Success
Most successful and dynamic law firms, regardless of size or location, have certain characteristics that distinguish them from their competitors and ensure most of the advantages just listed.
These characteristics are discussed in the following sections.
A law firm cannot operate as a collection of practices that have no interaction with one another. When individual practices merely exist under the same roof, internal competition, work hoarding, jealousy and suspicion develop. Successful law firms must have a focus, and each lawyer should develop specialized expertise consistent with the firm’s mission. Focused law firms will have significant marketing advantages because they will know what they are marketing. They will also be able to use technology, personnel, and value pricing more effectively and will be able to respond to changing economic and political considerations more quickly than firms that have a general-practice or full-service mentality.
Commitment to Quality
Successful firms recognize that the phrase quality work has a dual meaning: technical quality (How good is the work?) and service quality (Did the client have a positive experience dealing with the firm?). Unfortunately, lawyers in most law firms define quality work in the same famous way that Justice Potter Stewart defined pornography: "I know it when I see it." This ad hoc and subjective approach to defining quality legal work exists because most firms have no standards or evaluation procedures. Service quality, which clients are increasingly demanding, can be determined only by regular client and matter performance evaluations. Clients value lawyers and law firms who know how to communicate and are sensitive to their needs and concerns.
Collegiality and Esprit de Corps
Successful firms have a team attitude and spirit, including a willingness to share work and clients. Firms with this attribute are comprised of lawyers who care about and respect the persons for whom and with whom they work, trust their employees to be smart and use initiative, and genuinely seek input regarding changes or challenges.
Fragmented firms are plagued by lawyers who have little allegiance and commitment to the firm and who fail to keep confidences and build relationships. Loyalty is strengthened when individuals are respected, trusted, and involved in making decisions that affect them. It thrives where credit and decision making are shared, when a job well-done is recognized, and where relationships are honest, fair and consistent. Loyalty evaporates when secrecy, poor communication, and pseudo caste systems exist among associates and partners or among staff and lawyers. The symptoms of disloyalty and distrust are a lack of interest in the firm, reduced productivity, high turnover, poor attendance at firm meetings or activities, lack of cross-selling, and a fear of expressing opinions because of possible retribution.
Most flagging law firms have poor or weak leadership. Effective leadership involves spending time to articulate firm goals and objectives and motivating partners and employees to embrace those goals and objectives. In addition, it requires a positive example, consensus building, fairness, patience and good communication skills. Many firms have leaders, but lack leadership. Leaders must establish a sense of direction and maintain the firm’s focus. They must avoid the temptation to place themselves above others. Conversely, leaders must provide for succession and their own eventual replacement. Most importantly, leaders subordinate their own interests to those of the firm.
Successful law firms demand that members take responsibility for their positive and negative acts. A lack of accountability breeds apathy, sloth and frustration. Accountability is illusory until firm policies and standards have been defined and each partner and employee is encouraged and willing to abide by them. In many firms, lawyers, particularly associates, simply do not understand what is expected of them.
Successful firms have written partnership agreements, clear and fair criteria for partnership, and written policies and procedures.
Shared Financial Rewards
In sound firms, the most productive lawyers do not always receive all the financial rewards they have earned; the concept of a firm necessitates sharing with others. This attribute is frequently weak or missing in firms with an eat-what-you-kill compensation system or one that primarily rewards individual performance and profitability.
Sense of Fairness
Successful firms realize that not all decisions can be made objectively. Many decisions must be based on subjective factors—including a rough sense of justice. A law firm cannot ensure that everyone is happy all the time. Disagreements occur in healthy firms. It is important, however, that everyone feels that he or she is being treated fairly most of the time. Subjective compensation systems are essential components in firms with a rough-justice philosophy.
Willingness to Place the Interests of the Firm First
Selfishness and an unwillingness to compromise weaken and ultimately destroy a law firm. Individuals must subordinate personal interests and aspirations for the good of the whole. Consensus legitimizes important decisions. However, consensus building can go too far and paralyze a firm. All decisions do not need unanimous consent or agreement. In too many firms, an individual’s willingness to place the good of the firm above more parochial interests is declining.
Understanding of Where the Firm is Going
A lack of direction is a serious weakness is many firms. There must be common goals and aspirations that lawyers and staff understand. In addition, there must be a sense of vision. Yogi Berra understood this principle when he said, "If you don’t know where you are going, you might end up somewhere else."
Progressive Attitude and Spirit
Maintaining the status quo often stymies creativity, new opportunities, and new challenges. Successful firms use a proactive approach to resolve problems and react to opportunities. Less successful firms have a reactive approach to resolving problems and disputes or an if-it-ain’t-broke-don’t fix-it attitude. In a competitive marketplace, firms with an entrepreneurial spirit and a willingness to take reasonable risks will thrive and prosper.
Client Driven Decision Making
The well-known business maxim "The client always comes first" applies to law firms. All decisions and efforts must be focused on what is in the best long-term interests of clients. Client communications, service, and needs are paramount concerns in the best firms.
Clear and Positive Culture
A firm’s culture is a complex but usually cohesive amalgam of ideas, customs, values, personalities, backgrounds, relationships and skills. It is honed over time, reshaped periodically by internal and external factors, and manifested in the firm’s lawyers and how they practice and relate with one another. It reveals itself in the firm’s decision making, work ethic, communication styles, information sharing, ethics, attorney relationships, reward system, morale, and in how employees are treated, recognized and advanced. In many firms, it is difficult to define the culture because of this amorphous mix of components. In addition, not all cultures are perceived positively. Some firms are justifiably called sweatshops, clubby or whiteshoe. The failure of a firm to define its culture is often a reason for high turnover, lack of direction, or internal conflict and disputes.
A successful firm has respect for diversity in ideas, gender, age, ethnic background, religion and education. Excessive diversity may pose a threat to some firms, particularly if differences undermine core values or the culture of the firm.
A group of lawyers become a firm to the extent there is some sense of common purpose, approach, and shared values. The lawyers in a firm must be willing to help each other out in the many small ways that are the essence of the legal practice — they must assist, support, encourage, and cooperate with each other. This does not mean that everyone is the best of friends. However, unless a firm is more than a compensation arrangement, it is doomed to have many problems and defections. As a person looking to build and maintain an effective law firm, you must provide the glue that holds the firm together.
As a leader, you must establish and maintain characteristics of a successful firm, thus giving the lawyers of your firm every opportunity to excel professionally and personally, as a group and as individuals.
Ezra Tom Clark Jr., is President of E.T. Clark, Inc., a legal management consulting firm located in Mesa, AZ. He has been a practicing attorney and has had extensive experience in managing law firms and providing consulting services to small and medium sized firms in the United States and Canada. Clark is a frequent speaker at local, state and national programs on law firm management. The author can be reached at (480) 231-0794 or firstname.lastname@example.org.