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Opinion: Growth-minded law firms plan now

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Law firms, big and small, need a committee focused on the future. When looking at a law firm’s horizon, the questions become many.

Here are a few that come up.

First steps
Does the firm have the right people to grow? This requires identification of the practice areas in growth mode and of areas the firm does not wish to engage. This results in hard decisions that can cause some political consternation with attorneys who have been with the firm for years. When deciding which practice areas to grow, the question becomes whether you need a lateral hire or an associate fresh from law school to learn the area. How do you fit the lateral hire into the firm’s compensation plan? Compensation is the No. 1 factor on why law firms break up or attorneys leave law firms; further, when considering growth into certain practice areas, you must ask how that potential growth may impact administration to support those practice areas. Investment of this degree requires owners within the firm to agree to potentially reduce their income in the short term, for the potential to earn more income in the long term. Some may preach the phrase “firm first,” but in reality their actions can devolve to “me first.” Egos must be checked at the door in order for a law firm to grow.

Phasing out
Succession planning requires the firm to inquire when an attorney is choosing to retire. This is an uncomfortable topic for many. Some attorneys want to work until their 80s, which places a burden on younger owners in the firm; as attorneys age, they wish to not work as much, and the question becomes what is “reasonable compensation” for those attorneys, compared to younger ownership who desire to be rewarded for their efforts in building the firm. Transition of a retiring attorney’s practice is a two-year process, at a minimum, and requires the retiring partner to work with the firm to identify an attorney or team to address the client’s needs. This requires integration of the designated attorney with the client, and retention of the client depends upon familiarity, trust and confidence in the delegated attorney. Once the attorney retires, many sail off into the sunset. However, the retired attorney is an alumnus of the firm and should be tapped as a referral and goodwill source in the community. Maintaining contact and connection with the retired attorney is important for a firm’s ongoing success.

Outside factors
Law firms also are impacted just like any other business with economic downturns and societal issues. How nimble is your firm? The most pointed example is COVID-19. The pandemic has produced the need for lots of adjustments by law firms, but the most difficult adjustment seems to be a firm’s work-from-home policy. First, any WFH policy creates a rub between those employees who remain at work, per their attorney’s request or because of job description, versus those working at home; a perception can develop, and those who continue to work in the workplace likely feel overburdened, taking on increased administration tasks. The impact upon a WFH policy in terms of the firm’s culture is also of concern but rarely mentioned. How do you build a culture in absentia? Leadership and culture must be developed in person; for those working at home, the difficulty in training, supporting morale and other factors are significantly heightened. This is an unanswered question that every firm must answer going forward. How do you measure the effectiveness of an employee who works from home? If the employee has quantitative, objective measures to gauge their efficacy, then the problem is solved. Otherwise, assessing how effectively they are working from home becomes difficult.

Next leaders
A firm must always ask itself if it has the right leadership – those who eliminate politics in making firm decisions and apply a set of rules or criteria that treat all attorneys uniformly. Just because an attorney has a law license does not make that attorney a qualified manager of a law firm. Firms should look for attorneys who have the mind of a businessperson, willing to address the financial and human resources burdens. Further, the owners must be willing to fairly compensate the partner or group responsible for managing the firm. Many times, partners who are not on the leadership team are unwilling to fairly compensate a partner to manage the firm. Keep in mind, a poor leader inhibits growth and leaves missed opportunities on the table. You must ask if your leadership group or partner is proactive or reactive when addressing problems.

A so-called Futures Committee is one designed to look at all phases of a law firm. Most firms gather once a year, at best, to develop a plan for growth, but action is often delayed or lost. Remember, if you don’t develop a plan and put it into action, you will end up having a plan anyway; it’s just that somebody else made it for you, and you turn your future over to the hands of chance. Chance is never a formula for success.

Kevin Dunaway is an attorney of counsel at Evans & Dixon LLC and a member of its newly created Futures Committee to guide the firm’s 110 lawyers practicing in six states. He can be reached at kdunaway@evans-dixon.com.

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