Law Firm Profitability - Why Survival Depends on Law Firm BPM

As we watch another AMLAW 100 firm on a spiral-down trajectory, Law Firm Management and partners in other law firms look to quickly glean lessons - hoping to avoid the same type of demise.

When I see the tell-tale partner diaspora begin in the news, three things enter my mind:

1. The Root Cause - Degraded Law Firm Profitability
2. The Likelihood of Survival - Slim to None
3. The Timeframe for Extinction - Brief (Months, Not Years) 

Law Firm Management teams are looking for proactive profitability management solutions so that their firms avoid similar fates.  Many feel they just can't get their arms around it.  The reason for that is - the problem is dynamic, multi-dimensional and nuanced. 

Firms that aggressively move to take advantage of the dynamicity of the market for legal products and services will experience new growth.  Those that react retrospectively, tactically and with unidimensional approaches are likely to suffer the similar fate of extinction with increasing rapidity.

Legal Project Management - 101

Firms seem to be somewhat comfortable beginning to adopt one strategy for profitability protection - Legal Project Management.  By applying basic project management tenets, some firms are achieving higher profitability and increased customer satisfaction.  By employing project management best practices, firms can regain visibility and a new level of control over matter execution, with direct line impacts on profitability when done effectively.

Of course, there is no real news here - other industries have understood the need and value of project management for decades (like the technology industry, for example).  Once law firm customers began demanding accurate cost estimates and budgets, project management was an obvious requirement.

Why Law Firms Can't Survive without BPM

So Legal Project Management helps in some ways, but what doesn't it address?  So much - but let's focus on what I think are the top three:

1. Efficiency Gains By Changing the 'How':  Project management coordinates what work gets done, by whom, with some adjustments in terms of overall approach and timing.  The work itself might still continue on as before, just with better planning and coordinated execution.  Those are some elements of process optimization - but nowhere near what is required.  Law firms must fundamentally shift HOW work is done.  This requires a holistic approach to optimizing work delivery processes, and the effective utilization of supporting business systems or applications.  This is business process optimization, not project management.  BPM provides the optimization of use of both human and technology resources.  The result?  More with Less = Same or Increased Revenue with Less Staff or Overhead = Higher Profitability.  Faster Delivery = Accelerated Cash Flow.
2. Commoditization:  Law firm management must stay ahead of the curve in recognizing legal services that are destined for commodization (practice areas or customer types). 
1. Once recognized, process optimization techniques must be applied that empower law firm management and marketing teams to accelerate near-term revenue generation opportunities to capture as much of 'what is left' of the service offering while the commoditization process is occurring in the market.  The result?  Awareness + Focus = Exploited Revenue Opportunities = Working Capital to Fund Your Transformation
2. At the same time, while the practice area is in 'glide down' with full exploitation of remaining revenue opportunities, law firm management must use the working capital provided to accomplish required transformation.  This is done through the application of process optimization techniques.  The objective is to determine whether the firm can win at the commoditization game. 
1. If the answer is YES, the practice must be transformed to the newly defined process optimized delivery model, with the law firm marketing department out in front with the appropriate market penetration campaigns.  The result?  Exploit Commoditization = New Market Opportunities and Stable or Enhanced Revenue Generation and Profitability
2. If the answer is NO (the firm can't win at the commoditization game) then operational processes should be implemented to provide visibility and control over pursuit of new opportunities in this area - and redirection of these efforts to identified practice areas that might be able to releverage similar delivery approaches, skills and expertise.  The result?  Dump After Commoditized = Protected Profitability by Applying Resources to Higher Profit-producing work before degradation of profitability can occur
3. Market Differentiation: Legal product and services customers are self-educating and have new options (outsourcing; insourcing; online services).  These savvy buyers are looking for law firms who bring new perspectives, better ways of doing things, predictable high-value service offerings and innovative thinkers.  And to capture their business - law firm marketing techniques must transform with BPM techniques.  The results?  Deeper Customer Penetration + Increased Market Share = Increased Revenue + Increased Financial Risk Mitigation = Protected and Higher Profitability

If you discern anything from the above limited discussion, I hope it is this: the strategies I am discussing are evolutionary, not static.  Business Process Management is by definition meant to be applied to areas of dynamicity, and this is why law firms can't survive without it.   

Dowload our free whitepaper to learn more about why BPM is required to transform law firm operations and delivery models to ensure protected law firm profitability.

 

Law Firm Management - Are Your Policies Up for Interpretation?

As Law Firm business managers, you know how important policies are for the protection of your law firm's profitability, and even survival.  You are constantly thinking about and tweaking policies to make adjustments for lessons learned and new business strategies.  But how sure are you that those policies are understood and followed consistently by the firm attorneys and staff?

Ask yourself this:  "Are your policies up for interpretation?" 

If you are still operating in a world where policies are implemented on paper (inside of documents in your DM system or portal), then I think you probably would have to agree - they are definitely getting interpreted (rightly or wrongly) on a daily basis.  Well, I suppose interpretation is better than the other fear - that they are being ignored entirely.  Either way, it's causing your law firm management team too many sleepless nights of worry over what is getting missed.  And then of course, you need to get up from those sleepless nights and get to your office so you can manually try to police those policies into action!

But wait, I'm happy to tell you - there is another, highly effective way to make sure your policies are in-place, consistently followed and evolutionary.  It's called Business Process Management - or as one of our clients nicely phrased it - "Codifying Policies Through Software". 

Here are the highlights:

• Policies (and what are commonly referred to as "exceptions") become business rules that direct work and oversight as a natural part of daily operations.  
• Attorneys and staff are relieved of the impossible burden of having to 'know, understand and adhere to' policies.  Instead, they get to focus on conducting their business, and the policies are automatically overlaid as needed.
• If a policy is so nuanced, that only a human being can make a determination, then the review is sent to the right people to do the interpreting!

Sound too good to be true?  Well, it's not - it's reality.  Trust, yet verify - call us to see how we are helping law firm management transform how their firms operate, achieving full policy adherence while at the same time increasing firmwide bandwidth, productivity and law firm profitability.

Law Firm BPM - Look Ahead, Not Down at Your Feet for Safety

I sat down this morning to look at a mid-tier firm's existing New Business Intake process - with the intention of having a starter 'transformed' process documented for them in a matter of a couple of hours.  

Current Analysis Paralysis - Not a Good Starting Point

Before digging in, I read my email - and quickly find an email that goes something like this from a law firm - "We know we have to change our process, but we are still working on documenting our current processes."  Immediately I go into the 'no, don't do it!' mantra, because I know how much time, money and effort they will waste by focusing on current state, versus the transformation of their processes.  But at the same time, I know they do this because they believe if they don’t, something will get missed and they’ll be left with gaps.  So, I'm constantly looking for new ways to relate for them why a focus on the future, not the current state, is a substantially more effective approach.

Transforming Business Process Is Just Like a Remodel of Your Home

So today, it occurred to me...what if firms could see that business process transformation is like remodeling their house?  Let's say you want to remodel the main floor of your house.  What might that look and feel like?

Why a Remodel? 

First and foremost, there must be reasons you want to take on the project.  These might be a mixture of increased usability, financial and risk mitigation.  Something like this:

• Usability - The rooms are too closed. We can't see the kids when we are in the kitchen cooking.  We aren't getting the best use of our space right now, we think we could actually increase the usable space if we had a more open floorplan.
• Risk - There's been some water damage and we think we are going to need to go up into the ceiling and roof to fix it.  Seems like while we are there, we might as well use the opportunity to make improvements at the same time. The stove isn't properly vented right now either, which is concerning.
• Financial - This remodel would substantially increase the resale value of our home.  In the short-term, I think it would help us get a better refi, and we'll save energy costs as well, because we can put in more energy-efficient windows and appliances.

What and How Much? 

Next, you need to know what you would need to spend, and what your remodeled house would look and feel like in the end.

• No one in the family is an architect, so we'd better get a good one to help us. 
• We arrange for them to come over and consult with us, take a look around - and eventually draw up for us what our remodeled home will look like and outline for us the associated break-down of costs.

Go or No-Go? 

Now armed with knowledge of what 'could be' and what it would cost, you need to decide whether to go forward or not.

• Does the remodeled floor plan sufficiently meet our outlined needs (or even exceed our expectations because the experts pointed out things we never even considered - after all, they do this on multiple homes every year - so they see and hear a lot more from home owners than we do)
• What is the estimated cost - is it worth it?  Can we afford to do it all at once, or can we break it up into more feasible chunks?  What is the return-on-investment we expect in the short and long term.  Is that enough to move us forward?
• What will life be like for our family during the remodel.  Do we have to move out, or cook on a hotplate in the living room for a while?  How long?  Can we handle it?
• We talk to some friends that have remodeled and get the real-life low-down on what it was like and whether they felt it was worth it in the end.
• Finally - we have a family meeting and reach our 'Go-No-Go decision'.  We picture yourselves in that new, open and spacious floor plan and we agree 'Let's do it!' 

The Focus is on What You Will Have AFTER the Remodel!

Now, let's think about where in the above thought process the CURRENT DESIGN OF YOUR HOUSE gets considered:

• By you - when you are figuring out what works and doesn't work for you and your family right now.  How long does it really take you to think about this?  Probably not very long...you live there every day, and already know what you love about your house and what is frustrating or could be better for you.
• By the architect - architects know that their designs have to be realistic.  They can't just throw out any design of your home they want - they have to work with what you've already got in place. Where are the support beams, pipes and wiring, what are your preferences in terms of maintaining current fixtures, etc.  That said, where do they spend most of their time?  On the TO-BE design.
• In the budgeting and planning - the cost break-down will naturally include the components that have to change - and will identify what changes will take more money and time than others.

So clearly, the current layout and architecture of your home gets thoroughly considered at every step of the above process...but where is the majority of the FOCUS spent?  On the 'To-Be' - what your REMODELED HOME would look like.

Business process transformation is no different.  Your time and effort has to be on the future process, not the current.  You don't have to, nor should you, spend focus time on documenting current process.  Instead, you should be going through the process of transformation - and the current state will naturally make itself known all the way through.  Oh, and just like with your remodel - unless you are an experienced business process transformation architect, you should bring an expert in to help you envision that to-be so they can bring you industry-wide and developing best practices and guide you safely through the transition.

If you want to experience accelerated transformation without getting caught in 'current state analysis paralysis', participate in an Elegrity iPOW (Interactive Process Optimization Workshop).  We offer one-of-a-kind law firm process transformation workshops that accomplish more in 6 hours than what most firms are accomplishing in a period of weeks, or worse, months of time.  Let us help you and your firm get a real understanding of that remodel!  We will arm you with all the information you need to make safe, informed decisions without wasting time and money along the way.

Law Firm BPM is Not a Technology Project

Law Firm BPM is NOT a technology project?  Seems like an odd thing for a technology company who sells a technology platform for Law Firm BPM to say, right?   Think about it...do you see the words 'technology' or 'IT' in 'Business Process Management"? Nope. 

BPM projects are first and foremost business projects. They are based purely on business activities and functions. They are created to foster business efficiencies and better corporate governance. The requirements (business AND technical, believe it or not) must be provided by business subject matter experts. The ongoing support is primarily provided by the core business process owners.  

Of course, use of technology allows us to transform and manage these processes in ways not possible without it. If that weren't true, the business would be able to just stick with the manual processes they've already implemented in many cases. The fact is, manual or email-based processes just can't deliver the efficiency gains and risk management required for law firms anymore, so we need the power of the right BPM platform to facilitate and automate. 

BUT, that doesn't in any way change the exceptional business focus of every single process optimization project. Knowing this, our BPM project methodology is built around the immediate and ongoing participation of the business stakeholders and subject matter experts. We constantly work on improving our project artifacts and deliverables to make them more palatable and useful to these key business project team members. (See RANT blog on our feelings about this!)

 

 

We made it our responsibility to provide a Law Firm BPM platform that embeds the functionality we know the business users are going to ask IT for (and functionality they don't know to ask for) - so that your firm doesn't have to waste time worrying about technology and you can get right down to the BUSINESS at hand.  Off to the races to win better law firm profitability!

Alternative Fee Arrangements: Pipe Dream, or Golden Opportunity?

Are alternative fee arrangements (AFAs) catching on – or are they likely to remain one of those hypes that never really goes anywhere?

General counsels and other corporate law leaders seem more than ready to embrace AFAs. But are law firms willing to play ball? Yes – it appears that firms are gradually making the transition to new forms of billing. 

The Northwestern University Law School’s Center for Career Strategy and Advancement reports that:

“The billable hour is not dead yet, nor will it be any time soon. However, in the face of client demands for cost containment and increased efficiency, firms are showing more openness to considering fixed fees, contingency fees, and other alternative billing arrangements, typically on a matter-by-matter basis…. We can expect that alternative fee arrangements will become even more common in 2012.”

In its annual survey of law firm leaders, American Lawyer found that in 2011:

• 92% of firms had accepted a flat fee for an entire matter
• 88% had billed at blended rates
• 83% had accepted an incentive or success fee
• 82% had agreed to collars or caps
• 74% had accepted contingency fees

Only 1% of firms responded that they hadn’t used any form of alternative billing.

So, looks like AFAs are the hot new legal trend, right? Well, yes and no.

You may recall that some months ago, I referenced an article in The Economist that mentioned “alternative fee arrangements continue to grow in importance, albeit slowly: they accounted for 16% of big firms’ revenue in 2010.” More recently, the 2012 Client Advisory prepared by Citi Private Bank and the Hildebrandt Institute reported that in 2011, just 11.8% of firms’ revenues were attributable to AFAs.

The current usage of AFAs appears to be “a mile wide and an inch deep.” Looks like an opportunity to me – and I’m not alone.

In the American Bar Association’s Law Practice magazine, Frederick J. Esposito, Jr. writes:

“[P]roper and thoughtful planning will be key to making AFAs, or any other billing arrangement, viable and successful. Law firms that preemptively think through the issues of internal efficiency and utilizing project management skill will be prepared to deliver projects more profitably….

“The big question many law firms ask is how many other law firms are actually achieving profitability by using AFAs? The short answer is some firms are making more profit, but many law firms repeatedly make mistakes that vastly reduce profits.

“Those that have been successful with AFAs understand the economics and understand the need to pay more attention to the mechanics of their practices through better planning, organizing and managing of their firms and engagements.”

In other words, if you can make your processes run as efficiently as possible, you’ll be in a much better position to know exactly what your limit is in terms of price. You’ll position yourself to proactively offer your clients AFAs that give them cost-certainty while enhancing your profitability.

Now, wouldn’t that give you a competitive advantage? You can get started by reevaluating your firm’s business processes and exploring BPM. 

Are Your Law Firm Marketing Investments Paying Off?

Last week we were speaking with a well-respected member of a law firm management team about innovations and shifts in law firm marketing.  During the discussion, he said:  "We know 50% of the monies we spend on marketing are wasted, but the problem is, we just can't figure out what 50%."  Great quote...not so great a problem to be facing when law firm profitability is under attack - and law firm marketing is such a key component of success in the new world of legal services.

Break down the meaning of the statement, and a couple of points pop-out:

1. Law Firm Marketers (and Management) are having trouble tying efforts to results - they lack the business intelligence they need to evaluate return-on-investment of marketing activities.

2. Without meaningful information to show true value of marketing investments, law firm management has two options: Option A: Cut the marketing budget by 50% or Option B: Keep the marketing budget as-is, and continue the known waste for fear that the wrong 50% might get cut! 

What if law firm management had different choices?  Spend less, get the same return OR spend the same and get full value of that investment?  Either option adds to law firm profitability.  The first hits the bottom line, and the second hits the top and bottom line...which choice does your law firm want to make?

Regardless of which option your law firm chooses, you will need to innovate how you view, execute and report on marketing efforts.  But this really isn't a big deal - because the fact is, you have to do that anyway!  Competition in the legal industry has already transformed - with outsourcing, insourcing, pricing pressures, alternative fee arrangements - its an onslaught.  Your firm HAS to transform its marketing or you will be obsolete before you know it.

Here's the rub for law firms...new age marketing is based on collaboration.  Collaboration within your law firm (cross-attorney) and collaboration with your prospects and customers.  This is where law firm management faces the biggest challenge - culture and behavioral change. 

Elegrity helps law firms navigate the labyrinth of these changes by employing proven business process transformation approaches and supporting technologies. We help law firm management embed marketing into daily operations, with auditable and reportable connections between efforts and returns.  See our earlier posts for information on ways to overcome those challenges...and look for more posts on law firm marketing in the coming weeks.

Finance Systems are not Law Firm Management Systems!

 

 Financial Systems (i.e., Accounting Systems) for law firms are good at what they were built to do...manage finances and the ever-fun maze of law firm billing.  What they do not do well, however (and should not be used for), is to manage the enterprise business processes of law firms.

 

 

We see law firms misusing their finance systems in several ways, which end up costing them time and money on an ongoing basis.  Let's look at a couple of key misuses and the negative impacts they produce.

First, let's talk about the mess that is made of law firm accounting systems when they are used for 'workflow' and reporting purposes.  Oh, the joy of custom fields...NOT!  Custom fields for black/trigger list indicators for clients that have gone bad.  Custom fields for marketing purposes for 'reports' - which rarely actually get produced and used.  Custom fields for additional information about matters, which end up acting like a catch-all field for 'other stuff'.  Custom fields, custom fields, custom fields....

Next thing you know, you've got more custom fields than you bargained for - and you actually start forgetting why on earth they were created in the first place.  Oh, and on top of that, the data in those fields is suspect - not properly maintained, or 'blank' half the time. What a mess.  

And here's the thing - now it's time for a major upgrade of your finance system.  Finance system upgrades are hard enough without having to worry about 'migrating' all those customizations you've made over the years to try to 'manage' your law firm business using a system meant to manage your firm's finances.  The costs of the upgrades go up, or you avoid them all together because they are just 'too hard' and you get farther and farther behind on the maintenance of your central business system - the one that manages your firm's money.  Bottom-line - ask yourself: "Are we adding this field because it directly relates to management of our finances and billing?"  I can pretty much guarantee you - the answer is going to be "NO" more than it is going to be "YES".  So what are you actually trying to accomplish with those fields?  BUSINESS PROCESS MANAGEMENT.  The problem is, you are using the wrong tool for the job.

Another key mistake we see is law firms using the functionality of their finance systems as the delimiter for how they are managing their firm's business.  Let's look at an example...

Let's say you want to better manage your Billing Rate Exceptions (see our previous blog regarding this topic), but your finance system 'reflection' of these exceptions is somewhat stilted.  Does that mean your management of these exceptions (in terms of oversight) has to be stilted too?  No!!!  Yet over and over again we see firms get stuck because they make the mistake of allowing the limitations of their finance system to limit their ability to manage their business. The finance system, obviously, has to hold the end result of your rate exceptions for billing purposes, but it does *not* have to hold all the information about how those exceptions get requested or approved.   

FREE YOUR LAW FIRM MANAGEMENT STRATEGY FROM THE CHAINS OF YOUR FINANCE SYSTEM!  Whether you've got a law firm accounting system or your firm has entered the realm of ERP (Enterprise Resource Planning), the answer is the same.  Abstract the dynamic business process from your back-end financial systems.  Use those systems for their strengths and don't let their limitations limit your ability to manage your law firm strategically.

Consistent Change - Not an Oxymoron When Law Firm BPM Done Right!

Change - it's like a dirty word for many people.  Take me for example - I've focused my entire professional career on helping law firms and global corporations introduce strategic, fundamental shifts in how they think about and run their businesses...and guess what?  I don't like change anymore than anyone else - in fact, sometimes I can really resist it with the best of you!

But we all know the truth - change is constant, inevitable, and is required at an ever-accelerating pace as global economics push us all to innovate and be more agile.

Law Firm Executives Must Introduce Change

Law Firm executives know that changing how their law firms are run and managed is required to survive and thrive in the changed legal industry - but they live in fear of how the partners will react. See our whitepaper for our analysis of why process transformation is crucial to success in today's legal industry.

But..."consistent change" is easier than "different change".  Sound like I'm speaking gibberish?  Well, I'm not...here's what I mean.

If we can deliver change mechanisms to people in organizations in a 'familiar way', then the change becomes just another consistent expectation of what happens every day employees come to work.  But, on the flip side, if every change we implement 'looks and feels' differently, then it is unfamiliar, unexpected and unwelcome.

 

This is especially crucial to get right when we are transforming business processes.  Transformation of business processes means we are fundamentally shifting the way work is performed:

 

How Law Firm BPM Changes the Way Users Work 

1. Redistribution of work will occur as part of good process transformation.  Inevitably, without process management, work 'falls' through the cracks and the wrong people end up doing the wrong work.  When we introduce enterprise BPM, responsibility shifts will occur as work is put back onto the right resources.
2. Accountability of work, and decisions, are emphasized (and enforced through auditing). 
3. Policies that were documented, but not really followed become embedded and enforced.  And, when process transformation is ideated properly, business policy changes are likely to occur simultaneously. 

That is the power of positive, transformational change - and that power can cause discomfort if every time you introduce a new process or 'tweak' an existing process it feels like a big jolt. 

How We Mitigate the Fear of Change

We built our Law Business Management System platform for enterprise process transformation for law firms with the fundamental understanding that we need to empower law firms to continuously evolve their processes while allowing the users to have a consistent, familiar experience regardless of process or changes introduced.  As a result, our customers experience accelerated process transformations (sometimes introducing dozens of new processes in a matter of a very short timeframe), while other law firms do one or two and then stagnate.  Here are just a few key elements of LBMS that allow us to expedite transformation for our law firm customers:

1. Modularity of an agile user interface means re-use over and over again.  We don't use stilted forms to manage processes (they don't work!!) - we use modular screens that logically combine related information that feels 'natural' to end users.  These 'user interface modules' can be mixed / matched together in different groupings based on the particular work being performed or decision made.  AND, these same screens will appear over and over again in different processes.  This means that what the user saw in your New Business Intake process will be seen by them again inside your client/matter change processes.  Different processes, different business drivers - familiar experience. 
2. Cradle-to-Grave Lifecycle Management - LBMS embeds full lifecycle management of anything - and from the day we start and onward users understand that all processes are going to look and feel the same.  Whether Lateral Hire, New Business Intake, ad hoc Rate Exception requests, Matter Staffing Changes, Employee Onboarding, Payroll and Benefits Updates, Attorney Promotions - whatever.  It doesn't matter - it always looks and feels exactly the same.  Very little new learning required.
3. Same Law Firm Aware Security Infrastructure - LBMS' 'law firm aware' security infrastructure envelopes every application and process implemented inside the platform.  There aren't different security models and considerations that have to be understood and managed across different applications or workflow processes - they are all simply applications of a single security framework.  End users understand this once, and we're off to the races.  IT manages it in one place, for one platform, not multiple.  Business requirements for new processes or process changes are consistent and move quickly - as security is a 'known', not something that has to be discussed, re-discussed over and over again.

Change causes pain in law firms when each change comes in the form of a new application or each new process transformation doesn't look or feel like the last one.  This slows user adoption, eats away at firm investments, and bogs down your law firm when what you really need is agility.

Success comes when "Consistent change" starts to feel like the every-day...and it can and does work! 

 

 

Risk Management is Not a Destination - Law Firm Profitability Is

Risk management is critically important, but it in itself should never be thought of as the end-goal or discussed in isolation. Instead, it is one element in the road to the true destination.  Profitability of your law firm. 

Good risk management and corporate governance are actually components of, and very often byproducts of, a focus on profitability.

At Elegrity, we have an enormous concern for good corporate governance and risk management.  We push for it in every single business process we work with clients to improve.  But in every case, that focus on corporate governance is really just a focus on a key component of profitability insurance for our customers.  That's why increased revenue, accelerated cash flow and enhanced profitability are the cornerstone elements of our work with customers.  Risk management is something that is necessarily embedded in our work because of its direct connection to the bottom line. 

I get worried for our customers and prospects when I see risk management being looked at in isolation of profitability.  And, of course, I also get worried when I see profitability being focused on with a disregard for good risk management and corporate governance!  It can't be an either/or discussion.  It has to be both.

A Broader View Of Risk Management for Law Firm Profitability

1. Accountability.  When people know that there actions and decisions are audited and reportable, a new focus on high-quality and thoughtful decision-making begins to permeate the culture  of the firm.   Additionally, ensuring the right people have the right levels of oversight based on out-of-the-norm occurrences drives responsibility and accountability where it best fits.

2. Agility.  Publishing policy updates or announcing the firm's new strategic adjustments on the portal  isn't organizational agility.  Agility is about continually re-injecting policy adherence and strategy shifts into every day work patterns and operations.  In this way, risk management is a byproduct of how users work, not something to have to manually enforce.  This means you can move your firm quickly, with adjustments almost immediately and consistently inculcated into the firm.

3. Visibility.  We've all heard about business intelligence.  What's it really mean?  It means you can truly SEE AND UNDERSTAND what is happening, how it is happening, right when it is happening so that you can ask meaningful questions and make pointed, high-value adjustments.   It means you can become a PROACTIVE, not a REACTIVE firm - and this is true corporate governance.

4. Sustainability.  Isn't this a major risk for today's law firm survival?  Darn right it is.  If you don't have an eye on this risk, LOOK OUT.  This means sales and marketing must enter the purview of risk management right now. 

5. Social Law Firms. Whether they like it or not, Law firms must aggressively enter the world of social business.  New delivery models incorporating in-house, outsourced and transient workforces.  New kinds of collaboration.  New compartmentalization of work.  The management of risk and incorporation of corporate governance across the blurred walls of your law firm is only going to increase in complexity and importance.

Good risk management means better loss prevention (less money taken out of your profits).  It means increased efficiency over the long term (because when the right people see the right information and make better decisions, that's more efficient).  It means consistency of delivery and quality.  It means better sales and marketing with lower cost of sales for sustainability.  It means so much - all tied to the bottom line.

The next time someone approaches you to talk about "Law Firm Risk Management" without talking about how it ties to the profitability of your law firm in a much broader sense, beware...you are in old school territory. 

 

 

This is 2012.  We need to be having forward-looking conversations with a much broader understanding of the role of risk management and corporate governance in overall law firm profitability.

 

Law Firm Management New Year's Resolution - Getting in Shape

With the ever-accelerating commoditization of products and services in the legal industry, it is clear that the new key intellectual property of law firms is the HOW legal products and services get delivered as much as or more so than the WHAT. 

Success today and in the future relies on a law firm's ability to market, sell and then execute delivery of legal services and/or products more efficiently, with predictable cost structures and with better corporate governance than their competitors (other law firms; on-line legal sites; outsourcing organizations).

 

To do this requires 3 Core Capabilities:

1. The ability to strategically define optimized business processes (governance, core and supporting) focused on enhancing efficiency while simultaneously mitigating risk. 
2. The ability to codify defined processes using technology that automates where feasible, and coordinates and informs work (with meaningful information needed to complete work) for individuals and teams of workers where automation is not feasible or worthwhile.  And of course, the discernment to know the difference.
3. The ability to define and effectively coalesce and manage new types of teams (permanent and transient) made up of cross-functional; cross-corporate; free-lance and globally dispersed and mobile resources made quickly and safely productive by plugging them into the codified processes you have implemented.

Moving your firm towards this new way of working requires a step-by-step, not an all-at-once approach.  The way to start is to find one key business process and positively effect it with application of all three of the above described capabilities. 

 

This is your 'building and flexing' of your firm's new muscles.  And just like getting in shape, it takes time and persistence, but the results become noticeable pretty quickly if you just stick with it a little while. 

See our other blogs and free whitepapers for more information on how to get your firm on the road to getting in shape in 2012.  Happy New Year!