Professional Services Accounting ARTICLE -
Strategic Planning: A Must-Do for Law Firms
Target Audience: Legal Professionals, Professional Service Firms, Law Firm Partners, Human Resources, IT Employees, Law Firm Marketers
Strategic planning has evolved significantly from a trendy buzzword in the early 1980s to a must-do process that helps firms prepare for long-term goals and increase profitability. In fact, the Remsen Group Managing Partner Survey (a component of the 2007 Juris Law Firm Economic Survey from LexisNexis) found that 89% of firms that reported having a strategic plan believed that it contributed to improved profitability. However, the survey showed that 74% of respondents didn’t have a strategic plan. Why don’t more law firms engage in strategic planning?
Some consider the planning process to be too time-consuming and distracting from work that’s perceived as more important, such as business development and client relations. Others view the process as immeasurable, and therefore futile. Still other firms may not get the necessary support from partners and other leadership, which can doom the process from the outset. But there are many benefits to strategic planning that shouldn’t be overlooked, and it doesn’t have to be as difficult as it may sound.
Why You Should Do It
The strategic planning process focuses you on matters that impact the firm’s capabilities and ability to get more and better work from paying clients, which is especially important in a struggling economy. Effective strategic planning can help you:
- Understand how your firm’s culture and operations affect its performance,
- Recognize the impact of an evolving legal market on your firm and identify any internal changes needed to adapt,
- Pinpoint opportunities and potential threats within the market,
- Identify weaknesses and poor-performing areas and determine how to remedy them and build on strengths, and
- Establish a shared vision and long-term goals.
Strategic planning helps you determine where your firm is now, where you want it to go and how to get there.
First Steps
Assemble a planning committee that consists of lawyers of all levels and executives from your finance, marketing, HR and technology departments. Limit the number of committee members to a number that’s manageable — about six to nine — yet still representative of the entire firm. Also, you may want to hire a facilitator who can bring expertise, experience and objectivity to the group and keep the strategic plan moving forward.
When brainstorming what your goals should be, research clients, industries, competitors and geographic markets to obtain an accurate assessment of where your firm is now and what is achievable. For example, let’s say your biggest competitor has a large health care practice and you‘re thinking about launching your own to compete. If you currently have strong relationships with a handful of health care clients and you find out that there are other providers in your market shopping around for new legal representation, this may make sense. But if you have no health care clients and your competitor already has relationships with most of the providers in your market, your firm may want to consider pursuing another practice area instead.
Also be sure to develop strategic goals — such as establishing a presence in a new market — and clear strategies for achieving them. Don’t focus on operational issues unless they’ll affect your firm’s ability to achieve its goals. For example, your firm may need technology upgrades but the planning committee shouldn’t address them unless doing so will serve a strategic objective.
The finalized strategic plan should be concise, providing an overall direction for the firm and a limited number of high-priority initiatives. A detailed implementation plan that assigns responsibilities, budgets and deadlines should then be created, and goals should be tracked, measured and reported to the committee regularly.
Choosing A Strategic Planning Model
You can follow your own strategic planning model or choose from several tested ones, including:
SWOT analysis. This calls for identifying the strengths, weaknesses, opportunities and threats facing the firm. Strengths might include an experienced team of paralegals or a specialized area of expertise. Weaknesses could be an unfunded retirement plan or no clear succession plan. Meanwhile, an opportunity could be expanding operations internationally, and a threat might be a merger of your competitors resulting in a stronger single firm with more services to offer your clients.
This process helps you determine which areas of the firm are in good shape and which need work. Disadvantages are that it doesn’t prioritize findings and findings can sometimes cross categories. For example, a low client satisfaction score might represent both a threat and an opportunity.
Appreciative inquiry model. This was developed in reaction to perceptions that previous planning models started with a negative problem-solving approach, rather than a positive approach that “appreciates” the firm. Appreciative inquiry breaks down the planning process into five areas:
- Define the topics to learn more about, such as compensation or recruitment.
- Identify what the firm is doing when it performs at its best.
- Envision what the future will look like based on the firm’s strengths and core values identified in the previous phase.
- Articulate the building blocks for implementing the firm’s vision.
- Put the vision into action.
Fast track model. This approach, developed by David Maister, is based on the theory that all professional service organizations have the same goals:
- Raising client satisfaction,
- Increasing skills within the organization,
- Improving productivity, and
- Getting better business.
The objective of this process is to prepare an action plan for each goal that articulates the specific action; identifies who will be accountable; and determines how much time will be spent, when the deadlines will be, and what the end results should look like.
Driving Profitability
The strategic planning process enables you to develop a shared vision and long-term goals for your firm that will help clarify decision-making on all levels, whether it’s allocating your budget, recruiting lawyers or considering a merger or acquisition. Most important, the process can help drive your firm’s future growth and profitability. Don’t be part of the majority of law firms that lack a strategic plan. Take the time to start or update one today.
FEELEY & DRISCOLL, P.C., an accounting and business consulting firm, has offices in Boston, Massachusetts and Nashua, New Hampshire. For more than thirty years, Feeley & Driscoll has provided businesses with auditing, accounting, forensic accounting, income tax planning, estate tax planning and management consulting services. Serving a variety of industries, including construction, manufacturing, healthcare, architects and engineers, and professional services, biotechnology, and information technology. Feeley & Driscoll is committed to helping clients grow their businesses profitably.
Find out how our expertise in professional services accounting can add value to your business. Email us or call us at 1 (888) 875-9770.
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