- Law Firm Succession Planning:
The Future is Now so Make a Plan
by Eilene Spear and Jennifer Schaller, The National Law Review
In December, we published MPF Insight (see below), a report that summarizes results of our Leadership & Governance Survey and presents recommendations to law firm leaders. Since then, The National Law Review has written a series of four articles presenting its analysis of and commentary about the report. The final installment covers succession planning, an often neglected aspect of law firm management. Consider the following:
- For 63% of law firms, more than 50% of firm revenue is generated by lawyers older than 60 years.
- 30-40% of lawyers in private practice have begun the retirement process.
- 70% of first generation law firms do not survive their founding partners.
- 22% of firm leaders say they are grooming a successor for the leadership role.
- Litigation in 2016: An Examination of the Trends
by Thomson Reuters
This three-page report brings good news for smaller and mid-size firms! Despite the perceptions of many, the numbers show that litigation is holding strong in 2016 with no slow-down in sight according to Thomson Reuters’ Peer Monitor. Better yet, MidLaw (up 2% over 2015) is outperforming BigLaw in the demand for litigation when one looks at total billable hours across all time-keepers. Some key other findings in the report:
- Industries with the highest demand for litigation: Health Care, Financial Services, Pharmaceutical
- Majority of litigation goes to firm with fewer than 40 lawyers
- Reversing the recent trend, litigation is now closing the gap with transactional work for most firms that do both.
Bottom line, here’s yet more evidence to suggest that corporations are more and more willing to give important matters to smaller and mid-size law firms. But it won’t fall into your firm’s lap. You’ve got to go out and get it!
- Competing in a Changing Marketplace
by Robert A. Young, Esq.
Bob thinks a lot about law firm leadership. He’s former Chair of the ABA’s Law Practice Division and the ABA’s Diversity Committee. He also served as Managing Partner of his law firm, English Lucas Priest Owsley (ELPO Law, for short), for many years. In these roles, he thinks a lot about the unparalleled changes occurring in the legal profession, and he writes about what firm leaders can and should be doing to encourage change and drive innovation within their firms.
“In many ways, we’re our own worst enemy when it comes to advancing our law firms and in keeping up with what clients want and need,” says Bob. “We are truly in a change or die scenario. The sooner law firms realize this, the better prepared they’ll be to thrive.”
This is a strong, powerful article written by one of your peers. It should grab your attention.
- What's Hot What's Not - Annual Practice Trends 2016
by Dianne Molvig
We received some nice press in Wisconsin Lawyer magazine commenting on Bob Denney’s most recent edition of “What’s Hot and What’s Not in the Legal Industry.”
- What BigLaw Can Learn from Law & Order
by Jordan Furlong
The major accounting firms sell their brands. Not so at the big law firms, where the individuals are the brand. Consider how attractive law firm leaders would find a firm whose brand – its name, its systems, its process, its procedures, its consistency – trumps that of its individual lawyers. A firm that thrives despite partner defections because the individual lawyers follow a script orchestrated by senior management. Are “lawyer-proof law firms” the wave of the future?
- Law Firm Leaders are Optimistic going into 2016
by American Lawyer Media
Managing partners of the nation’s largest law firms are bullish about 2016 according to this annual survey of leaders of AmLaw 200 law firms. One-hundred four 104 firm leaders participated and were asked about overall conditions of the legal industry and their firm’s outlook for the coming year. This five-page article discusses survey’s findings. Among the highlights:
- Thirteen percent (13%) of firm leaders are “very optimistic” about 2016. Another sixty-eight percent (68%) are “somewhat optimistic.”
- Sixty-eight percent (68%) predict the US economy will maintain its current pace of growth in 2016.
- While eighty-eight percent (88%) of firm leaders say their firms will increase their total lawyer headcount, seventy-five percent (75%) anticipate asking some senior partners to leave.
- Eighty-eight percent (88%) project that billing rates will remain flat in 2016 compared to 2015, the highest percentage since 2009.
- Seventy percent (70%) of managing partners are concerned that many partners are staying too long.
- On average, fourteen percent (14%) of firm revenue is achieved through alternative fee arrangements, the same percentage as the last few years.
- Ten Practice Management
Challenges for Mid-Size Law Firms
by Edward C. Winslow, III, Esq.
Ed has served as Managing Partner of Brooks Pierce, a 90-lawyer firm with three North Carolina office locations, since 2000. He focuses on law practice management and strategic leadership, and is especially interested in the evolution of the legal profession. In the face of unprecedented change, he likes MidLaw’s chances and discusses ten challenges for which they are well-positioned, including:
- Talent Management,
- Change Management, and
- Five Trends
Clients Want You to Jump On
by Michael B. Rynowecer
In this short article, Michael shares five emerging trends he’s been seeing in the marketplace for legal services. These early seeds of change present new opportunities for those law firms that act now and seize the moment. Here are the five trends he discusses in the article:
- Clients want law firms to bring an institutional mindset to the relationship.
- Law firms are beginning to teach associates the “soft- skills” of business development and client service.
- More law firms are implementing client feedback programs to drive change. (We’ve been recommending client feedback programs for years!)
- Clients want succession plans as senior lawyers working on their matters move toward retirement.
- Clients want stability in their relationships with outside counsel and openly express their concerns about lateral movement.
- Ten Ways Small
and Mid-Sized Firms Can Compete
by Bruce W. Marcus
Can smaller and mid-sized law firms compete successfully with BigLaw in today’s turbulent legal market? History says yes, and we believe they can. This short article by the late Bruce Marcus sets forth ten ways to go about it, including:
- Focus on the Business Side of Your Firm,
- Modify Your Firm’s Culture,
- Learn to Market Effectively, and
- Think Incrementally.
- Succession Planning:
How to Hand Your Law Firm to the Next Generation
by Sue Remley
When it comes to succession planning within a law firm, we often hear from managing partners: “I’m concerned that our young partners don’t have what it takes to run this firm in the future. They lack the drive, commitment and work ethic to become owners of the business.” And from young partners, we hear: “The senior partners won’t let go. They cling to control and won’t introduce us to their clients and referral sources.” Firms need to find ways to bridge the gap if they want to be around in 2020 and beyond. Sue shares her advice to help your firm manage its succession process.
- Legacy vs. Mercenary:
Which Type of Firm Is Yours?
by August J. Aquila
This article discusses the difference between legacy law firms – those where the firm comes first and where there’s sharing, teamwork and investment in the future – and mercenary firms – those that operate more like a collection of sole practitioners sharing office space. August believes that law firms that lean toward legacy are better off in the long run. We agree. In the article, he offers suggestions on how you can move your firm in the right direction.
- Planning for the Future:
When it Comes to Succession Planning,
Law Firms Have Plenty of Room for Improvement
by John Sterling and John Remsen, Jr.
If you’ve been following us over the years, you know that we regularly survey firm leaders about topics relating to law firm leadership and management. And we consistently find that succession planning - in areas such as firm leadership, legal knowledge and expertise, and client relationships - is among the most neglected aspects in the business side of running the firm. In fact, most firm leaders give their firms poor marks in this most important area. In this article, we highlight finding of our most recent survey and offer best practices for succession planning and management. Here are few highlights of the article:
- Seventy percent (70%) of first generation firms do not survive their founding partners
- Elect a Deputy Managing Partner and charge him/her with important firm-building projects
- Create client teams and industry practice groups with both senior and junior lawyers actively involved
- Require senior lawyers to present annual transition plans at the outset of each year
- Strategic Planning:
It's Not Just For "BigLaw" Anymore
by John Sterling and John Remsen, Jr.
You may recall that, back in March, our MPF Leadership Matters online survey asked about strategic planning and the keys to successful implementation. The results of that survey serve as the basis for our article that appears in the June issue of ALA’s Legal Management magazine.
The bottom line: More firms are embracing strategic planning than ever before – and they’re seeing positive results from their efforts.
- A Glass Half Full or Half Empty?
The Challenging Market for Mid-Size Law Firm Services
by Peer Monitor - Thomson Reuters
Although the overall demand for legal services in the US has been flat (at best) since 2008, there are two ways that mid-size firms have outperformed BigLaw according to this report published in late March.
First, the demand growth for midsize firms is less volatile than for BigLaw and, second, realization rates are significantly better for mid-size firms than for AmLaw 100 firms.
The report also finds that there are opportunities for mid-size firms to capitalize on the increasing willingness of in-house counsel to feed work to smaller and mid-size law firms.
- Why Lawyers Are Still Waiting for the Future
by Aric Press, Editor-in-Chief, American Lawyer Media
As Larry Richard’s extensive research reveals, lawyers hate change. They’re not too wild about risk either. And the characteristics that make them really good lawyers tend to make them not-so-good business people. But, as we all know, change is all around us. Globalization, technology, demanding clients and competition are having, and will continue to have, dramatic impacts on the business of law.
In this article, Aric reflects on the future of law and suggests that the wave of change affecting the legal profession has just begun. Is your firm ready?
- Reaching New Heights
Midsize Firms Climb into BigLaw's Territory
by Roy Strom, Chicago Lawyer
Two MPF Advisory members – Mitchell Roth of Much Shelist and Ray Werner of Arnstein Lehr - are featured in this article appearing in the March 2014 issue of Chicago Lawyer. The article discusses a dramatic shift in the number and importance of legal work that traditionally went to BigLaw that is now finding its way to smaller and midsize firms. The reason? Not only a significantly lower rate structure, but also more flexibility and improved service. The article mentions a recent LexisNexis survey analyzing the legal spend of corporate America and we’ll feature the survey in a future MPF Weekly Update.
- Top Priorities for Law Firms in 2014? Depends...
by JD Supra
We start the year with a brief article from JD Supra that asks some of their leading contributors for their thoughts about law firm priorities for the New Year. Most talk about the need for firms to look ahead (not behind) and enthusiastically embrace the changes necessary for long-term success.
- Ten Questions To Ask Your IT Director
About Your Law Firm’s Cyber Security
by Sharon D. Nelson, Esq. and John W. Simek
We’ve recently seen several high-profile cases where the US Government, along with companies like CitiBank, Target, and American Express, have fallen victim to cyber criminals. There have also been a few instances involving prominent law firms. Can you imagine having to tell your clients that your firm’s data has been breached?
So, just how vulnerable is your law firm? To find out, read this article. Then schedule a meeting with your IT Director to make sure your firm is doing all it can to assure a safe and secure working environment.
- Featured Video
Here's a short but hard-hitting video that hammers home the dramatic changes in the legal industry over the past decade. We suggest that you play it at your next partnership meeting and ask your partners what they think. If this doesn't get their attention that your firm needs to change, nothing will. The video is produced by Re-ThinkLaw.org, an initiative launched by an outfit called Axiom. Stay tuned.
- Driving Execution:
Seven Ways To Get Your Team's Brilliant Ideas Executed
by Gerry Riskin
After 25 years in the legal industry, I often find myself working with firms that are long on planning, yet woefully short when it comes to implementation. My advice? Pick just three meaningful initiatives, dedicate the required resources, and assign a responsible partner – not a committee – to make sure each initiative is accomplished. And follow the advice is Gerry's brilliant article.
- The 2012 Law Firm Leaders Survey
by The American Lawyer
Despite uncertain US and global economies, leaders of the nation's largest law firms are feeling surprisingly upbeat about 2013, with 75% describing themselves as "optimistic" about the year ahead. For ten years now, The American Lawyer has surveyed the managing partners of the nation's 200 largest law firms to get their take on the legal industry in the coming year. Some other highlights:
- 80% intend to expand their litigation practices in 2013, especially IP litigation.
- 41% say corporate will be the most challenged practice area. Real estate is also expected to struggle.
- 67% of firms used contract attorneys in 2012.
- 45% of firms deequitized underperforming partners in 2012.
- 23% say they will make capital calls in 2013 to keep debt levels in check.
- Creating a Strategic Business Plan
by Pat Murphy, LawyersUSA
Along with Robert Young of Lucas English in Bowling Green, Kentucky, I was featured in this article that appeared in a recent issue of LawyersUSA. In it, I talk about research we've conducted at MPF affirming that law firms that develop and implement strategic plans outperform those that do not.
- Succession for Sustainability
by James D. Cotterman
Of the dozen or so characteristics of today's most successful law firms, succession planning is perhaps the most often neglected. Yet, succession should be an important element in many firm-wide strategic plans. Succession can be viewed in the context of firm leadership, client relationships and organizational involvement. It involves identifying and grooming future firm leaders, and rewarding retiring partners for successful transition, not just personal productivity.
In this thoughtful and well-researched article, Jim writes that law firms would benefit greatly from long-term planning and that succession - critical to sustainability - should command leadership's full attention. We couldn't agree more.
- What's Our Deal?
by David Maister
David Maister writes some really good stuff and you'll find lots of his books and articles featured on our Website. This particular article discusses things like mission, vision, values and culture in the context of a law firm. It's a great article to circulate among your partners in advance of your next Firm Retreat. It will get them thinking about a whole bunch of issues, including the rules and codes of conduct (if any) by which your firm and its professionals live.
- Make Mid-Sized The Right Size
by Peter S. Marlette, Esq.
Peter Marlette, Managing Partner of Damon Morey in Buffalo, New York, has recently joined the MPF Advisory Board. This outstanding article, which originally appeared in the New York Law Journal, is must reading for leaders of mid-size law firms. It discusses the exciting opportunities for mid-size firms in today's marketplace for legal services. Among his recommendation: Adopt and implement a firm-wide strategic plan, and become active in the right law firm network. His firm is a member of ALFA International.
- Where Leaders Stumble
by Patrick J. McKenna
In working with hundreds of law firm leaders over the past twenty years, McKenna has observed several warning signs that often lead to weak or ineffective firm leadership.
- Five Questions to Ask about Your Firm's Succession Readiness
by Thomas C. Grella, Esq.
"A leader's lasting value is measured by succession," says leadership author and guru John Maxwell. Tom Grella, a long-term member of the MPF Advisory Board, puts his spin on the topic from the perspective of managing partner of a mid-size firm. Importantly, he writes about the role of current firm leadership in the process. Tom is Past Chair of the ABA's Law Practice Management Section. This article appears in the May/June issue of the ABA's Law Practice magazine.
- Leadership Transitions: Seven Steps to Ensure Success
by Patrick J. McKenna
There is no definitive answer to the question of exactly how long an outgoing leader should stay in office after announcing his or her departure. Many management experts advocate a swift transition to avoid lame-duck syndrome or firm drift. However, one-on-one interviews with dozens of firm leaders reveal a very different approach.
- Anxieties of Leadership:
Critical Questions and Answers for New Managing Partners
by Patrick J. McKenna
For new managing partners, the responsibilities are multi-faceted and the stakeholders are diverse, both within and outside the firm. This article looks at the most common mistakes, the biggest challenges, some unanticipated surprises, and how to avoid them.
- Law Firm Succession Planning
Our friends at LexisNexis have published a series of papers on best practices in the “business of law.” This one looks at best practices in the accounting profession that can be helpful to law firms, especially smaller firms.
- Your Firm's Future
Depends on its Succession Plan
by Feeley & Driscoll, P.C. - CPAs and Business Consultants
This short article provides some practical guidance on how to transition the role of managing partner through thoughtful policies procedures to encourage a smooth, efficient, multi-year transition of leadership.
- Administrators: The "Secret Sauce" of Law Firm Success
by Law Office Management & Administration Report (LOMAR)
We are strong advocates for strong, competent, business-minded administrators in law firms. Management. Marketing. Finance. Human Resources. Technology. They make the trains run on time, and they make the firm more money. This article talks about the critical role of firm administrators from the perspective of three managing partners - from small, mid-size and large law firms. One thought we especially like: "Acting like a partner, that is like an owner not an employee, goes a long way toward helping the administrator get a seat at the table."
- Nine Rules for Law Firm Leaders
by Robert W. Denney
From strategic planning to effective committee structure, this two-pager gets right to the point. Although simple in concept, these rules are not always easy to apply and follow. But the most successful organizations do....including law firms.
- How Small and Midsize Firms Weathered the Storm
by The National Law Journal
After steep declines in 2008, both revenue and profit for mid-size US law firms have leveled off and remained flat in 2009-10, according to the just-released 2010 edition of this annual survey. With participation from 187 law firms, it's one of the most important and comprehensive economic surveys for smaller and mid-size firms.
- Is There a Sea Change toward AFAs?
In-House Counsel Give It a Solid "Maybe"
by Inside Counsel
Over half of in-house counsel - 56%, to be precise - say there has been a "sea change" in how fees are paid to outside counsel. Prompted by the pressure to reduce the overall cost of legal services and fueled by the ACC's Value Challenge, the time seems right to affect change. Yet, the gap remains wide between the perception of fundamental transformation and the actual practice.
- Legal Industry Faces Major Changes:
Large Law Firms Facing Intense Pressure to Adapt
by Katy Hopkins
Much ado has been made over the new partnership between Best Lawyers in America and US News & World Report to present their version of law firm rankings. We'll be writing more on that topic in a soon-to-be-published MPF White Paper. In any event, there are a few thoughtful articles on their website including this one. And it's good news for smaller and mid-size law firms.
- Isn't It Time That Your Firm Develops a Strategic Plan?
by John Remsen, Jr.
Do you and your partners have a written, cohesive firm strategy? Or are you merely sharing office space with other sole practitioners? Strategic planning is the key differentiator, but it's not for the faint of heart.
- Associates Survey 2010:
They Survived Economic Downturn, but Now What?
by Drew Combs, The American Lawyer
Now just might be a great time to recruit talented young lawyers away from the big law firms. This survey of 5,092 mid-level associates at AmLaw 200 firms reveals that they are not happy campers these days. Stagnant salaries, reduced benefits, poor internal communication and increasing workloads are the primary reasons. The number looking for a new job has doubled in the past year, with half looking for a better "life/work balance."
- Study: Location, Firm Size Key to Billing Rates
by Ross Todd, Law.com
Here's an interesting study that puts law firm billing practices under the microscope. It examines invoices received by 36 large corporate clients finds that location and firm size - not lawyer expertise - are the biggest determinants of a lawyer's hourly rate. It also concludes that 75% of proposed rate hikes are accepted, and that a lawyer with the title of "partner" can charge up to $100 more per hour than an "associate" with the same experience.
- What's Really Going On In Today's Legal Departments
by Lauren Williamson
Good news for smaller and mid-sized firms, according to this article which appears in the current issue of Inside Counsel magazine. According to a recent survey of over 550 in-house counsel, 65% say they have retained more smaller, regional firms over the past two years. The reason? Lower price tag for legal services. But there is even better news. They say they will continue using smaller firms, even after the economy improves.
- Why Do Law Firms Die?
by J. Mark Santiago
There are three common reasons why law firms fail, says this article that appears in the June edition of ABA's Law Practice magazine. Lack of leadership. Lack of strategic focus. Lack of financial discipline. Don't let your firm be among those that fall apart or seek refuge through an acquisition.
- The "New" Leverage and Other Selections from the Trends Medley
by Robert W. Denney
In this recently published article, MPF Faculty member Bob Denney says more and more law firms are focusing attention on leverage, associate development, alternative fee agreements and firm management. In our travels about the country, we see the same trends, as well.
- Firms' Billing Rates Inched Up During 2009
by Karen Sloan
It's hard to believe but, even during the worst economic recession in over 70 years, US law firms managed to increase their billing rates in 2009. The average was 2.5% according to a recent survey of the nation's largest law firms conducted by The National Law Journal. That increase compares to a 7.7% rate climb in 2007 and 4.3% in 2008. The survey also indicates that a larger percentage of revenue for most firms was generated from alternative billing arrangements.
- Keep an Eye on Your Firm's Billing Practices
by Law 360
According to research conducted by Samford University's Cumberland School of Law, 55% of lawyers in private practice admit to overbilling on occasion. The temptation only becomes more severe as there is less work to be dome. Don't let this happen at your firm! Not only is the practice unethical, it may also cause irreparable damage to one of your firm's most valuable assets - its reputation.
- 15 Recession-Response Tips
by Linda Oligschlaeger
Recession or not, this article from Law Practice magazine includes fifteen really good ideas for lawyers of law firms, regardless of firm size or practice mix. Many of Linda's suggestions focus on client service and business development. None of them involve rocket science.
- Leadership Transitions: Seven Steps to Ensure Success
by Patrick J. McKenna
Succession planning is neglected by far too many law firms. In fact, most managing partners - 74% to be exact - do not have an exit strategy when they take the job. This helpful article provides seven thoughtful suggestions to smooth the transition when you're ready to pass the baton.
- New Report Shows Signs of Life in Law Firm Merger Market
by Karen Sloan
The law firm merger market is starting to reawaken according to separate reports published by Hildebrandt International and Altman Weil. Although both reports show that firms aren’t ready to resume the highly aggressive growth strategies contemplated just 18 months ago, the market has started to heat up again. However, "it has turned from a seller’s market to a buyer’s market when it comes to acquiring small firms,” says Altman Weil consultant Bill Brennan.
- Law Firms 'Over the Worst' of Recession, PwC Report Reveals
by Rachel Rothwell
The world’s largest law firms are starting to enjoy the rebounding economy. According to this article from the UK’s Law Society Gazette, profits per partner are up sharply – 18% for the world’s ten largest law firms and a whopping 41% for firms in the 11 to 25 spots – since January 1st says a just released research report by PricewaterhouseCoopers. The report says that “profit margins also saw a boost in firms of all sizes.”
- A Broken Business Model
by Joel Henning
Henning asks "Will it take a revolution to change the way law firms operate?" Will today's current economic crisis force law firms to rethink the old model of annual hourly rate increases? Radical ideas may not only require a change in business model, but a change to the code of professional responsibility.
- Dealing with the Downturn: How Law Firms Can Meet the Challenges and Exploit the Opportunities
by Stephen Armstrong, John Claydon, Tony King and Norman Letalik
This two-part Lex Mundi article focuses on what law firm leaders can do to deal with the downturn through both aggressive law firm economics and strengthening client relationships. The suggested practices can help firms survive the downturn and strategically position themselves for the recovery.
- Legal Strategy 101: It's Time for Law Firms to Re-Think Their Business Model
by Wharton School of Business
This fascinating article from the Wharton Business School asserts that the global recession is forcing law firms to change the way they do business.
- Yes, This Recession Is Severe – But We’ve Been Through Much of It Before. The Question Is: “Will We Learn from Experience?”
by Robert W. Denney
Does this recession remind you of anything? Perhaps it's the same phenomenon we experienced 15 years ago when the dot com industry went bust? Learn what's changed in the legal marketplace since the last recession and what lessons remain the same.
- Implementation: The Gutsy Challenge of Strategic Planning
by Peter A. Giuliani
A great article for firm leaders about the implementation side of the strategic planning process. Giuliani says fuzzy goals, a lack of genuine commitment and an unwillingness to deal with tough issues often hamper successful implementation.
- Will Fate Plan Your Future or Will You?
by Howard L. Mudrick
If your firm has never gone through the strategic planning process, this is the article for you! It starts off explaining the basic "whys" and "hows" of planning, but goes deeper into the importance of focusing externally as well as internally. Mudrick was a member of the MPF Faculty for several years before joining Phoenix-based Jennings Strauss as COO in 2008.
- Orderly Succession of Law Firm Management
by Joel A. Rose
Most firms don't utter the "s" word -- succession -- until disaster strikes. This article leads off with a great example of that. Don't let your firm fall into the malaise and wait until fate forces your hand. Succession planning benefits firm leaders of today and tomorrow.