Fall 2017 Workshops and Speaking Engagements

For those who wish to join me at one of my upcoming keynote presentations or workshops, here are the program details: Association of Legal Administrators Regional Conference, Las Vegas, September 7-9, 2017: Legal Lean Sigma Institute Pre-Conference White Belt Workshop in Project Management and Process Improvement. Details here.

ALPMA Summit, Brisbane, Australia, September 13-15, 2017: Incentivising the New NormalDetails here.

Prodonovich Advisory, Sydney, Australia, September 19, 2017: Staying Relevant: Ideas for Growing Good "Traditional" Legal. Details here.

Legal Marketing Association, Midwest Tech Conference, Chicago, September 25-26, 2017: Moving from Art to Science: Incorporating Metrics to Drive Business Development and Marketing Priorities. Details here.

Legal Lean Sigma Institute, Boston, October 3-4, 2017: Yellow Belt Certification Workshop in Legal Lean Sigma® and Project Management. Details here.

Association of Legal Administrators Finance & Law Practice Management Conference for Legal Professionals, Chicago, October 5-7, 2017: Measuring ROI in Project Management, Process Improvement, and Pricing Programs. Details here.

Association of Legal Administrators Regional Conference, Nashville, September 2017: Legal Lean Sigma Institute Pre-Conference White Belt Certification Workshop in Legal Lean Sigma® and Project ManagementDetails here.

Beaton Live, Sydney, Australia, Annual Independent Law Firm Forum, October 18, 2017. Details here.

ICON Annual Conference, Sydney, Australia, October 19-20, 2017: Current Trends in Data Driven MarketingDetails here.

Ark Group and Legal Lean Sigma Institute, Chicago, December 5, 2017: White Belt Certification Workshop inLegal Lean Sigma® and Project Management. Details here

 

Timothy B. Corcoran was the 2014 President of the Legal Marketing Association and is an elected Fellow and Member of the Board of Trustees of the College of Law Practice Management. He delivers keynote presentations, conducts workshops, and advises leaders of law firms, in-house legal departments, and legal service providers on how to profit in a time of great change. For more information, contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.

Incentivizing the New Normal

Businesses that don’t merely endure, but thrive, over extended time periods tend to attract and foster leaders who establish and maintain tight alignment between business strategy and business execution. Unfocused businesses with unfocused leaders generate sub-optimal financial performance even when things are going well. But when permanent market disruptions occur -- a certainty in every market segment -- unfocused businesses with unfocused leaders tend to flail until they’re acquired, dissolved, or relegated to a shadow of their former strength. This is a lesson that many law firm leaders have learned.

As law firm leaders valiantly struggle to overcome the consequences of market changes, and maintain their firm's market share, they face several obstacles:

  • Law firm partners don’t enjoy losing the autonomy to run their practices as they wish, even when alternative approaches are demonstrably more lucrative for the individual partner and better for clients
  • Many firms take an undisciplined “whack a mole” approach to driving change, responding primarily to variable client demand rather than engaging in a systematic, strategic process for business transformation
  • There are minimal rewards for partners to change behavior, and numerous rewards to maintain the status quo

We won’t address the discipline of change management here, other than to say this: Leaders can’t drive change if they lack a comprehensive understanding of their law firm ecosystem and how each business function connects and interconnects with all others. Without a multi-faceted and multi-year master plan, the odds of landing on the appropriate formula are significantly diminished. But even if we assume such a plan exists, now what?

Follow the Money

If we hope to thrive in the new normal, we need to know how we make money, and how this process has changed given the market disruptions. Law firms tend to rely on a scant few performance metrics, most of which are focused on production, most of which are wholly internally-focused, and most of which are inefficient proxies for what we really wish to measure: profitability. For our purposes, profitability isn’t a crass or one-sided measurement. It’s a scorecard that reflects how well the law firm has deployed its unique assets to meet a market need in a way that’s mutually beneficial to the buyer and seller. Calculated properly, profits are a measure of long-term client satisfaction, not of “beating” the client in an adversarial game.

So we must understand the building blocks of our business, working ever backward from aggregate results, to the practices and offerings generating those results, to the matter types and activities contained therein, to the efforts necessary to win more of these activities. When we truly understand all that we do, and what we do well, and where we can improve, we can start to identify the critical behaviors necessary to generate greater success.

Acknowledge Different Contributions

Many law firms were built by exceptional lawyers who were as accomplished at generating business as offering legal advice, who were exceptional mentors and coaches, who were as adept with strategy as with operations. This is not most of us.

A successful law firm is comprised of different roles, different skill sets, different contributions. It’s necessary to understand the combination of contributions that generates success. Otherwise we risk the false assumption that “Success is primarily driven by business generation” or its opposite fallacy “We’re successful because we have top practitioners.” Of course these are true, just as a dozen other factors play a critical role. Only by understanding the unique combination of contributions by different lawyers with different skills can we establish a roadmap for replicating our success. However, we must acknowledge a fundamental truth: some contributions are more valuable than others, and this value may differ by practice, by matter type, by business cycle, by client industry, by year. Our objective in identifying critical behaviors is to maximize the contributions of all lawyers, rather than dilute our performance by asking, or allowing, lawyers to pursue that which is not their highest and best use.

Drive and Reward

Law firm partner compensation schemes, whether lockstep or eat-what-you-kill, subjective or formulaic, open or closed, tend to share one overriding flaw: they fail to proactively and transparently define the behaviors expected of partners in order to drive such behavior. Instead, rewards are issued at year-end, in a process oft-shrouded in mystery, to partners who may not know what specific actions were valued, and how their specific contributions were valued relative to their peers. Changing lawyer behaviors requires leaders to set expectations in advance and to identify the rewards associated with the desired behaviors. Lawyers, generally acknowledged as averse to risk and uncertainty, are more likely to be dissatisfied when the incentive scheme is opaque rather than transparent. Managing expectations in this manner also helps to reduce feelings of inequity, because partners know the rewards associated with various behaviors and those willing to adapt can access different rewards.

There’s an old saying: If your compensation plan and your business strategy aren’t in alignment, then your compensation plan is your business strategy. This isn’t a reflection of selfish partner behavior. In fact it’s the opposite. Sensible partners trust that their leaders have established an incentive scheme that rewards lawyers for activities that are beneficial to the firm. When leaders expect partners to act against their economic self-interest “for the good of the firm,” this isn’t boorish partner behavior. This is simply inept management. It’s the leaders’ obligation to create alignment. The goal: What’s good for the partner is what’s good for the partnership. Settling for anything less than this outcome, and what’s good for the partnership might actually be better leaders.

 

Portions of this article previously appeared in ALPMA's Survival Guide for Legal Practitioners blog and in Compensation (Re)Design for Law Firms, published by the Ark Group, with permission. 

 

Timothy B. Corcoran was the 2014 President of the Legal Marketing Association and is an elected Fellow and Member of the Board of Trustees of the College of Law Practice Management. He delivers keynote presentations, conducts workshops, and advises leaders of law firms, in-house legal departments, and legal service providers on how to profit in a time of great change. For more information, contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.

Pricing Legal Work is a Two-Way Street

In any market, effectively pricing any goods or services requires an understanding of the buyer's perceived value. When the buyer has no idea of the value of a given task, and no idea how to measure the quality of service delivery, then the buyer and seller end up in an unproductive dance in which low cost providers, irrespective of quality or expertise, emerge victorious. An informed buyer knows what goods or services are needed, knows how they could and should be delivered, and knows the intrinsic value of these goods or services to his business. But that's not enough. That information must be conveyed to the potential sellers so the sellers best able to meet the quality standards at the desired price win. A buyer seeking simply to squeeze the supply chain will generate cost savings for a while, but will have no credible answer when the CEO or CFO asks for evidence of a continuous improvement culture that enhances business velocity. A potential seller must also know how to deliver the necessary goods and services at the desired price, within the required quality standards, while generating a profit. To do this well, the seller must know his internal cost to produce and deliver these goods and services, which is a clear advantage to more experience sellers. If this cost is below the target price, he can turn a profit. If this cost is above the target price, he must continually seek out unsophisticated, poorly-informed buyers, an increasingly challenging quest. Alternatively, he can try to demonstrate that the goods and services deliver greater value to the buyer, and therefore warrant a higher price. Or make no profit. Or do something else. Or get better at it. Sellers who ignore buyer feedback when setting prices, focusing instead on calculating the organization's overhead costs plus a desired profit margin, and then distributing the resulting target across the product lines, are playing recreational checkers in a high-stakes chess tournament.

We've been at this for years now, yet too many law firm sellers and too many law department buyers are still terrible at conducting commerce. Pricing legal work is a two-way street. It requires the law departments to do a better job of understanding what they're buying, and why, and from whom, and how to measure success. It requires the law firms to do a better job of understanding what they're selling, and why, and what the buyer's looking for, and how to measure success in more granular ways than "We got paid (most of what we billed)."

Law department leaders: You're no longer allowed to say to your law firms, "We don't know what this should cost, we're expecting you to tell us," unless this is literally the first time your business has encountered this issue. Otherwise, invest in analytics to learn what you've spent historically, identify which matter types have high value to the business and which have negligible value, and determine how to distinguish and measure a job well done from a job done poorly. Then take this information and embark upon a rigorous process to make better build (do the work in-house) vs. buy (hire outside counsel) decisions, and align the providers so those with the requisite skill to meet the quality standards at the right price do the work. Involve your outside counsel or other legal service providers every step of the way. And if you find yourself ignoring the analytics and reverting to hiring law firms based on some mystical notion of brand strength plus a willingness to offer hourly rate discounts, then update your LinkedIn profile because your contribution can be automated in a spreadsheet at a far lower cost.

Law firm leaders: You and your partners are no longer allowed to say to your clients, "We don't know what this might cost, because every matter is different," unless you've literally never done work like this previously. But then you should also scrub your website to remove all references to having any expertise in this area, so potential clients in the future can skip over you and find a more qualified practitioner. Otherwise, invest in professionals and training in project management, process improvement, pricing, and practice management to translate your firm's expertise into delivering quality legal services at market prices while also generating a profit. Do this collaboratively with your clients, or at least those clients you wish to keep. You're also going to need to tweak your compensation plan, because you're most likely rewarding behaviors that look an awful lot like being bad at practicing law. If all of this sounds challenging and disruptive, it is. If it sounds too hard to tackle, then step back and let the lawyers who will be around for a while run with it.

I elaborate more on this topic in my chapter in the recent book, "Practical Innovations in Legal Pricing." 

From the publisher: The pricing of legal services is no longer simply about setting rates. Properly optimizing a firm’s pricing strategy is a critical source of competitive advantage and increased profitability, which now more than ever is crucial to staying relevant in the legal sector.

Firms must start looking to demonstrate their ability to provide clients with greater value through alternative fee arrangements, effectively controlled budgeting methods, and the integration of innovative firm management practices – whilst continuing to operate as a profitable business. Standard business principles have become the norm for firms – as clients become increasingly proficient in negotiating costs and defining the scope of engagement, service delivery must now be framed by value, expertise, and profitability rather than hours billed alone.

With contributions from pricing directors and expert consultants, Practical Innovations in Legal Pricing offers insight into newest effective approaches to pricing that top firms are undertaking. Taking an in-depth look at the role of shadow-billing and client collaboration in AFAs, integrating a firm’s legal project management and pricing functions for greater client benefits, and effectively executing a newly formed pricing strategy, this title will provide a comprehensive overview of the best practices in innovative pricing functions.

I think you'll find this book, with informative contributions from its many fine authors, to be an excellent addition to your must-read list. Yes, we're all busy. But consider this: your competitors may have already read it.

 

Timothy B. Corcoran was the 2014 President of the Legal Marketing Association and is an elected Fellow of the College of Law Practice Management. He delivers keynote presentations, conducts workshops, and advises leaders of law firms, in-house legal departments and legal service providers on how to profit in a time of great change. For more information, contact him at +1.609.557.7311 or at tim@corcoranconsultinggroup.com.