What Would Motivate You to Change?
As a new year begins, it's clear that adapting to change in order to stay competitive and thrive is essential for law firms in 2014 and beyond. The common thread is that lawyers will need to pay close attention to the new and constantly changing needs and wants of their clients if they expect to attain and then retain client loyalty. And yet some law firms continue to hang on to the "old ways" of running their practices, perhaps with the idea that some day the partners will wake up and find that the world of 2005 has returned. Until then they will cut headcount in order to bring short-term balance to their finances, kindling dissatisfaction among their ranks while failing to change and address the client cost and service demands that create financial pressures.
The simple fact is that firms today must identify their strengths and play to them. There are very few organizations that can be all things to all people. With limited resources available, it is important to emphasize those resources and expend them in a focused manner for greatest benefit to the firm and its clients. The catalyst to change is often money. With a cushion from past successes, there is little motive in many firms to change. When a cushion narrows or evaporates entirely, and when collections become an issue because clients with their own financial problems fail to pay for legal billings, firms must assess and change the way they operate.
There are two ways for firms to make this assessment. They can look at their revenue and figure out what their cost structure should be in order to turn a profit, or they can look at current costs and services and determine how much revenue they need for these services to bring in and make a profit. Most firms find that there is no easy way to adjust costs to revenue. The strategies for doing it - eliminating lawyers and staff, shedding clients, reducing services - each have drawbacks that are hard to overcome. By contrast, determining how much revenue is needed to cover costs requires making explicit the tie between individual compensation and the firm's overall revenue.
Firms that service major clients with teams (not just a single rainmaker) can identify and provide needed practice specialties that reflect a full range of client concerns. Coordinating team service according to a strategic plan can give clients a complete and virtually seamless service package. The client receives "one-stop shopping" from a group of lawyers who are chosen to address specific needs, both in terms of practice specialties as well as billing rates. This focuses the firm's resources where they should be - on what the client needs and wants - and creates a practical model for success in a highly competitive new year.
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