Posts Tagged ‘law firm success’

Truly Engaged Employees Lead to Highly Successful Law Firms

Wednesday, September 28th, 2011

Janet Ellen Raasch
Janet Ellen Raasch is a writer, ghostwriter and blogger (www.constantcontentblog.com) who works closely with professional services providers – especially lawyers, law firms, legal consultants and legal organizations – to help them achieve name recognition and new business through publication of keyword-rich content for the web and social media sites as well as articles and books for print. She can be reached at (303) 399-5041 or [email protected].

A truly engaged employee is one who believes so strongly in an organization that he or she invests discretionary effort in its success. In other words, a truly engaged employee is someone who regularly goes above and beyond his or her job description.

What does this mean in a law firm? While equity partners (and those on the track to become equity partners) are best thought of as owners rather than employees, everyone else should be considered an employee.

The engaged non-equity track associate involved in document review will notice and point out an interesting new detail. The non-engaged counterpart could ignore this detail, because it might make the job more difficult.

The engaged paralegal or legal assistant will cheerfully work evenings and weekends as a courtroom date draws near. The non-engaged employee will complain and sulk.

The engaged mail room person will deliver a registered letter to a lawyer as soon as it arrives, allowing for timely consideration and response. The non-engaged employee will wait until the next scheduled delivery cycle.

And finally, the engaged marketing director/manager/support person will devote extra time and effort to creating a truly customized client proposal, rather than simply answering RFP questions with the usual non-specific content.

In addition, employee engagement is not limited to the workplace. An engaged employee will rave about his or her law firm outside the office as well — whether to neighbors on the sidewalk, fellow parents at a soccer game, or someone they meet at book club or a cocktail party.

When you consider these examples, it is easy to see how truly engaged employees can propel law firms from run-of-the-mill to highly successful. “Defining and communicating the unique story or message at the heart of your law firm is essential to employee engagement,” said Laura Wegscheid.

Wegscheid discussed why law firms should enhance employee engagement in order to improve morale, operations and the bottom line. This presentation to the Rocky Mountain Chapter of the Legal Marketing Association (www.legalmarketing.org/rockymountain) took place Sept. 13 at Fogo de Chao Restaurant in Lower Downtown Denver.

Wegscheid is a senior consultant with Cast Communication Design (www.castcommunicationdesign.com), an internal communications consulting firm focused on helping businesses engage and align their employees.

The value of engaged employees

Modern research organizations use rigorous science to assess levels of employee engagement and link engagement to performance.

In 2009, Hewitt discovered that businesses with highly engaged employees have total shareholder return 19 percent higher than firms with average engagement.

According to a study of a large professional services firm by the Hay Group, the firm’s five most-engaged regional offices generated 43 percent more revenue per consultant (think lawyer) than the firm’s five least-engaged offices.

“According to Colorado Bar Association statistics,” said Wegscheid, “the average attorney has $446,500 in billable per year. A 43 percent increase adds an additional $191,995 to this amount, for a total of $638,495 per lawyer. That translates into $1.9 million extra for a firm of 10 attorneys, $3.8 million for 20 attorneys and $5.8 million for 30 attorneys. This is a lot of money.”

Research clearly demonstrates that the more engaged your employees, the better your revenue, productivity, earnings, shareholder returns, employee retention and customer loyalty.

According to Gallup, about 16 percent of employees at any business are actively disengaged. “Some call these people ‘CAVE dwellers,’ for ‘consistently against virtually everything,’” said Wegscheid. “They will actively try to destroy your organization.

“An additional 29 percent truly believe in your business and are actively engaged in making it succeed,” said Wegscheid. “That leaves the majority of your employees — approximately 55 percent — who are neither disengaged nor engaged. Smart businesses focus on transforming these ‘neutrals’ into highly engaged employees.”

How to encourage employee engagement

Good internal communication is one of the best ways to move employees out of the middle and into the “high engagement” zone.

“Internal communication is evolving,” said Wegscheid, “with the balance shifting from a model weighted by formality and control towards a model that facilitates employee engagement. Few organizations fall squarely into one of these four models.”

The inner circle model has the highest level of formality/control and the lowest level of employee engagement. Executives confer behind closed doors with no employee input. Information travels through formal channels from the top down to managers, who tell employees what to do – but not why. “Most, but not all, organizations have moved beyond this model,” said Wegscheid.

The cascade model is still quite controlled, but has a little more employment engagement. Decisions are made at the top and information flows from the top down, but managers are expected to share some information with their teams.

In the dialogue model, decisions and information still flow from the top – but are often accompanied by an invitation to ask questions. Feedback is limited to topics raised by leadership. The process is formal, but two-way, with the goal of making sure employees understand the information that was communicated.

“Most organizations, including law firms, currently operate at the cascade level and perhaps at the dialogue level,” said Wegscheid.

The community model combines the highest levels of employee engagement with informality and freedom of expression. “This model shares a mindset with social media,” said Wegscheid. “Knowledge is not controlled at the top, but contributed by and commented on by all participants in a network. Everyone has something to contribute.”

In the community model, leadership is still needed but messages can be initiated by anyone, encouraging the free flow of information throughout an organization. In this model, individuals feel comfortable sharing expertise and learning from each other, which results in spontaneous collaboration by employees at all levels to solve a problem, rather than formal teams composed only of executives. Employees as well as owners feel invested in the results.

“Because of sensitive information, proprietary relationships and a billable hour model that does not reward efficiency, the community model can be challenging for law firms,” said Wegscheid. “However, there are elements of this model that can be incorporated.

Engaged employees are those who understand and believe in a law firm’s message. This message can be created at the top and then delivered formally to employees (a low-engagement model). Conversely, it can be created collaboratively (with facilitation by firm leaders) and made part of an ongoing conversation among employees (a high-engagement model). Or it can be somewhere in between.

“The important thing,” said Wegscheid, “is to understand the value of employee engagement and actively consider which steps your firm can take to improve it – and consequently improve the firm’s bottom line.”

Why do some law firms fail while others succeed?

Sunday, September 30th, 2007

Janet Ellen Raasch

Janet Ellen Raasch is an author/ghostwriter who works with lawyers and other market-savvy professional services providers to research and produce reader-friendly manuscripts that are suitable for publication as articles or books. She can be reached at (303) 399-5041 or [email protected].

When brand-name law firms like Brobeck (San Francisco), Arter & Hadden (Cleveland) and Altheimer & Gray (Chicago) bite the dust, legal industry pundits are quick to offer their post-mortems. “Over-extended on leases and salaries,” says one. “Over-dependent on the technology industry,” states another. “Spent too much money on national advertising,” claims a third.

“My colleague Mark Greene and I are both committed to research, and we started to ask ourselves: should the nation’s leading law firms be making important management decisions based on the opinions of a few ‘wise guys?’” said Burkey Belser. “In no other industry are business decisions made with less hard data than the legal industry.”

Belser is president of full-service design firm Greenfield/Belser Ltd., located in Washington, D.C. He was in Denver July 13 to discuss the results of a research project that compared successful law firms with their failed counterparts. The presentation was given at the Law Firm Leaders Forum, held at Holland & Hart and sponsored by the Rocky Mountain Legal Marketing Association (www.rockymountainlma.com).

“We decided that we would conduct a scientific survey in an attempt to sort fiction from fact. We started our research by combing the law-firm and business-management literature and developing 140 hypotheses – variables that we thought might ‘make a difference’ in whether a firm was destined for success or failure,” said Belser.

“We included the ‘proven’ wisdom of the usual law-firm and business gurus,” said Belser. “The results surprised us. Of the 140 factors, only 60 proved to be associated with success or failure. And of those 60 factors, none was predictive in and of itself. Law firms, like human beings, usually do not die from a single cause but from a combination of systemic failures.

“Having a CEO and a CFO, for example, made no difference,” said Belser. “However, having other non-lawyer C-level executives (like a COO, CMO, CIO and CKO) — and empowering these individuals with decision-making authority in their areas — made a striking difference. Our results indicate that law firms that adopt a more business-like model are much more likely to be successful.”

Belser and Greene used the results of their research to create a tool that law firms can use to create their own profile — a profile that can be compared with those of the typical successful and failed firm. “This tool by no means predicts success or failure, but provides a solid prescription for law-firm self-analysis and change,” said Belser. “Law firms can recognize danger signs and set a course for healthy growth.”

The study’s “success” group (N-47) included AmLaw 200 firms that had posted a five percent growth in gross revenues two years in a row. The “failure” group (N-27) included firms with 50 or more attorneys that failed within the three years preceding the study. The survey, in which law firm leaders were interviewed by phone, took place in late 2003. A summary was published in The American Lawyer in April 2004.

“Successful firms were united under a strong brand identity and a common vision,” said Belser. “This factor was huge. Once, law-firm partnership was a career-long covenant. Today, partnership is perceived as a contract that can be broken by either party. In fact, lawyers know that they can often make more money if they ‘hop around.’ A shared vision and culture – not money — is the glue that will bind partners to your firm.”

This unified vision must be part of a strategic plan and must be communicated throughout the firm by skilled leaders. “Failed firms were much more likely to adopt an old-fashioned, autocratic leadership style,” said Belser. “Those with a democratic – one partner/one vote – style were somewhat more successful.

“But the most successful management style by far was consensus-driven,” said Belser, “a style in which lawyers agree to cede decision-making authority to leadership. Many of these leaders are much younger than the law-firm leaders of two decades ago. They fill their roles on the basis of merit and business acumen rather than longevity.”

The key to building consensus is communication. “Lack of communication leads to suspicion; suspicion leads to fear; fear leads to failure,” said Belser. “Ninety-two percent of the successful firms had a strategic plan and communicated this plan all the way down the chain of command to associates as well as staff. This number drops dramatically to 43 percent in failed firms. Plus, successful firms have systems in place that solicit and incorporate feedback from associates and staff as well as partners.”

Another factor that differentiated successful from failed firms was the willingness to embrace innovative change and manage risk. “Strategic diversification, for example, improves the chances that a firm will weather downturns in business sectors and geographic areas, as well as the loss of key clients,” said Belser

“A narrow or niche focus can have strong short-term benefits, but those strengths appear to diminish over the long term as markets converge or mature,” said Belser. “In addition, risk-taking must be strategic. Opening a new office in Fort Myers or Aspen just because a senior partner wants to semi-retire there – that’s just loosey-goosey management.”

“Ownership” of clients was also a key differentiator. In highly successful law firms clients are much more likely to belong to the firm – a “we” culture — rather than to the firm’s individual lawyers – a “me” culture.

“Client-hoarding creates an inherent conflict and significantly increases a firm’s likelihood of failure,” said Belser. “Whether generated by a firm’s compensation system or by the lawyers’ lack of confidence in each other, it is toxic. An ‘eat what you kill’ system is one of the most persistent problems facing law firms,” said Belser.

Successful law firms pay attention to the numbers — realization, prompt billing and collections. Ninety percent of successful firms have a business plan – which is implemented and tracked. Accomplishments are acknowledged and rewarded.

“Billing rates are so high and income so strong in most law firms that poor management can be disguised under a cloak of cash,” said Belser. “As long as the firm is making money, no one looks at the details. Then, one day, it is too late. Financial planning must be constant and centralized; partners should never manage their own financials.

“Finally,” said Belser, “successful law firms reinvest more of their profits in the firm than their failed counterparts. Too many law firms are fixated on profits-per-partner and how this number affects their various listings. It is time to break this mental lock!

“Mark Greene and I are pleased that we have been able to create a portrait of the changing legal industry — providing the hard data that will allow law firm decision-makers to sort fiction from fact as they chart their futures,” said Belser.

This research on law firm success and failure was a joint project of Greenfield/Belser Ltd. (www.greenfieldbelser.com) and its affiliate, The Brand Research Company (www.brandresearchcompany.com). For more information, please contact Belser at (202) 775-0333 or [email protected] or Dr. Mark Greene at (703) 408 0512 or [email protected].