July 10, 2020
Law Firm Formations and Transformations
As the legal industry continues to adjust to life during a pandemic, things are still changing every day as law firms make economic and other adjustments to their traditional ways of doing business. And all this change is likely to lead to even more change. As a result, we will continue to see law firm transitions and transformations abound. For law firm partners who are starting anew, as well as those who are working to adapt to these challenging times, what will you do to future-proof your law firm?
Adapt or Die.
We have previously written about preparing your law firm for the post-COVID world. Many law firms, however, are not making these changes quickly enough and are struggling to meet the continuing challenges presented by state-wide efforts to gradually reopen the economy amidst a rise in new case numbers. While law firms must respond to the present challenges impacting their infrastructure, workforce, and clients, they cannot afford to do so at the expense of long-term planning and change. Each of these areas requires attention to both immediate concerns and future planning.
Forward-thinking law firms need to ensure that their infrastructure, workforce, and client-base is flexible and resilient, not just to ride out this storm, but to be ready for whatever the future may hold. This means critical and long-term changes to staffing, productivity metrics, client review systems, partner retention, outsourcing, office space and remote work-places, technology systems, client interface tools (including billing and collections), and strategies for staying connected and moving matters forward without in-person meetings, appearances, and hearings. And not just short-term fixes, but law firms should revise governing documents and establish new systems and policies and procedures that will facilitate this adaptability and protect the firm in the future.
The good news is that many law firm partners and managers are identifying these issues and beginning to make these critical changes. And several law firms that had already established nimble, technology-driven business models are adapting more quickly. Those that do not will struggle to keep their firm alive and relevant in the coming decade.
For many law firm partners and managers, it will make sense to start anew. For some, this will mean taking your group to a new law firm (one that is adapting better than your current firm) or starting your own firm. For others, it means entirely re-thinking the way you have done business, taking the good and leaving the bad. While sometimes scary, new starts are exciting and bring the promise of hope. But how will you do things differently?
Start with your partnership agreement. A well-developed and well-drafted law firm partnership agreement is a competitive advantage for a law firm. It engages the partners in essential discussions and analysis on how to structure or restructure their law firm, how they should manage the firm, divide profits, and mitigate losses. It should be tailored to the law firm and its individual partner’s practices and growth plans, taking into account the proper compensation and revenue sharing systems for the firm that are flexible, dynamic, and fair. The law firm’s structures and systems, including its policies and procedures, should be ethically and legally sound, meet the partner practices and growth plans, yet be nimble and flexible enough to adapt to whatever the changes the firm may experience.
Whether your firm is adapting or starting anew, you must be forwarding-thinking. Strategic planning, and thoughtful and systematic execution of those plans, is a law firm’s greatest weapon against extinction.
Dena M. Roche
O’Rielly & Roche LLP