In the finance world, investors are often touting the importance of a solid business plan. In law—where outside investment is still irrelevant—it’s more important to talk about having a strategic plan.
A strategic plan is an outline created by law firm administrators or equity partners that expresses their plans to operate and grow the firm over a period of time. Like a business plan, a strategic plan should include a mission statement, long-term goals, short-term objectives, a SWOT analysis, specific action points, timeline, and key players.
With so many so many environmental, economic, and external uncertainties today, law firms cannot afford to assume that its current client list is secure, that new clients will continue to be attracted, or that its attorneys will stay productive (or even just stay). So not only does a strategic plan become a guide for every day activity, it also becomes a guide for how to adapt to changing circumstances.
By revising the strategic plan each year, law firms can ensure they are aware of market trends and adapting accordingly. Individuals at the firm can then be aware of their specific role in helping the firm gain market share.
A strategic plan can be created at a partners retreat or an end-of-the-year meeting among law firm leaders. Jack Newman, a lawyer with Morgan Lewis & Bockius in Washington, D.C., discusses his experience with creating and implementing a strategic plan at his firm (Newman uses the word “business plan”).
“The best and most important part of that exercise is that we happen to have a wonderful note taker. He didn’t just record what we were talking about but as each person spoke about the opportunities and identified how it might be done, it was tagged with the responsibility and given a due date. And what came out of that was essentially a client-by-client review, which, I think David Maister and others will tell you, is the first natural step in the evolution of a business plan. And that was in fact the first addition of our business plan. It was about five pages, as I recall.
…our business plan today [is] about 300 pages.”
Newman reiterates the importance of action plans—or very specific items meant to be implemented by a particular person at the firm. After each strategic objective, an individual was charged with carrying it out.
Easy to discount, non-billable time adds value to any firm. As such, it should be a part of your strategic plan. It is the time to train associates, interns, or staff. Newman’s firm included billing strategies in its strategic plan that allowed for professional development and investment of this nature to be formalized and encouraged.
“In the last issue of this business plan, one of the last internal actions that we took was to record our non-billable in more finite categories than we had used in the past so that promotional activities get a different code than client development activities—promotional activities being things like speeches and writing articles and so forth, and other client development being development of proposals and things of that nature. We track those non-billable hours very closely because, quite frankly, that’s at least 50 percent of our bread and butter. We want to make sure we’re investing properly. That we’re earning a return on it and that we’re doing all that we should be doing in a given area.”
If the financial planning is a bit over your head, than hire a consultant to discuss the getting started. For the sake of your employees and the longevity of your firm, it’s vital to create a succinct strategic plan that signals your firm’s awareness of market variables, other industry competition, ways to advance, and tools for growth. Writing down specific action points will motivate your firm employees toward specific goals and give you the opportunity to see their contributions.
Of course, “The billable hour is the coin of the realm in the legal profession. There is just no getting around that.” But, also remember that so much more goes into a strategic plan—and into the foundation of a successful law firm—than a mere tracking of billable hours.
For more information, attend C4CM’s audio conference today, called Finance for Non-Financial Managers: Demystifying Income Statements, Balance Sheets, Cash and Finance Lingo.