This article first appeared in the College Of Law's "Insights" communication to members (Feb 2013).
Law firms are asking some big questions as they plan for 2014. Pricing and relationships with clients are at the forefront, as law firms jostle for market position and dwindling revenue.
Sue-Ella Prodonovich, Principal of Prodonovich Advisory, says firms should be prepared to review their strategic plan every three months in a fast-changing environment.
“It’s about how do we flex, how do we let clients shape what our plan looks like, rather than how do we let lawyers shape what our plans look like,” she says.
The big issues
Prodonovich says the biggest issue for firms is determining their breadth of service. She recommends that firms narrow down their focus and clearly define their position in the market.
“You’re either going to get rid of unprofitable areas, you’re going to invest in emerging markets or growth markets, you’re going to invest in a geographic segment, or you’re going to invest in a service type or an industry type.
“But to try and span everything is a bit of a fool’s paradise.”
Starting out with strategy
The question firms initially must ask is: what are the ingredients that we’ve already got on the table?
For example, smaller firms can make decisions faster than the big firms. Big firms, meanwhile, can invest in emerging areas of law, growth markets and emerging markets.
“They have their scale, and they’ve just got the horsepower there, Prodonovich says. “When you need a big deal or when you need to talk to others, you’ve got a self-perpetuating referral base within them.
“And you’re getting some very good talent leaving the big firms and either starting up their own practices or building in a lot of horse power into smaller practices.”
Steps to creating a strategic plan
When creating your business plan, Prodonovich recommends working through the following steps:
- Understand your fee base. Review your fees over the past three years and identify trends you want to amplify or minimise.
Understand your clients. Consider how they met you, why they chose you, and what their plans are for 2014.
- Learn from your losses. Determine the critical few things you will say ‘No’ to and where you will reinvest time. Identify any client relationships you should ‘prune’ from your practice.
- Review the market. Do you have new competitors? Are there alliances or joint ventures to explore? Are clients changing the way they use your service
- Speak with clients and referrers and ask for their feedback. Incorporate ideas into your plan. If you don't have a Client Feedback program in place - then commit to starting one before July 2014.
- Review your offer and what distinguishes your practice. Analyse your ‘strengths’ and ‘weaknesses’ and identify ‘opportunity’ and ‘threats’. Focus on what do you need to do, or invest in, to build up your strengths and seize opportunities.
- Prepare a marketing plan. Prioritise activities that position your practice with your target market (prospects and referrers) and promote the factors that distinguish you.
- Update your sales pitch and review your collateral.
- Diarise 30 minutes every day for business development and pipeline activity; diarise two hours once a month to review business activity and plans; diarise three hours every quarter to check your strategy.
In the current tumultuous legal marketplace, a good strategic plan will help your firm to enjoy more than momentary success – it can give you longevity.
Sue-Ella Prodonovich is a presenter on strategic planning for The College of Law’s Legal Practice Management Course. Lawyers who wish to become a sole principal, partner, solicitor-director or in-house solicitor on the record must undertake a Practice Management Course. The College’s course meets the Law Society’s requirements.