CHICAGO — Small and midsize law firms often reject the idea of crafting a multiyear strategic plan, even though legal industry consultants say the plans can boost firm profits.
“Of those that plan, nearly 90% can attribute enhanced profits to their planning process,” said John Remsen Jr., a consultant based in Atlanta who doesn’t provide such planning services, but has surveyed firms with between 75 and 100 lawyers on the topic.
Top partners from three midsized Chicago-based firms who spoke on a panel moderated by Remsen in the Windy City last week illustrated the wide variation in how firms approach the issue.
Freeborn & Peters has a plan that was recently updated and approved by the firm’s executive committee. Shefsky & Froelich has a “growth plan” that was developed about eight years ago and hasn’t changed since.
While the firm may not have a written plan, Ungaretti & Harris lawyers do share a common vision on their profit goals, managing partner Tom Fahey said.
For most law firms, the plans map out how and to what extent the firms will expand, which practice areas will be core strengths, what profits goals will be and how compensation for individual attorneys will be determined.
Freeborn & Peters, which has about 120 lawyers and 65 partners, has a three-year plan, said Randall Vickery, the firm’s managing partner for client relations. The plan has helped the firm set out a vision for a future that doesn’t include a merger.
“We will not entertain a merger at all,” Vickery said during the discussion. “We’re very comfortable with our place in the marketplace.”
The plan used at Shefsky & Froelich, which has about 75 lawyers and 50 shareholder attorneys, is largely a recruiting tool that helps the firm’s lawyers identify other attorneys who will best fit with the firm’s culture, said Tony Licata, the chief operating officer at the firm.
Licata said he rejects the notion that his firm needs an evolving strategic plan focused on pumping up profitability. Lawyers at the firm are more concerned about making sure attorneys enjoy their work and get along, he said.
“This is not a profit-maximizing environment,” Licata said. “We’re focused on the proper blend of internal camaraderie.”
Shefsky & Froelich’s growth plan does specify that the firm wants to focus on certain practice areas, including corporate and securities, real estate, estate planning and litigation, as well as on building its health care expertise, Licata said. It also calls for hiring partners who have minimal portable client revenue of $750,000 annually, he said.
At Ungaretti & Harris, which has 109 lawyers and 69 partners, the firm decided that paying a consultant to help create a plan might not be the best use of funds after it had a bad experience trying to develop a prior plan, said Fahey.
Still, the firm has a group of lawyers that have the same goals with respect to making money, he said.
When Remsen surveyed 90 managing partners at one of his counseling forums in Atlanta two years ago, 57% said they had a strategic plan. Of those that do have a plan, 97% use them at least some of the time. Also, 89% said the plans have a positive impact on profits.
“The chances of being successful are considerably greater if you’ve developed, communicated and agreed to a strategy than if you haven’t,” said John Smock, a consultant in Lake Bluff, Ill., who provides strategic planning services. “It doesn’t mean you can’t be successful without one, but I think it’s a lot harder.”
Firms often steer clear of crafting the plans because the process is “hard” work and often raises unpleasant issues, Remsen said.
Dealing with rogue lawyers moving in a different direction than that of the firm, confronting older, senior attorneys about their opposition to new ideas, and discussing practice areas that should perhaps be scrapped are tough topics that can come up.
Also, attorneys often are more focused on short-term issues rather than the longer-term outlook. They also tend to be autonomous in their thinking, and they don’t like risks or change, he said.
