How to Develop and Implement a Strategic Plan for Your Firm

  • June 18, 2014
  • Ann Macaulay

The term “strategic plan” is often discussed in law practice management circles and many firms claim to have one. But what does it really mean to build a solid strategic plan or vision for your firm? What does it take to actually carry through with the plan? And how many firms have comprehensive, executable plans, and how many merely pay lip service to the idea?

A strong strategic plan identifies your firm’s goals and objectives and sets out a clear vision for its future. It assesses the external and internal factors that have an impact on the business of the firm. It offers members of the firm an opportunity to sit back and take a good hard look at the state of their current practices and work together on where they should be headed. Lawyers tend to look at their own practices and specific clients, but they don’t look at the law firm as a whole enterprise - this gives them a good opportunity to do just that.

Although creating a strategic plan should be viewed as a top priority for the well-being of the firm, that’s often not the case. Lawyers can be so consumed by immediate practice issues that they lose sight of their ultimate goals. Many lawyers see strategic planning as a make-work project—just one more thing that pulls them away from their “real” work—but this should be something that’s built into the fabric of the firm and that partners and associates are constantly aware of and working towards.

As a framework on which to build decisions, putting together a solid plan usually includes several steps, including determining the firm’s values, mission, vision, objectives, strategies and goals. Another part of the planning process should include an analysis of the firm’s strengths, weaknesses, threats and opportunities (often referred to as a “SWOT” analysis).

Focus on Your Clients

One of the first steps in building a strategic plan is to take a good look at your clients and focus on the opportunities and growth they offer. “Find out what your clients want, learn their business and find out where it’s going,” says Brian Armstrong, general counsel and corporate secretary at Bruce Power in Kincardine, Ont.

Look closely at where the future of their industries is headed—it’s not likely you’ll want to focus your business on an area in which mergers and consolidations are a good possibility. Armstrong once had an extensive practice in airline regulation. “Then they stopped regulating airlines, so I had to find something else to do.” He believes he could have foreseen this if he’d taken the time to sit down with his partners to think about it in a strategic, forward-thinking way.

What emerges from looking forward are clear choices around which clients you should have or need to get more of, and which ones you shouldn’t invest time and effort into. Asking these hard questions may force difficult or expensive choices, but it will be well worth it.

“You’d be astonished how few clients it can take to drive the priorities of a law firm,” says Richard Stock, founding partner of Catalyst Consulting in Toronto. He likes to sit down with the firm’s management and get a good sense of where the key clients of the firm are headed and what opportunities and pitfalls they face. He says many managing partners are too focused on internal management and not on the outside world: “If they’re not focused on that outside world, they’re going to have a very difficult time saying yes to all this; it will all seem too theoretical.”

A good strategic business plan should focus on growth, innovation and change, says Stock. Unfortunately, many lawyers are inherently risk-averse and resistant to change. In the highly competitive legal arena, there are a lot of very qualified people chasing a limited amount of work, says Stock, and if you don’t have growth, innovation and change, you’re going to lose clients and legal talent.

What’s in a Plan?

“Do a meaningful data analysis to ensure that the strategic planning is grounded in solid information,” says consultant Tim Leishman of Leishman Performance Strategy in Toronto, who works with law firms in the U.S. and Canada. A data analysis includes looking at the accounting data from the previous three to five years to understand the economic drivers of the practice. According to Leishman, it also includes looking at client data: “It’s important to understand who your most important clients are, what the trends in those relationships are, and what kind of relationships those clients have with your competitors.”

Leishman says some firms make the mistake of doing a broad economic analysis of the current economy or by looking at broad macroeconomic trends. “It’s very difficult in a legal practice to understand how broad economic trends are going to influence your relationships with specific clients.” As an example, he cites law firms opening offices in Asia because they’ve heard trade with Asian countries is a booming area. However, opening a new office is quite expensive, and while they’re might be an economic boom going on, an immediate link to Asia-based clients requiring legal services from Canadian lawyers isn’t necessarily there. It makes much more sense to start with existing and potential relationships with clients and see where they are heading.

The two most important elements of a business plan are to determine the clients and the legal talent you want, according to Stock. “You’d be surprised, when you look at the years of planning law firms have done, how very little prominence these two elements are given. Often it’s very financially driven, it’s data-driven, it’s internally focused, it says very little about the competition or about specific clients.”

“In the better planning programs, we’re also looking at what the top 25 or 50 clients of the firm have to say about legal services and about what business direction their company and their industries are headed in,” says Stock. “It’s very important to get that internal input because it’s one of the main tools to be able to change the priorities, the behaviors and thinking of lawyers in law firms—otherwise we’re just tweaking.”

Typically spending three to four months working on a firm’s plan, Stock looks at the work a firm has done in terms of business development, skills, monitoring and growth. “We start with what they have already done; then we do some top-down review and planning.”

Right from the beginning, Stock involves a firm’s executive leadership as well as its group leaders. He says the most important variable in whether a firm will come up with a plan and then manage it strategically is the strength of a firm’s leadership. “It depends on as few as five to ten people in even the biggest firms in the country. And maybe four or five in the medium or small firms.”

While strong leadership is important, getting consensus from all members of the firm for a strategic plan is also extremely important. Without having everyone on board and working towards the same goals, the plan can easily flounder.

Sandra Schulz, who’s now a sole practitioner in Edmonton, was involved in the planning process of her former 11-member law firm’s strategic plan. She agrees that it’s important to get consensus from everybody. “If you haven’t got everybody buying into the plan, then the boss will say do it and they will because it’s part of the job, but you’re not going to get innovation, enthusiasm, people living and breathing it. If you don’t have everybody else buying in, you’re going to spend the entire time putting out fires, trying to cajole people to do it.”

Schulz says her former firm excluded its two associates from the strategic planning process, which she describes as “an interesting choice, since they probably have a greater chance of someday becoming partners than if they were at a larger firm. If they don’t have a say in the planning process, then the chance of getting a buy-in is much less than if they are there at the table saying ‘we think the firm should go in this direction and this is why. This is a niche I’ve developed and I see that we’ve missed it.’”

Less Talk, More Action

Too many law firm’s strategic business plans focus on processes, but ignore the follow-up. “Lots of firms have plans but they don’t implement them,” says Stock. The key to putting a strategic plan in place rests in the hands of the firm’s leadership. If top management doesn’t work to keep the plan going, it’s doomed to fail. Even though more than half of all firms have put together strategic plans, Stock estimates that less than 20 per cent of them actually end up managing their firms strategically.

Stock normally divides the business strategy into 12 consecutive quarters in three years. Specific people are given to-do lists with milestones that have to be achieved in 90-day segments. “If we cannot successfully translate the business plan into 90-day slices, we haven’t finished the work,” says Stock. “When we look at law firms that have wonderful plans that don’t get implemented, we know that they have not focused enough on execution and implementation.”

Stock gets more calls from law firms to come up with an execution strategy than for help with the planning. “They need some structure,” he says, “they need to translate all of those broad directional priorities into to-do lists that are measurable and doable in their firm in that short time period. That’s where strategy has to be practical, and if you don’t have experience at doing that, strategy doesn’t get done. (This is) because most firms in the same competitive market will have pretty much the same strategy.”

In areas such as securities or insurance work there’s a limited amount of high- and medium-yield work at any time in this country, but the question of who needs to do what by when needs to be answered. “Those plans are very similar until you decide which specific clients and which specific talent is going to actually pull this off.”

Smaller Firms

Many small and mid-sized firms worry about the cost of hiring a consultant. Brian Armstrong argues that it really isn’t cost-prohibitive: “Whatever the size of the firm (less to the mega firms than to the smaller firms), the smaller you get, the more important it is to focus on the needs of your clients.

“You get 80 per cent of your new business from your existing clients. And it’s so much easier to develop new business from your existing client base than it is to go out and find a new client. That’s why finding out about what your clients’ strategic priorities are and where their businesses are going is so important, particularly in a smaller firm.”

As is often typical in smaller firms that don’t have a lot of resources, Schulz says her former firm put a plan together themselves without bringing in an outside consultant. Because she had done some facilitation on other strategic planning ventures in organizations, she led the firm’s discussions. She says that by taking on that role, it was harder for her voice to be heard. Part of the trade-off was “cost versus effectively losing the voice of one of your people.” As a result of that experience, Schulz believes the best option for many small firms is to have a consultant put the framework in place, then let firm members do the work from that point. “For a smaller firm, even if the costs are at stake, it’s worth it to spend some money at least to get someone to help you with the process.”

The right consultant can help set things up so that they are only there for a short period of time. They can then leave you to do the work they’ve assigned, and return for a few hours after the bulk of the work is completed. “Bringing in the neutral person lets you restore as much of the power struggle as possible,” Schulz says.

Measure the Results

“Too many strategic business plans are just about processes—we have the book, we have the documents,” says Stock. “Measure the results. If you don’t have measurability —on innovation, on quality, on differentiation, on growth, on clients—then you haven’t done anything.”

Build follow-up into your plan so there are measurable results you can look at. “For instance,” says Stock, “you might set a goal such as ‘we will be doing 85 per cent of all the work in Ontario that this customer gives out, effective March of next year.’” If you have no idea which other lawyers they use or how much work they give out, then you have some homework to do. He adds that innovation can be measured: “You can decide to have no more paper bills, or to increase client satisfaction by visiting the top 100 clients of your firm every year. These are innovations because most people aren’t doing them.”

One easily measurable way to make sure you’re on course is to survey your clients on a regular basis. Armstrong surveys his internal clients every year. He uses a fairly detailed survey instrument that asks clients to forecast what their needs are going to be over the next planning period, where they feel their requirements for legal services are going to grow and where they’re going to decline, what sort of services they value from the law division, and how they rate his firm on a bunch of different criteria. “It’s 15 or 20 minutes’ work for all of our clients, and we get a report that gives us a quantifiable look every year at how we’re doing on service, on results and on overall client satisfaction.” Armstrong asserts that it gives him “immensely helpful feedback.”

Strategic plans should be part of the everyday management of law firms and seen as a normal way to operate, not something that just comes up every few years as a chore to be done. “But they are not,” says Stock. “They’re viewed as ‘look at this extra thing, let’s get that out of the way because this is the planning year, isn’t it?’”

Putting together and enforcing a strategic plan can be extremely effective. “It’s a trap to say you’re really busy now and you don’t have time for this,” says Armstrong, “you may find out by the time you get through being busy that the skills you have are no longer relevant.”

Ann Macaulay is a Toronto writer.