Walker Clark Worldview

This is the fourth of a series of posts about the compelling business case for quality assurance in law firms.

The third characteristic of successful quality assurance programs in law firms is that they focus on the greatest risks and attack the biggest quality problems.

We favor a practical approach.  The best methods do not seek to perfect each and ever task, function, and process in the firm.  Unlike methods such as ISO 9001, we do not recommend detailed documentation of each and every process.  However, we do recommend intense focus on the ones with the greatest risks. In law firms, most quality assurance issues can be isolated to one or two critical weaknesses. Our approach focuses on these “significant few” issues, rather than every possible one. In particular, we recommend that a firm start by improving the processes that are currently causing the greatest problems. Focus on problems that annoy the clients the most, such as missed deadlines, errors in documents, and untimely or inaccurate bills. In our experience, most of these problems can be mitigated substantially, and sometimes even solved entirely, with relatively simple, low-cost improvements.

Norman Clark

The people who do the work are in the best position to improve it.

This is the third in a series of posts about the characteristics of successful quality assurance programs in law firms.

Many law firms assume that the installation of an effective quality assurance program will require hiring a platoon of expensive external consultants to set up and administer the system. Actually, this is the wrong way to do it.

Law firms already have the internal quality assurance “experts” that they need — their own people.

Quality assurance requires a firm-wide approach and enthusiastic executive-level leadership. However, the “real work” is done by fee earners and support staff in the practice groups and project teams. Most risks arise from a relatively small number of specific weaknesses in the way that work is performed every day.

The people who do that work every day are usually the ones who can best diagnose the causes of problems in work processes. Therefore, a major component of a successful approach to quality assurance is to provide knowledge, tools, and methods to people working in departments, practice groups, and teams. This empowers them to take responsibility for improving the quality of their work.

Although we recommend firm-wide infrastructure and consistent procedures to manage quality, the intense focus must be at the working level. The key persons in are the lawyers who are managing client matters day to day. This working-level approach is almost always more successful and less expensive than solutions imposed by senior management or outside consultants, who arrogantly believe that they “know the business” better than the people who work in it every day.

When Walker Clark, LLC, assists a law firm with the development of a serious quality assurance program, we contribute tools, methods, measurements, and program management structures. The real improvement comes from the people who do the work.

Norman Clark

It only takes one hole to sink a ship, not a hole in every compartment.  If one practice group — or even one lawyer — has a vulnerability, the same or similar weaknesses probably exist elsewhere in the firm. A firm-wide approach to quality assurance therefore usually produces the best return on the investment of time, resources, and attention.

To carry the maritime analogy forward, we observe two principal types of “leaks” in law firms with poor quality assurance. Like many leaks, each one can go unnoticed for months or years while it does major damage to a law firm’s financial seaworthiness.

Reduced productivity

“We can always find time to fix our mistakes, but we can never find time to prevent them.”

Most law firms rely primarily on after-the-fact inspection to catch and correct mistakes, particularly in documents. Such rework can consume as much as 40% of the time of fee earners and staff. Since most clients are unwilling to pay the law firm to correct its own mistakes, every hour spent in rework represents a revenue-producing opportunity that is lost forever.

Law firms that have introduced serious, systematic quality assurance systems and procedures have found that the resulting improvements in productivity can produce substantially increased fee revenue without proportional increases in staff. This results in dramatic improvements in profitability.

Loss of clients

“We get only once chance to get it right.”

This comment by one of our firm’s clients, a practice group head in a mid-size firm in the United Kingdom, summarizes what law firms everywhere are experiencing.  Clients today have decreased tolerance for poor quality. By the time the client actually complains, it might be too late to save the firm’s credibility with the client.

This leak is more subtle than the client who fires the law firm midway through a case or matter. One of the most important diagnostic indicators of a systemic quality assurance problem is the relatively low percentage of clients who return to the firm for subsequent legal services.

Interestingly, there also appears to be a correlation between poor quality assurance and poor recovery. Firms that lack a quality assurance system also tend to be inept at responding promptly to client complaints. At best they tend to placate the unhappy client for the moment, but do little if anything to prevent the problem from arising again.

Norman Clark

Quality assurance will be one of the most important factors in law firm business strategy in the decade of the 2010s. It will have profound effects on law firm profitability by reducing the causes of poor productivity. Law firms that do quality assurance well will also have a powerful competitive advantage over those for whom “quality assurance” is little more than crisis-to-crisis improvisation in response to client complaints.

The current state of quality assurance

As my colleagues in Walker Clark, LLC, and I work with our clients in law firms, we observe six serious deficits in quality assurance. These are particularly acute in small and midsize law firms, but they can apply to law firms of any size. They also appear to be worldwide.

1. The lack of a consistent, firm-wide quality assurance infrastructure in the firm and in practice groups
2. Little or no awareness of the basic principles of service quality in the delivery of professional services
3. Inadequate data upon which to make risk management decisions
4. Inadequate practices and procedures to delegate legal work and manage its quality
5. Over-reliance on after-the-fact inspection of work product as a quality management procedure, rather than reducing or eliminating the causes of error
6. Inconsistent project management skills and practices

In tomorrow’s post, I will begin a six-part overview of the core elements of an effective quality assurance program.

But for now, ask yourself: “How many of these six deficits exist in my law firm?”

Norman Clark

As I was reading the weekly feed of law firm press releases from Latin Counsel this morning, I recalled how few law firms bother with this time-honored, but largely overlooked marketing tool.

A press release is an excellent low-cost way to improve your firm’s “targeted” visibility. By “targeted visibility” I refer to the process of getting a specific area of professional expertise in front of the eyes and into the minds of a specific audience of clients and potential clients.

Our experience in Walker Clark, LLC, has been just the opposite of the old myth that “Nobody ever reads press releases.”

For one thing, we read them — hundreds of them — every week. Walker Clark has a highly specialized market research service for law firms and corporate law departments. This requires that we must be continuously researching legal markets and law firms in other jurisdictions. Sometimes the research is focused on identifying potential strategic allies or even potential merger partners. Sometimes we are advising a law firm or law department about potential local counsel in another country. The point is that we need specific, accurate, and timely information. Press releases are one of our major sources of detailed information about a law firm’s expertise, experience, and service capabilities.

The great value of press releases is that they can take your firm beyond slogans and assertions on your website or in your brochure. They can also improve the visibility of individual professional service providers in your firm. Thanks to the scope and self-replicating nature of the internet, press releases are also one of the most cost-effective marketing tools available. The cost of publishing a press release can be almost non-existent — less than the cost of printing a single copy of a brochure.

The return can be substantial. One of our law firm clients recently told me that a single press release was the decisive factor in their beating an equally well-qualified competitor for a major project finance engagement. In fact, the fees from that project were sufficient to cover the firm’s entire marketing budget — for three years!

Nobody reads press releases? Think again.

Norman Clark

For more information about Walker Clark market research services, or to learn how our firm can help you integrate press releases into your marketing strategy, please contact me directly by e-mail or by telephone at +1-239-466-8370.  (For security purposes, the e-mail link will take you first to a validation page on a third-party website.)

I think that it is very appropriate that South America will be the venue for three major international legal management events in the first half of 2010. During the past ten years, Latin American lawyers have emerged as global leaders of the legal profession; and some of  the best-managed, most progressive law firms in the world are based in the region.

Mark these three major events on your calendar, and click on the links for more information:

• Biannual IBA Latin American Forum Regional Conference , 17-19 March 2010, Santiago, Chile - This major international conference is produced by the Latin American Regional Forum of the International Bar Association. It  will include a showcase session on 19 March 2010 dedicated to law firm management issues, including interactive audience polling. I will be co-chairing this session with Jaime Carey, the managing partner of Carey & Companía, one of Chile’s leading law firms.
• Arbitration Practice Management, 12 June 2010, Asunción, Paraguay – This half-day program is produced by CEDEP, on of South America’s leading continuing legal education institutes in association with the Law Firm Management Committee of the International Bar Association. It is a special session of CEDEP’s annual Latin American Arbitration Conference, which attracts leading international lawyers worldwide. I will moderate this session, which will be a roundtable discussion focusing on the special issues in the management of an international arbitration and dispute resolution practice.
• Managing a Modern Law Firm, 14 June 2010, Buenos Aires, Argentina – This one-day conference is produced by the IBA Law Firm Management Committee and the IBA Latin American Regional Forum. It will cover four contemporary challenges for modern law firms: writing and executing a marketing plan; a business approach to law firm strategy; career management of associates; and know-how and knowledge management in a small or midsize law firm. My Walker Clark colleague Fernando Moreno will be one of the panelists during the session on marketing plans; and I will chair the session on law firm strategy.

Although these programs are being held in South America, I recommend them to any lawyer anywhere who is responsible for the management of a law firm or practice group, but especially for those from small and midsize law firms. Each one is also an outstanding networking opportunity, especially for lawyers from North America and Europe who are interested in meeting top lawyers from some of the best law firms in Latin America (and the world).

Norman Clark

Thomas Friedman published an important column in today’s New York Times:  “The Fat Lady Has Sung.” I highly recommend it to readers of this blog outside the United States who seek insight and understanding about the leadership dynamics and current dysfunctionality in the American political system.

It is also required reading for the managing partner of any law firm anywhere.

Friedman is critical of both President Obama and the Republican Party.  Put your own personal political views aside as you read the column.  It discusses some basic truths that apply to law firms going through times of challenge and change, whether in the United States or anywhere else in the world.

Courage in a crisis

While consensus, trust, and common goals are essential elements of long-term success, times of challenge frequently require clear, directive leadership. I have seen a number of law firms fail to achieve goals and capitalize on opportunities. Why did they fail to implement what appears to have been obvious? In most instances, there were two reasons. They both relate to failures of courage.

I will state each one in plain but honest terms.

• Personal cowardice. No one is willing to step forward and assume the risks of taking charge. Crisis is not a time for “summits” and consensus building. Those can come later.  Clarity, direction, commitment, and resolve are what are needed now.

This does not imply dictatorship. The two greatest American presidents in my opinion, Franklin Roosevelt and Abraham Lincoln, did not seek or assume dictatorial powers, despite the criticisms of their opponents. (Some of Lincoln’s and FDR’s political opponents made today’s “Tea Party” movement in the United States look like…well… a tea party.) Instead, their great contributions were to set a direction for a country that, at the time, was adrift politically and whose long-term survival was legitimately in doubt. They consulted their opponents, were not constrained by ideology, and were not afraid of a pragmatic trial-and-error approach with respect to the details.

• Group cowardice. In some law firms, the partners are unwilling to go through the sometimes painful process of resolving internal disputes. Conflict is an essential part of the development of any business group. Without it, there is no hope of developing the genuine trust and common purpose that are essential to becoming a high-performance business team.

Responsible dialogue

Friedman’s article suggests is that “no” is not a responsible position for someone responsible for governing a country.  The same applies to law firms. Irresponsible minorities frequently betray themselves in one or both of two ways:

• The party of “no.” I have seen a few law firms wrecked or almost destroyed by the stubborn refusal of a willful minority of partners to accept any change whatsoever to a failing status quo. “No” is not a negotiating position. Instead, it is the first word in saying “farewell.”

• Taking hostages. Super-majority voting requirements in partnership agreements are usually a wise precaution when making fundamental decisions about the partnership or the business. The minority must use super-majority requirements responsibly, and not to hold the law firm hostage to the minority agenda or to no action at all.

The best way to test the legitimacy of opposition to change, especially in difficult times, is to ask questions.

• Probe the rationale behind the opposition.
• Feed back what you understand the opponents’ position to be.
• Ask them how they would apply their rationale to relevant hypothetical situations.

These techniques will usually expose intellectual dishonesty, if there is any, and allow everyone to focus on any honest issues that need to be discussed.  If all else fails, this truth-seeking strategy will also bolster the courage of the majority to deal with irresponsible factions in the partnership and, if necessary, to remove them before they can sabotage the future of the firm.

Norman Clark

As my colleagues and I advise law firms on governance issues, such as managing the growth of the partnership, partner compensation, or capital requirements, we and our clients sometimes discover that it has been many years since the partnership agreement, partnership deed, by-laws, or other corporate “constitution” has been reviewed.

Although signing the partnership agreement is a time-honored ritual of becoming a partner, we have actually seen partnership agreements that do not bear the signature of any current partner.  In a very few cases, the partners have been unable even to locate any copy of their partnership agreement.

I hasten to point out that these law firms are not bunches of  bumbling incompetents.  Almost all of them are otherwise well-managed and reasonably successful. With all the demands on partners’ time, sometimes the basic foundations of law firm governance are overlooked, assumed by the partners to remain solid despite the passage of time.

This assumption ignores a fundamental risk in business. Past success guarantees nothing in today’s legal markets.  The fact that your law firm has done well in the past does not mean that your governance system will be able to respond appropriately and efficiently to future challenges.

Should your law firm review and update your partnership agreement or other corporate documents? Here is a quick and very reliable diagnostic checklist:

1. Has it been more than 10 years since you wrote or last revised your agreement?
2. Has your partnership grown by more than 30% since then?
3. Are any of your partners over 50 years old?
4. Are your younger partners unhappy with their compensation?
5. Are you thinking about a merger with, or acquisition of, another firm?
6. Is is harder to make decisions now than before?

If you answer “yes” to any of these questions, now is good time to review your partnership agreement to see whether it might need to be updated.

Norman Clark

In its Knowledge@Wharton site yesterday, the Wharton Business School, University of Pennsylvania, posted an interesting abstract about motivating employees: “Putting a Face to a Name: The Art of Motivating Employees.” This should be a quick, but worthwhile, entry on your personal “to read” list.

University of Pennsylvania professor Adam Grant draws several interesting conclusions from his research.  I believe that, although not drawn from observations in the legal profession, they have direct applicability to law firms.

People are motivated by an understanding of the positive impact that their activities have on others.  Here are summaries to two of their studies:

Grant and a team of researchers — Elizabeth Campbell, Grace Chen, David Lapedis and Keenan Cottone from the University of Michigan — arranged for one group of call center workers to interact with scholarship students who were the recipients of the school’s fundraising largess. It wasn’t a long meeting — just a five-minute session where the workers were able to ask the student about his or her studies. But over the next month, that little chat made a big difference. The call center was able to monitor both the amount of time its employees spent on the phone and the amount of donation dollars they brought in. A month later, callers who had interacted with the scholarship student spent more than two times as many minutes on the phone, and brought in vastly more money: a weekly average of $503.22, up from $185.94.

Even reading about the benefits that one’s work produces for other people can produce apparent increases in motivation .

In a follow up study to the one he published in 2007, he focused on lifeguards at a community recreation center. Some of them were given stories to read about cases in which lifeguards had saved lives. A second group was given a different kind of reading material: testimonies from lifeguards about how they had personally benefitted from their work. The results: Those who had been reading about their ability to avert fatalities saw their measure of hours worked shoot up by more than 40%, whereas those who had merely learned that a lifeguard gig could be personally enriching kept working at the same clip.

The Knowledge@Wharton post has links to the papers that Grant and his teams produced.

Some law firms try to minimize face-to-face contact with clients by junior associates and support staff.  Grant’s research suggests that this is a mistake.

Everyone in the firm needs to see the face of the client. In some cases this can be a simple face-to-face encounter, such as a partner taking time to introduce a client to associates and support staff who work on the client’s matter. Even when employees cannot literally see the face of the client, partners should make sure that each member of the team — from senior associates to the crew in the mail room — understands how their efforts ultimately benefit the client.

Norman Clark

An all-too-common sight on the bookshelves of many law firm partners is the thick, dusty binder labeled “Strategic Plan.” The partners, usually with the assistance of a consultant, developed an elegant, impressive, detailed strategic plan. They implemented almost none of it.

Implementation usually involves some significant changes in attitudes and habits.

• It requires a shift from a short-term mentality to a long-term commitment to sustainable business success. Partners need to focus on what they need to do now to build the long-term performance of the firm, and not just how much they can bill in fees this month.
• It involves discipline and a new ordering of priorities. These are essential to completing action items on time, measuring results against expectations, and making continuous improvements.
• It requires an understanding that the old ways of doing things will not necessarily work in the future. Many firms have done well in the past largely due to excellent lawyers, hard work, valuable clients, and good luck. The first two are excellent traits. However, at no time in recent years has client loyalty been weaker; and good luck eventually runs out. Past success guarantees nothing in today’s legal markets.
• It requires change leadership on the part of the firm’s managing partner and the entire management team. Unless the firm’s leadership team is willing to provide consistent, unequivocal, and unanimous support for the needed changes, the firm is probably wasting its time trying to improve.

Implementation is hard work, particularly for partners and managers who are already overloaded with everyday client work and administrative responsibilities. The choice for law firms is summed up in the old management proverb:

If you keep on doing what you have always done, you will get what you have always gotten.

Norman Clark