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Written by Norman Clark and Fernando Moreno
Published: 19 January 2016
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drawing of George Santayana

As law firms begin a new fiscal year, whether in January or at some other point in the calendar, most of them overlook one of their most powerful and reliable planning resources, last year's performance. Year-end financial data and the collective experiences of a firm's partners can help detect the probable causes of serious, often chronic, strategic, financial, and operational issues.

To paraphrase the Spanish-American philosopher and essayist, George Santayana (1863-1952), law firms that cannot remember the past are condemned to repeat it.

By taking a little time to investigate and understand the past year's performance, a law firm is better able to set realistic priorities for the new year. Year-end financial data and the collective experiences of a firm's partners can help detect the probable causes of serious, often chronic, strategic, financial, and operational issues.

Here is a short checklist of questions that you and your partners should ask as you review your firm's performance during your last fiscal year.

your clients

your numbers

your people

your competitors

Ask why five times.

These are fairly simple and obvious questions, but most law firms fail to ask them. The answer to any of these questions could make a profound difference in your firm's performance and market position in the new year. 

When you and your partners ask these questions, be sure that you are basing your answers on reliable evidence -- not just hunches, instincts, or "experience." "How do we know this?" can be one of the most powerful analytical questions of all.

Moreover, we suggest that you follow the Japanese management technique of "asking why five times." Usually the basic cause of a performance problem is not on the surface, but requires intellectually persistent probing to find and understand it. You and your partners might have to ask why several times before you discover the action that will give you the best results.

Before you start planning the future, take a few hours to be sure that you fully understand your firm's recent past.

Norman Clark and Fernando Moreno