By, Bruce W. Marcus The Marcus Letter
Retreat season is just around the corner. Lawyers, accountants and consultants will assemble, tie-less, at fine resorts throughout the nation, to explore the futures of their firms and what can be done to sustain the present or alter the future. Good food, great weather, good golf and good sightseeing for the wives, with a couple of hours of serious business built in. Recharging the batteries, and maybe, the minds. Maybe a speaker from outside to inspire, inform, and then – all too often -- forget.
What a great opportunity, particularly in this time of economic turmoil and technological change, for real accomplishment by recognizing new realities of the marketplace and professional environment, and calculating what must be done now to make the firm viable in the future.
The world, of course, is always in a state of flux, and attrition and flux alter all institutions. But when the economic environment, technology, and the needs of the marketplace change at today’s accelerated pace, the firm that merely resides in the false security of traditional professionalism lays itself open to being swamped by that very economy and marketplace.
For a partnership, which functions at least with the consent -- if not the management – of the partners, the retreat offers the best opportunity to examine the most crucial questions a firm can ask of itself. As we function today, are we still capable of being relevant to the needs of our current and future clients? Can we serve a new environment with the traditional views and attitudes of the profession?
And so, in addition to the usual topics discussed at retreats, professional firms might do well to address at least the following questions, all of which are increasingly important in the next few years…
Marketing strategy. We have come to the end of the first era of professional firm marketing, in which professionals overcame their disdain for so crass a process as marketing by allowing the devices of marketing – newsletters, seminars, press releases, direct mail, and even web sites – to become an integral part of firm practice. Bates v. State Bar of Arizona, which struck down the canons of ethics prohibiting frank marketing was in 1977. It’s taken all this time -- and perhaps a new generation of professionals – to understand and accept its meaning. The word competition, never part of the lexicon of a professional, is now beginning to be understood by lawyers and accountants, if not happily accepted in all quarters.
But when all competitors in a profession have the same tools, and when the need for credibility deters professionals from competing by saying, "We do better audits. Or "We write better briefs," residing merely in the devices of marketing is no longer sufficient. As marketing budgets get bigger, more press releases, glossier brochures, or more newsletters are not sufficient competitive devices. Thus, we now enter the era of strategy. How do we define the market we serve or should serve, in terms of their needs and our ability to meet those needs? How do we define our firm and services in terms of the needs of those we serve? Which marketing tools will best serve us to bring the best of what we are to the prospective clientele we want and need? And how do we manage the marketing effort to maximize the value of our efforts – what are the tactics we need to make the strategy work?
The firm that doesn’t devote a good part of its retreat to this subject, will ultimately freeze into a Daumier-like print.
Fee structures. It’s difficult to realize that the hourly billing structure is not venerable. It was a simple and appropriate answer to the cost accountants who objected to the simple “Fee for Service” bill. And while to many it seemed a nuisance at first, it did serve to show clients specifically what the firm was doing for them (or does it, in fact?). There are indeed a few advantages to the hourly billing structure.
But there are disadvantages as well. Does the hourly billing structure reflect the value of a firm’s activities in its client’s behalf? Does it not put the focus on the wrong thing – number of hours spent – and not on the value of the effort to the client? Does it not impede marketing – and even managing – efforts by forcing the firm’s professionals to concentrate on billable hours to the exclusion of time spent on the firm’s growth and health?
And when all firms tend to have such similar billing rates that one very smart law firm manager called the structure a virtual cartel, does it not open to ultimate questioning about whether the cartel is not so virtual after all?
Internal communication. A law or accounting firm is either a collection of individuals who merely share the same office, or they are indeed a firm, sharing more than just profits. David Maister calls it the one-firm firm. The one-firm firm shares ideas, and information. It participates, where feasible, in serving all of the firm’s clients, so that the client knows there’s a full firm, with all it’s talents and skills, behind each decision and each bit of advice.
A successful firm knows that internal communication is more than just a newsletter or an internal web site or memos. It’s information management. It’s understanding how to gather and classify information, and how to parcel it out to those who need to know, without inundating with irrelevant stuff those who don’t need to know a particular bit of information. A successful firm knows that the devices of communication aren’t the communication itself. A good firm knows how to make information useful.
A good retreat should devote a large measure of time to developing internal communications structures that emphasize the information to be communicated, and not the communications devices.
Governance. Most good lawyers, and most good accountants, are rarely good managers. Management is a full time business, and not something to be done between rainmaking and client management. That’s why an increasing number of firms are retaining professional managers.
But hiring a professional manager doesn’t absolve a firm’s partners from participating in the firm’s management. Too many firms are managed -- no, run – by the same principles and practices used by managing partners at the turn of the century. The fact is that even for a partnership and a professional firm, there are almost as many management structures and styles as there are for a corporation.
Today’s economy demands a management style that’s capable of fast decisions, of successfully competing for – and managing -- good personnel, of rapidly establishing new practices to meet the changing needs of the marketplace, of constantly improving information management and communication, of developing and managing marketing strategies.
Is the traditional partnership structure still viable? Maybe, but maybe not. Are practice groups viable? Only if they are seen for what they really are – management structures predicated on a specific aspect of the practice. And only if they are well managed as quality control structures, as marketing structures, and as internal communications structures. (Edge International’s Patrick McKenna has written some remarkably good pieces on practice groups. Click here to see article)
In today’s rapidly moving economy, it behooves a professional firm to constantly review its management structure. Will it be useful next year as it was last year? Has the firm, or its practice, or its market changed to a degree that warrants a new approach to management to keep the firm competitive and viable in next year’s marketplace?
Cross selling. There is nothing that can define a firm better than its success or failure at cross selling. It’s a measure of the degree that partners trust one another, and understand one another’s practices. Yet few firms, even the most successful, do it well. And there’s little else in a practice that seems to generate so much talk and so little action.
Cross selling is a matter of trust. Trust that by bringing a colleague into a relationship, that relationship won’t be diluted or diminished in some way. After all, in the professions the relationship to clients is as much personal as it is skill. But that trust can only be engendered by education. Your partner may be brilliant at what he does, but what do you know about what he or she does, or he or she know about what you do?
Cross selling, then, isn’t something you do without a structure for it – the understanding, the education, the view that a firm’s professionals have more to gain than to lose from cross selling. The retreat is a good place to start building the structure.
Your retreat, then, can be either a routine litany of mundane business surrounded by leisure and food, or it can be an opportunity to move the firm more solidly into the future.
By, Bruce W. Marcus The Marcus Letter