Practicing Business or Business Practice?

Over the last few weeks I have been fixated on the concept of change within today’s professional services. As an outsider to the law firm environment, yet with tremendous contact within firms, I sit in awe of the next call or email talking about the firm’s trials and tribulations. It is amazing how an outsider can see, in real-time, what is happening yet those in the very midst are simply unaware of the metamorphosis that is occurring within their firms.

In the past week I had the opportunity to have a round table discussion with corporate CFO’s on the concept of financial management and budgeting. I was amazed that so few corporations build budgets based on current economic trends and are revising their position each quarter. Often these organizations see the budget as the Holy Grail, and any negative divergence creates frustrations and animosity among the ranks. I also hear of this type of behavior in today’s legal practices. Firms create their budgets for the upcoming year in a vacuum, and then etch them in stone. When the firm doesn’t live up to expectations, frustrations and dissension permeate the ranks.

Since my last posting there has been a lot of news articles hitting the press about what is happening with law firms. For the most part, law firms are facing the same economic pressures every other organization is facing. With these pressures some organizations soar while others sink. The reason for which, each firm reacts differently to these economic stimuli. Their response all dependent on when the ‘realize’ the stimulus, their management, their culture and a plethora of other factors.

On May 28, The Wall Street Journal published an article about a Midwest US firm making the decision to trim their ranks by 124 people. (http://blogs.wsj.com/law/2008/05/28/sonnenschein-lays-off-37-lawyers-plus-87-others/). Since the release of the article several firms throughout the US had meetings to tell their staff that their firm isn’t immune to such cutbacks. Since the melt down of the US real estate market and the subsequent credit fiasco, US law firm trimmings are not uncommon. Each month, some firm steps up to the table and realize trimming ranks is their only solution. This behavior is a direct response to a stimulus in the environment. One could argue that astute leadership would have seen the stimulus coming. I would argue, whether you see it coming or not the reaction may have been the same.

However, one day later an article in legalWeek.com identified a firm whose revenue rose 24% from last year. http://www.legalweek.com/Articles/1130817/Bird++Bird+flies+high+with+24+revenue+rise.html How could that be, here are two firms facing the same economic environment and their response is very different. The answer is definitely not simple and would require a thorough understanding of their practices and their management. On a very simplistic note, change happens and firms have to react to change. How they react is a product of their management and their culture. How they react to stimuli will determine their place on the competitive continuum.

I personally feel that those who change their position on the continuum rest in how they develop a response to a stimulus. A much stayed organization will seek to apply ‘old’ solutions to new problems. As such they will slowly get left behind. It is the progressive firm that steps outside of the status quo, challenging the norm that will leap ahead of others. In a recent webinar by Kevin O’Keefe, (www.lexblog.com), on attorney blogging, O’Keefe made a subtle point of how different firms assimilate attorney blogging. For some firms, it is the taboo because of the social pressures of the other attorneys and the Bar hasn’t made any statement on blogging. While for other firms reap huge benefits. Both firms faced with the opportunity; one stayed and the other innovative.

A great example of a firm not choosing the status quo response was published by LegalWeek.com on May 22. In not knowing the background, one can only speculate the firm had a decline in their litigation practice. When faced with this stimulus, they came up with a ‘cost-free’ litigation program for their clients; which they named CONTROL. http://www.legalweek.com/Articles/1128480/Article.html

Change happens all the time, what happens to your organization rests solely on how you respond to it. You can seek innovative ways or hammer in the ‘tried and true’, the choice is completely yours. Keep in mind, old solutions work for old problems. In difficult times, innovation is the fuel for your organization to gain the competitive advantage. Choosing old solutions is simply business practice. Today, law firms need to be practicing business– treating the practice of law – as a business.