The notion of ‘strategy’ frustrates many managing partners. Conventional wisdom (and often management consultants’ advice) is that all firms should have a strategy.
I want to challenge that convention. How many law firms have agreed on a strategy but have not implemented it? How many firms do not have an articulated strategy? How many firms have tried to agree on a strategy, but failed? How many firms have been told that if they do not follow a certain strategy (such as being focused or being ‘known’ for something), they will not remain competitive? Most of these firms are still in business, and successful by their own definitions of success.
I do not disagree that these firms might be even more successful or profitable if they had a strategy – but that would be making a different point. They do not all need one.
First, let me be clear what I mean by strategy or business strategy. In this sense, strategy articulates decisions about what industries in which to compete and how to compete in them, leading to a clear statement about which clients are to be served, what services are to be offered, and the geographical reach of the firm.
Business strategy is usually supported by operating strategies or policies relating to marketing, people and know-how, finance and technology. From this package, a firm might also be able to identify a competitive advantage – a unique or relative difference in what the firm offers, or (more likely) how it is offered, compared to its principal competitors. In the language of consulting, this is often called differentiation or a value proposition.
Let me suggest that in the sense it is used above, not all law firms need a strategy. There are firms that do not articulate which clients or services their business covers; that will take any work that any client brings to them. Such firms can be successful without ever creating a business strategy. Instead of a strategy, what I think a firm like this does need is a sense of purpose among the partners about why they are in business together.
But a sense of purpose and a strategy should not be equated. Certainly, a sense of purpose may derive from a mission to serve certain clients (the less well-off in society or the victims of medical negligence) or provide certain services (legal aid or commercial law), or to meet the needs of a particular locality. All of these may well lead to a strategy as I have defined it. But they do not have to.
This sense of purpose, as established by the founders, modified over the years, and continued or adapted by the present partners, is usually supported by common values and acceptable (or at least tolerated) ways of behaving towards clients, suppliers and others inside the firm.
All of this combines to create what I will call a normative framework or environment for the firm. It is this framework that determines why and how things are done or not done.
Examples of a normative environment include maximising profits, eat-what-you-kill, having fun, minimising risk, respecting each other’s contribution, team-working, investing for the long term, to name but a few. There cannot be a definitive list, because these things are about values and preferences. They may not even have been articulated, but are implicit and taken for granted – they are part of what people usually describe as the firm’s ‘culture’.
However the normative environment is formed, and wherever it comes from, it will fundamentally affect how people think about the firm and what is done there on a day-to-day basis. It is the deepest part of the firm, and potentially the most difficult to change.
One of the ways I have found helpful in starting partners thinking about the normative environment in their firm is the ‘three Cs’ (convenience, complement, combine). Let me suggest three reasons why partners in a law firm might be in business together:
(1) for convenience: partners are not together to do anything, but because it suits them to have a common home and name, and shared resources. The offices, equipment and support staff are taken on a cost-sharing basis. The partners essentially maintain their own client base and practice. There is no role for business strategy in such a firm: professional and personal autonomy override any concept of a directed ‘firm’;
