Despite the COVID-19 pandemic that forced much of the world into a stand-still, many law firms posted double-digit gains in revenue and profits per equity partner. A common factor in these law firms not just surviving but thriving included a strategic plan and commitment to a culture of high-performance, according to a study by a law firm consulting group.
According to a Law.com article, the law firm consulting company Zeughauser Group (“ZG”) notes that there are traits that are commonly shared by outperforming law firms. In regards to strategic planning, these are generally an reasonably attainable yet aspirational vision of what the law firm partners want to build together. The plan also includes clear priorities for the firm’s partners as well as goals for achieving them. According to ZG, successful firms have a clear understanding of their current market position as well as a clear understanding of the market position they want to achieve.
Not surprisingly, a majority of law firms have to build a consensus — obtaining input from the firm’s informal and formal leaders as well as respond to their concerns — while developing their strategic plan. If law firms share data indicating where the business stands, the benefits of market leadership in particular areas of focus, and other aspects will help the firm succeed.
Compensating High Performers
ZG further learned from its analysis that law firms that outperform others in their market often prioritize the interests of their high-performing partners. This often includes law firms ensuring that top contributors are compensation in a manner that at a minimum remains competitive with the market. ZG further noted that some law firms took the economic unknown regarding COVID-19 to reallocate funds as well as compensating high performers. The continued uncertainty has provided other law firms the opportunity to do the same.
Moreover, outperforming law firms both set and communicate clear expectations for what is required to become and stay a partner, according to the article. These expectations are several including producing, originating cases, managing teams across practices, managing teams across offices, and obtaining client-pleasing results. Moreover, outperforming law firms encourage those who do not measure up to those expectations to find other positions inside or out of the firm.
Other characteristics of law firms that are outperforming their counterparts in the legal field includes firms that have a deep and thorough knowledge of the firm’s markets. They also have a clear and focused understanding of the competitions. Most important, these firms are able to recognize and embrace market shifts as well as prioritize where they focus on excellence.
As a result, many lawyers at Biglaw are not concerned about their job security (while many Americans are) due to the COVID-19 pandemic. In fact, many lawyers are collecting large bonuses because these firms have excelled financially in 2020 and are projected to continue to do so in 2021. This success and stability can be attributable to many factors including an attorney’s ability to work from home easily, having business revenue from a diverse range of industries, focusing on varied practice areas, and a significant reduction in travel expenses. According to a Wells Fargo Survey reported by the Wall Street Journal (“WSJ”), of the 125 firms surveyed their revenue increased an average of 6.4 percent in the first half of 2020 when compared to the prior year despite demand being roughly the same. Net income rose 25.6% in 2020 when compared to 2019.