What did law firms do that helped them outperform the market in 2020?
Image from Shutterstock.com.
Law firms that posted double-digit gains in 2020 revenue and profits per equity partner had a strategic plan and a commitment to a high-performance culture, according to an analysis by two law firm consultants.
Those two drivers of success were the focus of a Law.com article by Kent Zimmermann and Peter Zeughauser, partners at the Zeughauser Group. The consultants plan a series of articles that address other traits shared by “outperformer” law firms.
Strategic plans typically include “an aspirational but reasonably achievable vision of what their partners want to build together, and clear priorities and goals to get there,” the article said. “In other words, these firms typically have an appreciation for their current market position, Point A; and they have a clear understanding of the market position they are working to achieve, Point B.”
Most law firms will have to build consensus while developing their plan. They will likely have to get input from the firm’s formal and informal leaders and to respond to their concerns. It often helps if the firm shares data that shows “where the firm stands, the benefits of market leadership in chosen focus areas, how a rising tide will lift all boats, and what it will take to make it happen,” Zimmermann and Zeughauser wrote.
Second, outperformer law firms generally prioritize the interests of high-performing partners. That includes compensating top contributors in a way that at least keeps up with the market.
Zimmerman and Zeughauser noted that some law firms used the economic uncertainty surrounding COVID-19 to reallocate profits and reward high performers. Continuing volatility gives law firms not yet on board the chance to do the same.
Outperformers also set and communicate expectations for what it takes to become and remain a partner, the article said. The expectations include productivity, origination, management of teams across practices and offices, and results that please clients. Those who don’t measure up are encouraged to find other positions.
“If it’s done well, the firm gets a happy alumnus who may become a client and, one day, a source of referrals,” Zimmerman and Zeughauser wrote.
Other traits of outperformers include having a deep knowledge of the law firm’s markets and the competition, being able to embrace market shifts, and prioritizing their centers of excellence.
