Strategic Management of the Family Law Practice
Many family lawyers, myself included, did not go to business school as undergraduates. Perhaps we should have. After entering the practice of law, we were told that law is a “profession,” not a business, and that our profession and practice would suffer if we approached our practice from a business perspective. This perspective was understandable in the era (pre-1970s) when the demand for legal services exceeded the supply of lawyers. Ironically, in today’s legal economy, where too many lawyers chase too few quality cases, it is this antiquated viewpoint that could in fact be most deadly to the viability of our practice.
Why do some businesses succeed and others fail? Why has Wal-Mart consistently outperformed the retail industry as a whole while K-Mart has struggled? In your own legal community, you may know lawyers of equal ability experiencing radically different levels of success. Strategic management theory argues that the strategies an organization employs have a major impact upon its performance relative to its competitors.
A strategy is simply a specific pattern of decisions or actions that managers take to achieve an organization’s goals. Strategic management focuses on long-range planning.
The strategic planning process has five major steps:
1) Establishing strategic vision and mission for the firm;
2) Converting the strategic vision and mission into measurable objectives and performance targets;
3) Developing a strategy to reach those objectives;
4) Executing the chosen strategy efficiently and effectively;
5) Evaluating performance, reviewing new developments, and taking corrective action.
Developing Strategic Vision and Mission
Most family lawyers practice in small firms. As such, the process of developing a strategic vision is somewhat different than the process undertaken by corporate managers. Before deciding on the firm’s vision and mission, the family lawyer must first establish goals and priorities in his or her personal life. We must remember that our law practice exists to serve us, not burden us. If properly managed, our practice can support our families, send our children to college, and provide for our retirement. If improperly managed, it can make us miserable and, ultimately, may fail.
You should ask yourself:
• How much money do I need or want to make?
• How many hours per week do I want to work?
• When do I want to retire?
• What aspects of my current practice do I most enjoy?
• What do I dislike?
Stephen Covey, in his book, The 7 Habits of Highly Effective People, refers to this process as “beginning with the end in mind.” He writes:
[T]he most fundamental application of “begin with the end in mind” is to begin today with the image, picture, or the criterion by which everything else is examined. Each part of your life—today’s behavior, tomorrow’s behavior, next week’s behavior, next month’s behavior—can be examined in the context of the whole, of what really matters to you. keeping that end clearly in mind, you can make certain that whatever you do on any particular day does not violate the criteria you have defined as supremely important, and that each day of your life contributes in a meaningful way to the vision you have for your life as a whole.
Therefore, it is essential that you reflect upon and recognize your personal core values and your personal definition of success before defining the strategic vision for your practice.
The mission statement for your law practice defines the nature of the firm’s practice and what the firm is trying to accomplish over the next five to 10 years. The ideal mission statement should answer the following questions: Who is being satisfied by our services? What needs are being satisfied? How are our client’s needs being satisfied?
For example, the mission statement for my law practice states: “We seek to provide the highest quality legal representation available in the area of marital and family law (excluding dependency cases) to middle to upper income individuals in the Tenth Judicial Circuit through the utilization of superior knowledge, expertise, technology and client service.”
This type of mission statement should be a collaborative effort between the attorney and staff. Unlike the current fad of publicly displayed mission statements (which often appear to be for “PR” purposes), your firm’s mission statement is for attorney and staff only and is designed to ensure that everyone in the firm remains focused on the strategic plan.
The SWOT Analysis
An essential component in formulation of the strategic vision and mission statement is the SWOT analysis. “SWOT” refers to strengths, weaknesses, threats and opportunities and threats. Strengths and weaknesses refer to the firm’s internal capabilities; threats and opportunities and threats look to external forces. Strengths refers to the firm’s core competencies, that is, something that the firm does particularly well in comparison to its competitors.
The SWOT analysis should be a collaborative exercise by the attorney, associates (if applicable), and support staff. Each person should write down his or her opinions regarding each area (you may be very astute regarding your strengths, but need assistance in identifying your weaknesses. Your staff will be more than happy to assist you in this regard).
In considering threats and opportunities and threats, you should consider the local legal market as well as national trends. For example, you should review the most recent Florida Vital Statistics Annual Report (1999) regarding trends in dissolution of marriage in your target market area. Reviewing these statistics reminds us that there is a limited amount of legal work available and forces us to confront and evaluate our place in the market.
You should also consider broader trends in the legal profession, such as:
• The redefinition of the law firm. Is multidisciplinary practice in our future? Should law firms be managed by MBAs? Will lawyers become employees working for the legal equivalent of HMOs?
• The impact of the Internet and technology.
• The pro se movement.
•Recommendations of The Florida Bar Family Law Steering Committee.
Measurable Objectives and Performance Targets
Now that you have formulated a mission statement and developed your strategic vision, the next step is to convert this strategic vision into specific performance targets. To be meaningful, the major goals should have four characteristics:
1) They should be precise and measurable (avoid generalities such as “maximize profits”); 2) they should address important goals (to maintain its focus, the organization should operate with a limited number of goals); 3) they should be challenging but realistic; 4) they should specify a time period.
Bill Hewlett, one of the founders of Hewlett-Packard, has observed, “You cannot manage what you cannot measure. . . what gets measured gets done.”
Long and short term goals should be included. When tradeoffs must be made between long and short term goals, long term goals generally should prevail. It is rare for any business to thrive when management repeatedly sacrifices long term goals for short term advantage.
Developing a Strategy
Thus far, you have established a clear vision and mission for your practice and you have developed measurable, important, challenging, and realistic goals. You have also developed a time period for those goals. In this step, we will develop the strategy to enable the practice to meet its performance objectives.
First, we must seek to develop a sustainable competitive advantage. A business has a competitive advantage when its profit rate is higher than its competitors’. A sustainable competitive advantage occurs when the business is able to maintain this high profit rate over a number of years.
Two factors primarily determine the firm’s profit rate and, therefore, its competitive advantage: the amount of value clients place on the firm’s services and the firm’s overhead cost.
Generally, the more value clients place on a firm’s services, the higher the price the firm can charge for those services. Therefore, the creation of value is the basis for gaining a competitive advantage.
There are four primary ways to create value for clients: efficiency, quality, innovation, and client responsiveness.
Each practitioner must examine his or her practice to identify how these four areas can be improved. The starting point is specialization. The hard reality of the current legal marketplace is that few practitioners can achieve a sustainable competitive advantage without focusing their practice on one area of law.
practicing exclusively in one area, the cost of resource materials, software, CLE, and marketing decreases. Specialists enjoy greater productivity, less stress, an enhanced professional reputation among judges, and access to better quality cases. The “building blocks” of competitive advantage (efficiency, quality, innovation, and client responsiveness) all are improved through specialization.
In Florida, specialization means board certification. Only board certified lawyers may market themselves as specialists. Board certification acts as a form of differentiation strategy. A differentiation strategy achieves a competitive advantage by creating a product that the client perceives to be unique. This perception of uniqueness allows the attorney to charge a premium price relative to the competition. Think about it. Which divorce lawyer charges and receives the premium rate in your community: the general practitioner who has countless low dollar cases in five areas of practice, or the board certified marital and family law expert who specializes exclusively in a few high end financial divorces? Consider lawyers in the news and on television taking on the biggest and most lucrative cases. Are they practicing more than one type of law? The answer is obvious: Only when a lawyer becomes the best in a given specialty does that lawyer have the opportunity, and expertise, to take on the biggest and most profitable cases. Moreover, becoming the best is a function of specialization.
Once board certification has been achieved, the practitioner should give serious consideration to application to the American Academy of Matrimonial Lawyers. The academy is a nationwide group of approximately 1500 matrimonial lawyers. Academy requirements are rigorous, including board certification if available in that practitioner’s state, a number of years’ specialization in matrimonial and family law, and completion of a written and oral exam. Membership in the academy provides a nationwide referral network and excellent CLE programs and allows for interaction with the best marital and family lawyers in the country. It is the ultimate differentiation strategy for the marital and family lawyer.
Another method for improving the building blocks of value (efficiency, quality, innovation, and client responsiveness) is through standardization of procedures. Standardization is the elimination of discretion or choice. Put another way, similar tasks should be done in the same manner every time. It has been said that “Discretion is the enemy of order, standardization and quality.” Furthermore, a given task should be done by the lowest paid person who is capable of performing the task properly.
The starting point for standardization is the development of the firm’s procedure manual. The goal of the procedure manual is a written delineation of all activities of the law firm. It should be unique to your practice and will naturally evolve as the practice grows.
You should begin by critically examining each component of the various tasks performed in the firm. This should be a collaborative process between attorney and staff (the attorney being the final arbiter).
I have included a list of topics to consider for your manual. It is not intended as a definitive list. There is no definitive list except the one that you develop to meet the unique requirements of your practice.
The specific application of technology to the family law practice is beyond the scope of this article. However, we must recognize technology as a powerful tool in providing value to the client through quality, efficiency, innovation, and client service.
Examples of the application of technology to the family law practice include voice recognition, child support, use of spreadsheet software for equitable distribution and tax calculation, time, billing and case management software, pension valuation, and document assembly programs. Clearly, the firm that makes innovative use of technology will enjoy a competitive advantage over the firm that does not.
We have previously seen that client service or responsiveness is one of the fundamentals in providing value to the client. There have been numerous excellent articles written on this topic and indeed there has developed a set of unofficial standards which are commonly mentioned (return phone calls, send clients copies of pleading, etc.). Many of these standard recommendations are suggested to avoid ethical problems. These standards are fine but should be viewed as merely the starting point of client service.
To really provide the type of client service that will achieve a competitive advantage over your competitors, you must begin by examining all aspects of your practice from the client’s viewpoint. For example, do you enjoy filling out lengthy questionnaires in your physician’s waiting room? Probably not. Well, your client probably doesn’t like it either. Perhaps some other, more user-friendly, method can be developed.
Each step in the process should be reviewed with the goal of making the process easier and less stressful for the client. There is no one right way to provide client service. Although unique to each person’s practice, attention to detail, productive use of technology, and a motivated support staff are essential regardless of the particular methods employed.
Execution of Strategic Plan
The strategic plan is implemented through action plans which describe detailed activities, responsibilities, and targeted completion dates required for a specific project. The methodology is similar to the old adage about how to eat an elephant (which is one bite at a time).
It is essential to specify the activities required for each outcome, the completion date, and the person responsible. An action plan can be expressed using the following formula: Responsible person + action verb + goal (possibly expressed as a quantity) + time frame. Examples include: 1) The bookkeeper shall bill all client work by the 30th of every month; and 2) I shall complete and file the application for board certification by January 5, 2002.
The firm’s action plans should be developed with, delegated to, and supervised with your office staff during staff meetings. These meetings should be scheduled during normal office hours at regular intervals (you should probably begin with weekly meetings). The meeting should be held as early in the day as possible to avoid interruptions and have sufficient time allocated (at least one hour).
It is essential to specify the activities required for each outcome, the completion date, and the person responsible. Without the weekly review of progress on the various action plans, it is easy to degenerate into inactivity or misdirected activity. One of the advantages of staff involvement is that you are forced to confront your own procrastination.
The final step in the strategic management process is to evaluate the firm’s performance, review new developments, and take corrective action. This is an ongoing activity that should be reviewed on a monthly or weekly basis. Accurate information is essential to this process. Every firm needs systems for gathering and reporting strategy-critical information and tracking key performance measures over time.
Evaluation of the firm’s financial progress requires, at a minimum, the following data for the applicable time period: gross revenues; fixed expenses; fees billed; fees collected; accounts receivable (30/60/90 days); new files opened; files closed; funds in the firm’s operating account; any unearned retainer amounts in the trust account.
constantly monitoring these factors, you can spot trends and take corrective action. However, this data is just a starting point. You can maintain a database to track any area of your practice. For example, you may wish to maintain data regarding your initial consultations. What percentage of initial client consultations retain you for representation? From where do they come (referrals, Yellow Pages)?
I have maintained this database over the past year and discovered that by raising the consultation fee by 50 percent, the percentage of initial client consultations that resulted in my being retained for representation increased by 32 percent.
This type of information is critical in evaluating the effectiveness of your marketing efforts. If you find that your Yellow Pages advertisement generates a significant number of calls, but only a small percentage of those callers actually retain you, you may wish to redirect the money spent on the Yellow Pages to some other form of marketing. Without data, however, you aren’t truly managing, only guessing.
Evaluation of the nonfinancial performance of your firm is more challenging, since issues regarding quality control are more difficult to measure. One of the best methods for maintaining quality control is through case management conferences with your staff. Each case in your office should receive a thorough review at least on a monthly basis. There are a number of software programs available to assist you or you may choose to design your own using a database such as Microsoft Access. You really can’t review your cases too often.
If you find that, even after implementing proper time management techniques, you still do not have time to properly review your cases, you need to take corrective action. The corrective action may include hiring additional staff or increasing your hourly rate and retainer requirements. Remember that over the long term, your practice cannot grow if quality is compromised.
Today, it is essential for the family lawyer to apply these fundamental principles of strategic management to his or her practice in order to achieve and sustain a competitive advantage in the legal marketplace. Hopefully, this article will prompt the reader into further investigation of this vitally important subject.
Jesse J. Bennett, Jr., practices marital and family law and family mediation in Winter Haven. He is board certified in marital and family law, is a certified family mediator, and is a fellow in the American Academy of Matrimonial Lawyers.
This column is submitted on behalf of the Family Law Section, Jeffrey P. Wasserman, chair, and David L. Manz and Susan G. Chopin, editors.