Understanding the Business of Law: Thinking Like the Client

C|M|Law Library encourages you to look at this October 2012 report from ALM Legal Intelligence entitled Thinking Like Your Client: Strategic Planning in Law Firms.

This report is co-sponored by LexisNexis|InterAction & LexisNexis|Redwood Analytics and authored by Cathy Lazere and Jennifer Tonti.  Cathy Lazere, a former editor at the Economist Intelligence Unit, is a freelance writer.  Jennifer Tonti is Senior Research Director at ALM Media.

This report notes that there is a difference between the practice of law and the business of law.  Recent economic conditions have only served to reinforce the  importance of  these differences.  This report highlights that most law firms have a thorough and detailed understanding of the practice part; but lack skills and understanding with the business of law.

The authors state that the legal community is facing big issues … ones that are not easily solved. But the same big issues seem to surface every year, with every survey. In too many ways, the slow pace of change is inhibiting growth and limiting progress.

• Revenue is the top priority in most strategic plans. Yet, almost half of the respondents are remiss in building, tracking and measuring client loyalty and satisfaction. Are firms overlooking the direct link between revenue and satisfied customers?
• Profitability is the second strategic plan priority. But, fewer than half are actively focused on a non-billable hour strategy, and more than half can’t yet tell if alternative fee arrangements (AFAs ) are more profitable than hourly rates.  AFAs and various pricing models have been around for a few years; they are not going away. Isn’t it time to honestly reexamine the elements that make your firm profitable?
• Talent acquisition/retention holds the third top spot for strategic priorities, although laterals dominate the discussions and, apparently, everyone’s plans. How sustainable are growth models tied to an on-going “musical chairs” game of lateral talent shifting from firm to firm? Is anyone focused on a plan for organic growth?

Thanks to bespacific.com for the tip.