This column is by Janet Stanton, Partner, Adam Smith, Esq.
At far too many law firms, client or matter intake consists of a perfunctory credit and conflicts check, and you’re off to the races. This forfeits the opportunity to intentionally and purposefully manage the pipeline of future work your firm does—a potent and potentially transformative business discipline. Without it, as we have seen repeatedly, firms often find the hasty approach produces large, durable, and unforeseen “conflict shadows,” indigestible write offs, and even—at worst—more than their fair share of malpractice saber-rattling.
Wouldn’t a better approach be to make intake purposeful and intentional?
Hard to argue with, but:
- In practice, what does “purposeful and intentional” mean? Or, more simply, what does “strategic” mean?
- What if it treads on the toes of the powerful?
- And as the inevitable corollary: “Purposeful? Sez who?”
Saying “no” is the hardest part
The aim of this article is to explain what strategic client/matter intake means in practice, and to offer thoughts on why a firm might want to go through the (real, undeniable) resistance of introducing discipline and rigor to what has traditionally been every partner’s sandbox. Make no mistake: We understand quite well that saying “no” to some work is often hard, but we emphatically believe it’s necessary if firms want to be steering their own course rather than having it set for them by the random accident of what clients come knocking.
Getting a solid grasp on the rationale behind why a firm might want to do this takes us back to first principles.
As a general matter, internal strategic clarity serves as a filter or roadmap to guide business decisions across the firm (from investment and recruiting/staffing to governance principles, to compensation, marketing, IT, etc.). Externally, it sends a clear message to the market; clients know what your firm stands for.
More pointedly vis-à-vis client/matter intake, a critical tool in managing your competitive position in the law firm marketplace is to actively manage the work you do. Different types of work, consistently pursued and engaged in, will place your firm in different competitive tranches—like it or not. Unless you are choosy about the work you do, you may find yourself viewed by clients as without compelling distinction and/or at odds with your firm’s aspirations. Strategy means saying, “no
Over time, intake determines the future course of the firm. Not all clients or matters are of equal value to the firm. Hence, thoughtful criteria around client/matter intake are indispensable to the firm’s long-run health, reputation, and (frankly) revenue, and profitability growth.
What criteria might a firm consider? These will be different for each firm, identify and prioritize those that are most aligned with your strategy; focus on what really matters; not nice-to-haves (since a long list would be counterproductive and distracting). Some examples might include:
- Relative strategic importance to the firm:
- Playing to key practice strengths
- Focusing on your selected industries
- Arising out of geographic areas targeted for expansion
- Higher rates/profitability.
- More intellectually interesting/complex work.
- Work that is more critical to the client.
Credible approval exemptions will present themselves where judgement will be required; this is far from a “set it and forget it” process. As such, you might test the waters with a pilot program.
Law firms cannot excel at everything. Lawyers know it, clients know it, and even Chairs and Executive Committees who stake out that claim know it. To reiterate, strategy means saying “no.” The critical question defaults to “Where will we play?” This is where strategic to the firm gets its teeth.
We submit that unless your firm has already specified a small handful of practice areas where it wants to be recognized as a “destination” firm—where it routinely makes clients’ short lists for such matters—then the firm has a bit of work to do in specifying and limiting where exactly it plans to play.
A compelling, real-world example of strategic intake comes from Paul Weiss, inarguably one of Law Land’s super-star performers. This from Brad Karp at the 2016 Bloomberg Business of Law conference:
“Perhaps no aspect of our strategy has been more critical to our success than our laser-like focus on investing in our core practice strengths and steering clear of non-core practice areas and non-core jurisdictions. … We have resisted the temptation to dabble in non-core or exotic practices or to open new offices in far-flung jurisdictions around the world in search of increased revenue.” (emphasis added)
Oh, did we mention, strategy means saying “no?”
Figure 1: Schematic representation of the network classes obtained by our algorithm, available here
Every time I read your posts I feel like you’ve been poking around in my brain. Really great information here, Bruce.
My favorite section? “To reiterate, strategy means saying ‘no.’ The critical question defaults to ‘Where will we play?’ This is where strategic to the firm gets its teeth.” I’d really like to better understand how many firms have this locked down — and based in reality (dare I say from research?), not gut feelings.
Lynne: This is very kind and generous of you; many thanks for your thoughts.
I, however, am not the one you should thank. This article was written by my partner at Adam Smith, Esq., Janet Stanton, who is a student of many of the all-time strategic thinking business greats starting with Peter Drucker and going through Jim Collins, Clayton Christensen, Daniel Kahneman, and more.
https://adamsmithesq.com/team/janet-stanton/
Great observations, as always. Isn’t this a classic example of an agency problem, where individual partners’ aims aren’t aligned with the firm’s? For instance, the firm may want to invest in core areas, but individual partners, rewarded based (at least in part) on the revenue they generate, have a strong incentive to bring in work that benefits them personally but may hurt the firm. As a junior associate, I was often required to spend significant time on non-billable client pitches. Partners, focused on their revenue credit, had no downside to overworking associates on these “free” (to the partner) labor-intensive tasks.
As long as partners act as free agents, incentivized by the work they generate, their interests remain misaligned with the firm’s strategic goals. How can firms overcome this alignment problem without introducing significant complexity, such as by charging partners for associate time spent on BD pitches?
Hi Trevor –
Thank you for your trenchant comment. This is, indeed, the crux of the issue; a disconnect between the firm’s strategic goals and near-term partner wants. If not managed, the firm’s strategy will be meaningless.
I’d suggest a more prophylactic solution; if the process gets as far as an ill-advised (from the firm’s perspective) pitch, penalizing partners will only generate unwelcome inefficiencies and needless bad blood. Why not head the problem “off at the pass?”
This will, however, require leadership and discipline.
Firm management (or practice management at larger firms) should proactively and frequently communicate the kinds of client profile, industry, type of work, pricing, etc. being sought, regularly re-connecting those discrete dots back to the strategic plan, and the benefits of hewing to a strategic plan generates – for all.
Moreover, management must work with partners to improve the profitability of sideways incumbent clients including putting a partner on notice that new matters will be rejected if economic arrangements are not brought up to stated criteria.
This is how other industries and professional service firms operate; why not Law Land?