Although strategic planning is a popular phrase among law firm owners, it's a misnomer. Strategic planning isn't the same as planning, and planning is not the same as strategy.
You need a coherent strategy that lays out how you'll win as a law firm. But too many business owners confuse a business strategy with aimless "strategic plans."
What is Strategic Planning?
Strategic planning, stripped down, is just glorified planning. It has nothing to do with real strategy.
Instead, strategic planning is a set of activities a company says it'll do. The set may sound good but doesn't really drive the results you want.
That's because what most law firm owners call strategic planning doesn't have any real strategy behind it. To make matters worse, they often lack an actual strategic planning process.
In short, you develop a strategy and ask strategic framework questions any time you need to make a choice. This includes developing attorney marketing plans and business plans. The strategy doesn't stop at this level, either. Instead, it goes down to every decision level in your law firm.
Once you create your strategy, your plans can fall into place. For example, you'll find it easier to determine which marketing channels and tactics align with your law firm's strategy.
Law Firm Strategic Planning is About Value
Business expert Roger Martin, whose work appears on our books that every lawyer should read list, explains why the misconception about strategic planning harms business owners who could benefit from properly applying strategy in their companies.
Every business owner, including lawyers who manage their own firm, knows that strategy is valuable. Most leaders think that strategic planning is about preventing discomfort and fear in the future. Martin argues that dealing with those two factors is at the root of true strategy.
Rather than looking for ways to cut risk, the real strategy involves thinking about ways to improve your odds of success in spite of them.
Most "strategic plans" look pretty similar from one law firm to another. They include a vision statement with a big goal, plans or initiatives to meet that goal, and an analysis of the relationship between those initiatives and revenue.
Projecting many years into the future feels comforting. At face value, it seems like a decent way to eliminate risk, and it's helpful for thinking through budgets.
But that's not the same thing as a strategy.
Strategy involves questioning assumptions and thinking carefully about what you decide not to do. "Strategic plans" can help a company form a budget. But that leaves out the opportunity to question strategies deeply. Too many plans focus on meeting quarterly or annual goals instead of answering tough questions.
Most existing plans that lawyers call strategic fail because these plans are only specific about the first year, too.
Martin notes, "... management typically commits only to year one; in the context of years two through five, “strategic” actually means 'impressionistic.'"
Plans can certainly help you create a budget and a set of intended activities for your business. But, the activities in these plans are aimless without a real strategy. Creating the plan feels comforting, but it's not the same as setting you up in the best possible way to fight for your desired outcome.
Once you know the difference between strategy and what most organizations pass off as "strategic plans," you're on your way to developing your own law firm strategy.
Key Components of a Law Firm Strategic Plan
A well-structured law firm strategic plan serves as the foundation of a firm’s success in the competitive legal industry. Understanding the critical components that make up this plan is essential for law firm leaders seeking to navigate the complexities of the legal market effectively. Here are the key elements that should be included in every law firm’s strategic plan:
Vision Statement: Defining the Firm's Long-Term Aspirations
The vision statement is a powerful declaration of where the law firm aspires to be in the future. It provides a clear direction for the firm and inspires employees to work towards a common goal. A compelling vision statement articulates the firm’s ambitions and serves as a guiding star, influencing strategic decisions and priorities. For instance, a law firm might envision itself as the leading provider of innovative legal solutions within its regional market, thereby encouraging staff to pursue greater collaboration and creativity.
Mission Statement: Understanding the Firm's Purpose in the Legal Profession
While the vision statement outlines the long-term aspirations, the mission statement focuses on the firm’s purpose and core values. It answers the questions of who the firm serves and what legal services it provides. A well-crafted mission statement aligns with the specific needs of potential clients and emphasizes the unique qualities of the law firm. For example, a family law firm may state its commitment to compassionate advocacy for families experiencing divorce or child custody disputes. This clarity of purpose not only attracts potential clients but also motivates employees by reflecting the firm’s values and philosophy.
Firm’s Strategy: Developing Your Own Strategies That Leverage the Firm’s Strengths
A key aspect of any law firm’s strategic plan is its overarching strategy, which defines how the firm will achieve its vision and fulfill its mission. This will often encompass specific tactics related to practice areas, client development, marketing efforts, and operational efficiency. Identifying the firm’s strengths—such as renowned attorneys with expertise in niche areas or a strong network of referral sources—allows the firm to differentiate itself in the legal market and focus on opportunities that align with its unique capabilities.
In summary, these foundational components—vision statement, mission statement, and coherent strategies—form the backbone of a law firm’s strategic plan. They provide clear guidance for law firm leaders as they make decisions and set priorities, ensuring that every member of the firm is aligned with its goals and objectives. By effectively articulating these elements, firms can embark on a path toward sustained growth and success in the evolving legal profession.
The SWOT Analysis as a Strategic Planning Tool
One of the most effective strategic planning tools law firms can utilize is the SWOT analysis, which stands for Strengths, Weaknesses, Opportunities, and Threats. This framework allows law firms to conduct a comprehensive assessment of their current situation and develop a strategy that capitalizes on their unique position. Here's a deeper look at how to perform a SWOT analysis and how it can inform your law firm’s business development.
Understanding Internal Factors: Strengths and Weaknesses
Strengths: This part of the analysis focuses on the firm’s internal attributes that give it a competitive advantage. This could include:
- Highly skilled attorneys with expertise in specific practice areas
- A strong reputation and brand recognition in the community
- Established relationships with existing clients and referral sources
- Access to innovative legal technology that enhances service delivery
Identifying and leveraging these strengths is crucial for positioning the firm strategically within the legal industry.
Weaknesses: Conversely, understanding the law firm’s weaknesses helps identify areas for improvement. Weaknesses may include:
- Limited marketing reach or brand awareness
- Gaps in practice areas or expertise that clients demand
- High employee turnover or dissatisfaction
- Inefficient operational processes that hinder service delivery
By recognizing these weaknesses, law firms can implement corrective measures to mitigate their impact and build a stronger foundation for future growth.
Recognizing External Factors: Opportunities and Threats
Opportunities: The next step in the SWOT analysis involves assessing external conditions that the law firm can exploit for growth. This could encompass:
- Emerging trends in the legal sphere, such as increased demand for remote services or specialization in niche practice areas
- Changes in client needs or new demographics, such as younger clients who prefer digital communication
- Regulatory changes that create new service opportunities (e.g., changes in family law, business law, etc.)
- Competitive advantages arising from underserved markets or geographical regions
Identifying and capitalizing on these opportunities enables law firms to align their services with current and future market demands.
Threats: Lastly, it’s essential to analyze external threats that could adversely affect the firm’s performance. These may include:
- Intense competition from other law firms or alternative legal service providers
- Economic downturns that limit clients’ willingness to invest in legal services
- Technological advancements that disrupt traditional legal practices
- Changes in laws or regulations that could undermine the firm’s area of practice
By understanding these threats, law firms can develop risk mitigation strategies within their overall strategic plan.
Integrating SWOT Analysis into the Strategic Planning Process
Conducting a SWOT analysis is not merely an academic exercise; it should be an ongoing process. Regularly assessing the internal and external landscape sets the stage for law firm growth.
Once the SWOT analysis is complete, practice leaders should integrate these insights into their strategic plan, aligning their firm’s strengths with opportunities while addressing weaknesses and threats. This comprehensive approach enables law firms to articulate a clear and actionable strategy, ensuring they are well-prepared to navigate challenges and seize growth opportunities in the evolving legal profession.
Setting Smart Goals and Key Performance Indicators (KPIs) for Law Firms
Establishing clear, measurable goals is a cornerstone of effective law firm strategic planning. By setting SMART goals and integrating Key Performance Indicators (KPIs) into the planning process, law firm leaders can create a robust framework for tracking progress and ensuring that the firm stays on course toward achieving its strategic objectives.
Defining SMART Goals
The SMART framework is a widely recognized approach to goal-setting and stands for Specific, Measurable, Achievable, Relevant, and Time-bound. Here’s a breakdown of each component:
- Specific: Goals should be clear and well-defined. Instead of saying, “We want to attract more clients,” a specific goal would be, “We want to increase our new client intake by 20% in the next fiscal year.”
- Measurable: Goals need to be quantifiable, allowing the firm to track progress and determine success. Using the previous example, the law firm could use metrics from its client management system to measure intake rates over time.
- Achievable: Goals should be realistic and attainable given the firm’s resources and capabilities. Setting overly ambitious goals can lead to disappointment and demotivation.
- Relevant: Goals must align with the law firm’s strategic objectives and overall mission. They should be meaningful and directly connected to the firm’s aspirations in the legal profession.
- Time-bound: It’s essential to set deadlines for achieving goals, which creates a sense of urgency and accountability. For instance, specifying that the 20% increase in new clients should be achieved by the end of the fiscal year provides a clear timeline.
Integrating Key Performance Indicators (KPIs)
Once SMART goals have been established, it is crucial to outline Key Performance Indicators (KPIs) that will help the firm measure its progress toward these goals. KPIs are specific metrics that indicate how well the firm is performing against its objectives. Here are a few examples of relevant KPIs for law firms:
- Client Acquisition Rate: Measures the number of new clients acquired over a specific timeframe, helping the firm assess the effectiveness of its marketing.
- Client Retention Rate: This metric tracks the percentage of clients who return for additional legal services, providing insights into client satisfaction and engagement.
- Billable Hours: Monitoring the total number of billable hours worked can help assess the firm’s operational efficiency and productivity.
- Revenue Growth: Tracking revenue over time enables law firms to evaluate their financial success and identify trends.
- Website Traffic and Conversion Rates: These digital metrics reflect the effectiveness of online marketing efforts and how well the firm converts website visitors into potential clients.
Aligning Goals and KPIs with the Strategic Plan
To maximize the effectiveness of the firm’s strategic planning process, it is essential to ensure that the set goals and KPIs are consistently aligned with the firm's overarching strategic plan. Regularly reviewing performance data and adjusting goals as necessary will drive accountability and foster a culture of continuous improvement within the firm.
Key Questions to Answer Any Time You're Trying to Make a Decision
Strategy is a set of choices. Most law firms are always actively making decisions. What's key is that strategy doesn't end at the business level.
Instead, it cascades and flows down to every decision made within the company. This means you must think about the best ways for your choices to reinforce those at the next level.
This doesn't happen in most existing businesses where initiatives get stalled. The problem is due to poor "choice chartering."
When a leader makes a decision in an organization, subordinates must make choices in line with that decision. Instead, most staff members are told to "execute" the manager's decision. Without any clear direction, most staff members make their best guess. When they fail, they're then accused of "poor execution."
What a leader must do to avoid this is focus on choice structuring. A manager must tell their staff the choice made but also share:
- Why the leader made that choice
- That the decision directs staff to make choices that reinforce the leader's choice
- That the leader is available to help with this second-tier decision-making
- That the original choice can be revisited if staff cannot find a reinforcing one at their level
To start this process, there are 5 key questions that lawyers should ask themselves to form a law firm strategy at any level. These are:
- What does winning look like?
- Where will we compete so that we win?
- How will we compete so that we win?
- What capabilities must we have to win?
- What enabling management systems do we need to win?
These are not linear steps. Instead, they are integrative and self-reinforcing. They demand that you circle back to the questions you asked earlier. This ensures your ideas fit together. You'll consider each question individually and then how they influence one another.
What Does Winning Look Like?
Answering this question explains what success will look like for your decision. It aligns the various goals you set for your firm and establishes clear endpoints to get everyone on the same page about what success means overall.
You can ask this question at every level of your law firm. To define "winning," you must reach beyond planning. Planning doesn't actually incorporate what winning looks like. Instead, planning involves looking at a goal outcome and charting the path to that goal.
Where Will We Compete So That We Win?
Answering this question explains who you will serve, what types of cases you will take, and why taking those cases positions you in a way that will let you win. In short, it defines your playing field.
In answering this question at the business level, you'll clearly define:
- Your geographic service area
- The category you service
- Your client segment
If you're having trouble narrowing down your answers, check out the book Niching Up. Limiting your market to a specific niche could work better than casting a broad net.
How Will We Compete So That We Win?
Answering this question explains the decisions that you need to make in your chosen playing field so that you will win.
At the business level, you must compete on cost or differentiating factors. The latter tends to be more viable for lawyers.
Consider the following:
- What makes us unique?
- What complaints/fears do clients typically have about lawyers?
- How do we use our unique qualities to overcome client complaints/fears?
Clients have plenty of choices in the legal landscape. To win them over, you must make the case that your law firm is the right choice compared to other options.
This question and the previous one are intrinsically tied together. As you approach these questions, you may find yourself revisiting them often.
What Capabilities Must We Have to Win?
Answering this explains the skills, abilities, and resources you need to win in your chosen playing field.
This is often where most lawyers struggle to decide which elements fit into "how to win" versus "capabilities to win."
Your "how to win" is your theory of how you're different from your competitors. To define it, you should feel confident that your competitors can't or won't match your competitive advantage.
Your "must-have capabilities" are the things you invest in to turn that theory of advantage into a reality. Here are some examples of how a law firm might cover capabilities:
- A staff of lawyers with skill and experience in the chosen practice area
- A way to get the word out about their firm to bring in new clients
- Ways to maintain client satisfaction
What Enabling Management Systems Do We Need to Win?
Answering this question explains the systems you will use to build and maintain your must-have capabilities.
Here's how Roger Martin breaks it down:
"A company needs management systems that build and maintain the distinctive capabilities that underpin a unique how to win in the chosen where to play that meets its winning aspiration."
To effectively manage your law firm, you need to put systems in place to shore up your must-have capabilities. An example of this could be something like checking your legal CRM to follow up with every client throughout their cases.
The Four Seasons Hotel presents a helpful example of management systems.
They seek to win through a unique kind of service carried out by experienced staff members. They direct their resources into recruiting and hiring the right people in an industry that's known for high turnover.
This plays out in a management system. The Four Seasons requires three in-person interviews for successful management candidates. Despite annual industry turnover rates as high as 70%, the Four Seasons keeps it below 10%.
Although the legal industry and hospitality might seem unrelated, they're much more similar than you'd expect. In both industries, client service is key. Without exceeding client expectations, hotels and law firms bottleneck their future growth. Law firms and hotels both have to consider the best ways to attract and retain key staff, too.
To apply this to your own business, consider the following question:
Where in your law firm can you direct resources of time and money into building the systems that help you win?
Developing Your Own Law Firm Business Strategy
Running a successful law firm requires a strategy for every decision you make. Working with an outside partner can help you connect your law firm strategy to your attorney marketing plan
Rankings.io has helped many law firms that are ready to enhance their online presence. Contact us now to learn more about how we can help with your law firm strategic planning.
