Wednesday, September 30, 2015

Grow Your Small Firm

91% of practicing US attorneys own or work for firms with 4 or fewer lawyers, according to Zap Data (a division of Dunn & Bradstreet).  Many are “solo by choice,” as Carolyn Elefant likes to call them.  From my perspective, there seem to be many small firms that would like to grow, and would enjoy financial and operational benefits by doing so, but don’t feel they know how to successfully execute a growth plan.

Trying to grow your practice can be scary, particularly if you don’t have a good handle on your firm’s financials.  The first and most important step is to gain a concrete grasp of your firm’s financial position and outlook, and to run some “what-if” scenarios to account for ups and downs that can occur.  This will allow you to identify the resources that will be available to finance the addition and define the objectives that need to be met to have a successful outcome.

The next step is to create a compensation framework for potential partners, of counsels and associates.  Consider what is needed to attract and maintain the caliber of talent that you seek, as well as the expected return to your firm.  For an experienced, business generating partner you will derive less financial benefit (on a percentage of billings basis) than a more junior attorney who is not a self sufficient rain maker.  Be mindful to establish simple arrangements that incentivize the behavior you want and don’t create conflicting interests within your staff.  Once you have created compensation frameworks, you may occasionally choose to sweeten a deal to attract a unique person, but you want to be careful not to stray too far or too often.

You will want to target candidates that add to the firm’s capabilities, not just those who increase billings.  If you have a significant level of stable billings, you will probably look to hire an associate to maximize your return.  If you are looking to grow your firm’s scale, expand capabilities or add to management capabilities, a partner level addition is the right path.  If you have a very up and down caseload which at times requires experienced staff and at other times does not, you might look to add of counsels that can generate some work to keep themselves busy, but who are also available to service your clients. 

Attracting the people you want is very similar to a sales process.  To be successful, you need to identify and define the factors that differentiate the job opportunity you are providing from the others that are available in the market.  Consider creating a slide deck to communicate your selling points, such as a more competitive bill rate structure, better service capabilities, fewer conflicts, a better technology platform or a better compensation structure.  You will want to define what it means to work for your firm and why it is a better platform for them on a personal level; explain how you help them develop their business developing skills, show how you help them develop new legal skills, demonstrate a better work life balance with work-from-home capabilities and let them know their voice will be heard.

When you work for BigLaw, the career path that your employer has placed you on is clear.  Make sure that the career path you provide to your prospective employees is equally clear.  People need to understand how they can move up in your organization, what moving up can mean in terms of income, and how they will develop professionally in your organization. 

Lastly, share with prospective employees the lifestyle benefits they will enjoy when working for your small firm.  Potential employees want to feel empowered; let them know that they will be brought into the firm’s process if they join your team.  While this does include the personal touch of knowing everyone’s name and having direct communication with the people who have their names on the door, the participation in your management process will inevitably attract interest.  Sharing information about the performance of the firm, staffing decisions and planning, client development strategy or even operational issues like IT and benefits selection are unheard of in BigLaw; in your firm your employee will be part of a team with a purpose.
A little financial planning, along with a bit of “sales” strategy can go a long way to finding and attracting the resources that will take your firm to the next level.  It’s a process that takes time and doesn’t typically come together on the first go round, so get started today!


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David DePietto is the founder and CEO of NexFirm. 
He can be reached at ddepietto@nexfirm.com

Tuesday, March 31, 2015

Clarity Versus Certainty: How to Hire the Best

For many, a great thing about working at a BigLaw firm is the certainty around compensation.  With each passing year you and your peers advance up the ranks with an associated compensation increase.  There aren't many other jobs out there where you know what you can expect to earn each year for the next eight years on your first day of work. 

Small firms cannot provide this sort of certainty, which can make recruiting top talent a challenge.  So, how do you compete with the big guys for great talent?  Fight certainty with clarity.

BigLaw attorneys have no clarity.  None.  They don't know how their firm makes money (or does not make money) off of their efforts, how the firm is faring financially, what the partnership objectives are and most importantly, what is expected from them so they may succeed and make partner.  Some don't even know what their bill rate is.

This secrecy was tolerable when the certainty of advancement seemed guaranteed.  Lately, it is harder to count on the certainty that BigLaw offers.  Layoffs, compensation cuts and other career disenfranchising has made it difficult to believe the way that BigLaw lawyers used to.  For many, the secrecy of BigLaw has become intolerable.
  

How can small firm partners leverage BigLaw's newfound uncertainty to recruit the top performers in the field?

  • Share the firm’s objectives.  Provide some background knowledge on the firm's growth and future expectations for business development.  Where do you see the firm in 15 years, and what does your hire's position look like in your vision?  Knowing there's a plan for growth and that they play an important role in achieving that goal gives your recruits the stability they need to stick with your firm over BigLaw offers.
  • Create a clear path for attorneys.  This means more than a list of titles. It should include the objectives and an understanding of the overall firm development.  You should also give your attorneys an understanding of how their contributions effect the firm's reputation and bottom line.  Above all, your team will benefit from a strong understanding of how they provide excess value to the firm and how they get paid for it.
  • Provide professional development tools.  Make sure your attorneys know that they will become better attorneys by working with you.  BigLaw attorneys can fall through the cracks, but small firm attorneys have the benefit of working closely with senior members.  Lay out the processes in place at your firm to help your team members hone their skills.  I listed several methods for incorporating professional development into your firm's everyday operations in a previous post.


Small firm partners who know how to communicate all they have to offer can be sure that they will hire the best of the best.


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David DePietto is the founder and CEO of NexFirm. 

He can be reached at ddepietto@nexfirm.com