There are a number of issues that are turning the hair of law firm leaders grey. Cybercrime, for instance, is a serious threat that must be taken seriously.
Homeworking after two years of pandemic lockdowns is also a major consideration for many firms. As is the issue of fostering a positive work culture, which includes combating fee earner burnout.
1. Client Relationships
As law firms are not selling a tangible product, they rely on relationships with clients to drive business growth and sustain client loyalty. Clients are a firm’s most valuable asset and it is crucial that they be protected and nurtured.
This includes maintaining effective communication, proactively seeking feedback, providing added value, and building trust and credibility. Further, leveraging technology in the form of CRM tools can help streamline client management and foster a more personalized service.
Another challenge that many firms face is frequent lateral movement. This can impact client engagement as it may raise concerns about the stability of their firm and their ability to provide consistent counsel. In addition, it can cause clients to seek alternative legal providers. It is essential that firms invest in their current attorneys to ensure they have the right skills and experience to meet the needs of their clients.
2. Culture
Creating an inclusive and supportive culture is a key component to mitigating any potential burnout or decreased well-being amongst attorneys. This may look like ensuring the thought leader’s successors are set up for success by propping up their existing relationships or making sure external PR teams include them in pitches as subject matter experts.
Legal professionals want to feel as though they’re a vital part of a team, which enhances their job satisfaction and productivity. This could be as simple as implementing on-the-spot recognition cards or setting up a “dream program” where employees can list their personal goals and grant wishes based on performance.
Legal firms can also invest in holistic management training to support team members. This approach reduces micromanagement, a major factor that contributes to attrition. Legal professionals feel that being constantly second-guessed or having their decisions overturned can make them reluctant to take the initiative.
3. Financial Stability
Financial stability is the ability to pay bills each month, live without excessive debt, and set aside savings. It is often defined as a lifelong journey that requires consistent behavior and discipline.
In a profession obsessed with work-life balance, it’s no wonder that many legal professionals struggle to achieve this balance. A 2021 study reveals that burnout is on the rise, and this can lead to an increased risk of turnover.
Law firms are often fragile financially, despite their freakishly robust capital structures. Once a critical number of senior partners or gifted rainmakers leave, their departures can trigger covenants in a firm’s bank loans. This can result in a spiral of departures, as banks demand higher loan collateral or accelerated payments. In extreme cases, these demands can threaten the solvency of a law firm. Achieving financial stability requires a careful approach to lending and prudent financial management.
4. Technology
Throughout the wide-ranging, open-ended interviews conducted for this study, firm leaders focused very little on client-related challenges. This is likely a result of buoyant demand and the fact that many critical internal issues are currently at the forefront of their minds.
A strong legal case management system is crucial for the success of a law firm. The ability to efficiently track matters, communicate with clients, and rely on powerful reporting and analytics tools can be the difference between winning and losing business.
In addition, a powerful legal billing solution can help firms meet the growing demands of client-driven pricing models and compliance with new IOLTA regulations. Ensure your firm’s tech solutions align with and support broader business goals by following our Legal Technology Implementation Checklist. For example, automating menial tasks like email filing and document storage frees up valuable associate time to focus on client interviews and communication.
5. Business Development
As firms compete for clients, business development is vital to staying ahead of the curve. By identifying trends and opportunities for growth, businesses can increase revenue streams and remain profitable over the long-term.
Law firms can also use business development to determine which industries and clients are best suited for their firm, and then put processes in place to part ways when those opportunities are not viable. This can save the firm time and resources that would otherwise be spent on unprofitable work.
Burnout can also strain client relationships, as legal professionals who are not fully engaged may struggle to understand and address client needs. This can be mitigated by creating a more cohesive team environment that fosters camaraderie and collaboration. Lastly, many firms are using innovation challenges to spark creativity and build stronger bonds between attorneys and staff.
6. Employee Engagement
Employee engagement is a measure of the emotional connection employees feel to their jobs and organizations. It is a powerful motivator that helps increase productivity and reduces the risk of absenteeism and burnout.
Employees are most engaged when they trust their leadership and know that the organization’s goals align with their own. In addition, they want to have a challenging job that allows them to use their strengths and contribute to the success of the firm.
Firms that provide regular, helpful feedback to their employees and empower them to take action will experience higher levels of engagement. Tools like Prodoscore enable managers to easily view daily productivity and engagement data, allowing them to identify and intervene before any problems arise. This enables them to prevent burnout and other issues that could jeopardize the health and safety of their teams.
7. Leadership Development
Legal professionals who are burned out lack the focus needed to perform their work. This can result in errors in legal work and missed deadlines that impact client service. It can also lead to an environment of distrust and a lack of teamwork among colleagues.
Firm leaders may need to work harder to develop their leadership teams if they want to improve their firms’ business. Firms should consider implementing a system of mentorship for new associates to help them grow into future leaders of the firm.
Continuing to tighten equity controls for new partners may be another challenge that needs to be tackled. This could prove challenging for law firms that have already instituted non-equity tiers and those that add a salaried partner tier to their partnership model. Moreover, the issue of recognizing the contributions and hard work of legal professionals is another challenge that may need to be addressed.
8. Client Relationships
A firm’s client relationships are a major concern for managing partners, particularly when a thought leader leaves. The firm needs to make sure clients know how to get in touch with other lawyers who can help with their matters. When a founding partner quits, it can leave a significant gap in leadership, so it’s essential to have a clear succession plan in place to maintain stability and client trust.
The departure of a partner who has big book of business can send the message to clients that all is not well at the firm. This could lead them to look for new firms.
When communicating with clients after a colleague leaves, it’s important to be respectful and professional. Having personal meetings or conversations rather than emails or formal letters helps maintain positive relationships. Attending industry networking events or professional associations is another way to maintain positive interactions and demonstrate your commitment to the legal community. Providing value through an introduction or support for a client matter also builds on your relationship with the former colleague and establishes you as a trusted connection.
9. Financial Stability
Financial stability means having enough money coming in to pay for all your expenses and have some left over to save for future goals or emergencies. According to Rocket Money, it also means being free of consumer debt and having a healthy emergency savings fund.
Law firms that do not have financial stability may run into difficulties with their lenders. They are unlikely to be able to meet repayment obligations or take on new debt, and they will face severe pressure on their profit margins.
The z-score is a measure that attempts to fill some of the gaps in information regarding the financial stability of firms and critical market structures. However, it may overlook risk due to the fact that it evaluates institutions individually rather than as a system, and it may overlook the potential for “contagious” losses from one institution triggering loss in others.
10. Marketing
In the midst of the Great Resignation, fee earner burnout and the ever-increasing demands of a rapidly evolving profession, law firms must take a hard look at how they are managing their clients.
Firms need to create a comprehensive marketing plan that includes passive and active marketing techniques. Creating engaging content can establish a law firm as thought leaders in the legal landscape and resonate with prospective clients.
To build trust and credibility, firms should also encourage clients to leave public reviews and testimonials on their website. Law firms should also set up a system that enables them to routinely update their biography pages with new achievements. And, their websites should be easy to navigate and mobile friendly. Lastly, they should work with senior rainmakers to establish guidelines for sharing credit for new business. This will help avoid the risk of losing a long-term client when one partner retires or leaves the firm.