We had high hopes for the final session on the first day of P3, with my friends Tim Corcoran (@tcorcoran), John Byrne (@johnmbyrne), Catherine MacDonagh (@CathMacDonagh) and Amy Hrehovcik (@hRovingChik) presenting – and we weren’t disappointed!
As per the attendee guide:
We will examine a typical corporate business case and how it incorporates internal and external factors such as market demand, competitive pricing, cost of production, cost of delivery, client mix, channel strategy, profit targets and resource allocation to make a go/no-go decision for a new initiative. By contrast, law firms have traditionally taken a less rigorous approach to quantifying new initiatives, relying instead on each practice group or even each partner to drive business decisions."
We’ll illustrate how a law firm fully embracing an integrated P3 mindset can dramatically improve its approach to business strategy, improve financial performance and maximize its resources and capabilities. We’ll demonstrate how law firms can embrace data, process, tools and incentives to make better business decisions."
The speakers started by showing us a cartoon that resulted in a lot of laughs (cartoon removed due to copyright).
It’s long been a saying that "law firms want to be the first to be second" – we’re not known as being a pioneering industry. And with all of the recent upheaval in the economy, while there are many who accept that things have changed, and that we need to change with them, there are also those with their fingers crossed that if we wait long enough, things will just return to the way that they’ve always been.
But, there are many, many benefits to embracing a P3 mindset at a law firm, not the least of which is profitability. The speakers gave us a short three-act play to illustrate their points.
The first act was a caricature of the firm of "yesteryear," exacerbating some of the more stereotypical traits of law firm partners when bringing in a lateral hire in order to underscore the lack of business consideration that often happens. From this skit, we learned that the firm of yesteryear was solving for something different – such as just revenue, or increased billable hours. Firms today need to stop solving for yesterday’s problems.
Although the first act had a couple of voices of reason, arguing for making the business decision, they didn’t have any data to back up their arguments with facts. Data is key here.
The second act focused on a corporation of today, and their process of making the decision to start producing a new product, which was based on research, data, and future goals. It was clear to the audience the sharp contrast between the first and second acts, with the first showcasing a decision made based on a "gut" feeling that it was the right thing to do, and the second a decision made based on real analytics and information.
Act three combined the first two, showing us a possible law firm of the future, which makes decisions based on sound business cases.
The key takeaway is that sound business decisions are based on analytics, so firms must analyze independent and interrelated factors. Also, since performance is best measured over time, we must compare alternatives – including the cost of doing nothing. It is possible to increase quality and reduce the cost of delivery for legal services – the two are not mutually exclusive.
Over and over again, I heard the messages from them about collaboration, improving processes, and showing commitment to clients. They had me at "commitment to clients" – what better reason to embrace the P3 mindset at your firm than that of showing your clients that you are committed to serving them?
As we’ve discussed in previous posts, you cannot embrace AFAs without being dilutive to your profits if you don’t also look at the delivery of service, according to Corcoran. Our attorneys did very well for a long time, but now, times have changed. And we have the opportunity to help them.
Byrne says "think big, start small." Firms don’t need to implement all of these process improvements immediately – instead, consider some pilot programs to roll them out over time. From the audience, Mark Greene noted that the legal industry is in the relationship business, and so while firms may want to believe this works, there will often be naysayers. He asked how the panelists would recommend combating this type of thinking.
Corcoran suggests that although relationships are important, informed decisions are even more so. And although this isn’t a popular opinion, if you’re management at a firm, relationships should be with the firm and not the individual attorney. A buffer against having individual lawyers take business is having institutional processes to protect those relationships. It all comes down to opportunity – having these conversations are positive for the individual attorney-client relationship.
It was a truly excellent panel, which kept us riveted at the end of day one – no small feat after a long day of "drinking from the firehose" of P3! This week and next, I’ll bring you two more recaps to close out my review of the conference, and as always, add your comments and thoughts below!