Despite the delay in the regulation to license alternative business structures and the full implementation of the Legal Services Act, it is imperative that law firms decide now what direction their firm is planning to take.

We can categorise the profession simply into three areas; the well-managed strong national and regional firms, the firms who are seriously financially challenged and the vast majority - probably as much as 75 per cent of the remainder who do not have a clear direction and plan.

These latter firms are not under severe financial pressure but have no succession or exit strategies for the existing partners.

Do they continue to practise for several years? Do they try to sell up, but at what value and to whom? The new dawn of legal services that is still on the horizon offers considerable opportunities to those prepared to plan their future. Unquestionably there will be challenges along the way but the poorly marketed brand of solicitor will still have a significant role to play in the new era.

The world of legal services is muddied by the new entrants offering a plethora of services: 'divorce from £69'; 'cheap as chips conveyancing' and online services offered by various affinity groups.

However, the brand of solicitor should always have a place in the community if some strategic thinking about its future takes place.

Many lawyers become so preoccupied with immediate issues that they lose sight of their ultimate objectives. That's why a business review or preparation of a strategic plan is a virtual necessity. This may not be a recipe for success, but without it a practice is much more likely to fail. A sound plan should:

  • Become a framework for decisions
  • Provide a basis for more detailed thinking and planning
  • Explain the business to others in order to inform, motivate and involve
  • Assist benchmarking and performance monitoring
  • Stimulate change and become a building block for the next plan
A strategic plan should not be confused with a business plan. A strategic plan is designed to be a short working document whereas a business plan is usually a much more substantial and detailed document. A strategic plan can provide the foundation and framework for a business.

The starting point must be to determine if there is an existing vision, mission, objectives and strategies. Then judge these against actual performance along the following lines:

  • Is there a current vision and is this being achieved?
  • How has the practice's mission and objectives changed over the past three years? Why have the changes occurred or why have no changes occurred? Identify primary reasons and categorise them as either internal or external.
  • Describe the actual strategies followed over the past few years in respect of products/services, operations, finance, marketing, I.T, management etc.
  • Critically examine each strategy statement by reference to activities and actions in key functional areas covering such matters as:
  • How has the practice been managed?
  • How has the practice been funded?
  • How has the practice sought to increase turnover?
  • How have the overheads increased?
  • How have redundancies affected the business?
Take each of the above and try to reference this against actual performance. Continue to ask why and establish the reasons for differences between the actual and desired performance.

A practice rarely succeeds or fails for minor or trivial reasons. The causes are usually substantial and are often self-evident, at least to an outsider. For example, the practice was completely over-borrowed; management was weak; badly implemented mergers had taken place; client care and cross selling of services were ignored or exiting former partners expected capital account repayments in an unreasonable way.

It should be possible in the course of a few pages to set down the main elements of the firm’s vision, mission, values, objectives, goals, strategies, strengths, weaknesses, opportunities and threats etc. The compilation of a short report along these lines is likely to prove much more difficult than a lengthy dissertation which mixes up details and principles and confuses the broad picture.

Law firms have traditionally grown by succession and have never needed to consider why they are in practise and what services they should offer. Partners are now questioning why they deliver certain services and whether these services are profitable.

In many cases partners cannot agree to even writing the most basic strategic plan so a partner retreat should be considered which will focus them on the important rather than the urgent. It is well worth taking time away from their day-to-day fee-earning activity to gain the advantages of a formal meeting away from the office.

By using an outside facilitator partners will open their emotions to what they really feel about the key issues within their practice. It is essential that all firms have a shared strategic vision and all the partners must agree to that vision.

So many partnerships continue to operate with one or more dysfunctional partner who has a different agenda to the remaining partners! This lack of a common vision with a dysfunctional partner (or more) creates the poor performing practices we see today - many of which will be poorly managed and have profitability and cash-flow issues.

The old adage is still true: 'failing to plan is planning to fail'. The signs that the need for decisive action is being taken seriously however are encouraging; 360 Legal Group has conducted well over 100 strategic planning days in the past twelve months.

Viv Williams is chief executive of 360 Legal Group, which provides a dedicated business consultancy service to UK lawyers and which has some 700 law firms as members