As many of us know from experience, partners in solicitors’ practices often cannot agree on even writing the most basic strategic plan; yet at this time of extreme change it is more important than ever that law firms have a clear vision as to what the future holds for them.

Law firms have traditionally grown by succession and have never needed to consider why they are in practice in a traditional partnership, what services they should offer and how they charge for these services. It’s been passed on over centuries.

However, many younger partners in law firms are now questioning why they deliver certain services and whether these services are profitable. More importantly, they are questioning their very existence in this new legal landscape. So is there a future for local solicitors to thrive in either a geographical or niche practice?

The answer to that question is definitely yes, but only if the practice changes the traditional (badly managed, poor cash flow etc.) image and approach. So how do partnerships realise their potential and agree, amongst themselves, a strategy for the future?

A growing number of law firms are turning to partner retreats to help focus partners on the fundamental and important issues for the practice, rather than the "urgent" ones that crop up every day.

Partnerships that are not in full agreement as to their key issues can see real benefit from taking time away from their day-to-day fee earning activity to gain the advantage of a formal meeting away from the office. By using an external facilitator partners will often 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 partners must agree to that vision.

How 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 one single dysfunctional partner (or more) creates the poor performing practices we are still seeing today, many of which will be poorly managed and have profitability and cash flow issues. It is these practices that will be among the thousands of law firms that are predicated not to be in business within the next few years.

Partners can often find it difficult to share their views with each other whether there is dissatisfaction within the partnership due to lack of profitability or more fundamental issues such as whether the firm should be providing publicly-funded work.

Another key issue for dissatisfaction is firm’s exit strategies. With the average age of an equity partner in a law firm now being 60 years, a growing number of partners are realising that there are no younger potential partners willing to become equity partners in their firm and this has become a real concern. The desired outcome of the retreat should always be to establish what the correct outcome for the practice will be as a going concern, rather than for the individual partners.

For example, if a practice has a high street office which is owned by the senior partners yet the work produced is better suited to an office away from the high street (i.e. personal injury) all the partners would have to agree to this fundamental move away from the high street. What is in the best interests of the firm has to take priority over the interests of the senior partner. An outside facilitator can force the partners to vote on this type of fundamental issue.

Another area prompting a need for an agreed strategy is practice finance. The current seismic shift that the profession is experiencing has been accelerated partially by the Legal Services Act but more importantly by the banks, who are taking a more pragmatic view on law firm debt. In fact bank lending has flatlined over the past two years with firms having to work within existing overdraft facilities.

Unsecured bank borrowings are estimated to be at one billion pounds. Sadly, to enable them to remain within their current facilities some law firms have utilised other monies to pay wages and other bills. The Legal Services Commission has been pursuing firms who have been overpaid and the HMRC has taken a tougher stance on chasing non-payment. We have seen more statutory demands served in the past month or so than during the past twelve.

Law firms no longer have time to deal with partners that do not see the key issues and challenges that face them. The process is usually identified by a managing partner or other partners who recognise that they have a problem within their practice. Inevitably the issues facing the firm will be causing frustration within the partnership and concern over the direction the firm is taking.

It is essential that the retreat has an outside facilitator who is aware of all the issues. Partners will open up when challenged and an outcome for the benefit of the firm can generally be achieved.

It is always advisable to hold a retreat away from the office, thus avoiding the obvious distractions. It will take one or possibly two days. Some firms hold their retreat over the weekend to avoid the loss of fee income. Other firms will take a day away from the office to complete their retreat. Spring and autumn seem to be the most popular times but obviously avoiding key holiday times or when work flow is at its most demanding time.

The facilitator will usually write the agenda, with the assistance of the partner/partners who have organised the retreat.

Often the day is split into two sessions where relevant team members (accounts, practice manager, heads of departments etc.) attend the morning session but only the equity partners stay for the remainder of the day. If tough decisions have to be made then that has to be the responsibility of those that own the practice.

All aspects of the practice would usually be discussed and in various ways; however there are usually one or two burning issues that become paramount and without changing these fundamental problems, the practice will not develop or even potentially survive.

A written report of the day should be provided by the facilitator to the partners and this forms the basis of a strategic plan. The plan will have action points, some of which may require external assistance. This can then converted into a "growth plan" where consultants assist in the implementation of change. As with any industry or profession there has to be sustained mentoring to ensure the items agreed are carried through.

Each retreat is very different and outcomes will vary but examples of outcomes that can be achieved include:

  • Deciding to seek a merger partner
  • Deciding to sell the practice
  • Deciding to acquire other practices and develop a strategy for growth by acquisition
  • Successful closure of high street premises and opening of open plan offices suitable for non-high street work
  • Splitting up of partnerships, where partners responsible for publicly funded work may leave to join other publicly funded partners
  • Agreement of an exit strategy for dysfunctional partner(s)
  • Partner agreement to drop some unprofitable legal services - some partners agree to re-train
  • Partnership agreeing that they need help and assistance to develop the practice
  • Partners agreeing to appoint a non-lawyer to effectively run the practice (this is the facility for non-lawyers to become partners of a law firm under the Legal Services Act and will become more important when Legal Disciplinary Practices (LDPs) come to fruition)
  • Agreement to change the partnership to either LLP status or Limited Company status. This, in turn, greatly assists with succession planning
In a recent example a ten-partner practice with a turnover of £3.5m agreed, following a day’s retreat, to become incorporated and have five directors, the youngest female partner becoming managing director of the newly formed business. Now that’s a result!

As more practices begin to realise they will need to change the way they deliver services and become more business-orientated partner retreats are increasingly and correctly being used as serious strategy sessions to ensure the firm is addressing the fundamental issues facing it and the legal profession rather than being a partner benefit or "jolly".

The implementation process behind change management will assist those firms who wish to embrace change and realise their true objectives.

Until now it has generally been the mid to larger firms that have taken time to stand back from the daily routine and fee earning to "retreat". However, those firms who want to survive - and thrive - might wish to heed the advice of Michael Gerber who in his book The Emyth encourages all businesses to spend time working on the business - and not in it.

Viv Williams is CEO of 360 Legal Group and has successfully run hundreds of partner retreats as part of specialising in helping law firms to manage change.