Mirror, Mirror on the Wall: On law firms, BPI and a moment of reflection
Where were you eight years ago?
This month. April. It would have been 2008 . . .
The stock market looked like this
The NYSE Composite was down a little over 10%. It was a pull-back. A correction. Nothing to worry about. Happens all the time. You’d have to go back to the crash of the tech bubble to see drops worse than this. It wasn’t going to get that bad . . .
Legal revenues looked like this
They were healthy. Consistently growing at levels around 5% (or more!), things seemed unstoppable. And by unstoppable, I mean consistently increasing revenue. Healthy worked rates. Great billed rates. Realization (in retrospect), was awesome.
Then this happened
The bottom fell out. Things got nasty. Things got real. It was like the blink of an eye. The world changed forever. Financial chaos spread around the planet like an angry plague. For some, it was “hell on earth”.
Law firms weren’t immune
Growth vaporized. An industry that consistently achieved quality growth rates for more than a decade saw growth vanish overnight. Gone. Zero. Then negative. The legal market shrank.
I’ll be the first to admit that the Federal Reserve data doesn’t look nearly as bad as I would have expected. When I talk to managing partners about their experiences during the financial crisis, their stories are awfully similar to mine – holed up in an office working for an investment bank wondering if the world was about to end.
The pigeons circled like vultures . . .
But my point is this
It doesn’t really matter what the data looks like. After all, the global financial crises happened. You were there. Do you remember?
Where were you?
The same office? A different firm?
I am willing to bet that you find yourself somehow . . . changed . . . as a result of the financial chaos of eight years ago. I know I am. It seems the global financial crises left an indelible mark on us all.
Some law firms thrived. Some law firms perished. The difference didn’t always have to do with “practice groups” or “diversification”.
A lot of it had to do with preparation
And by preparation, I don’t mean anyone having the fortuitous ability to read the proverbial writing on the wall. Look at the charts again. Even the “best and the brightest” didn’t see it coming.
By preparation, I am referring to a more diligent undertaking of the financial and operational variety.
Business Process Improvement
Now is the time for your law firm to ask itself:
- Have we done enough?
- What can we do to boost profit today and prepare our firm for a downturn?
It’s not about waiting for the chaos to unfold. It’s not about predicting whether we will have a “hard landing” or a “soft landing”. It’s about having the confidence that you have given your law firm the best chance to survive a period of declining revenues.
Have we done enough?
A quick a dirty way to determine whether your firm has done “enough” is to stand back and admire the fruits of your BPI. Are profits per partner higher as a result of your efforts? If they are, great job.
We don’t upgrade software, systems, and devise new procedures for the sake of having all the fanciest bells and whistles. Rather, we endeavor in BPI for the sake of running a more profitable and (I dare say) efficient law firm.
BPI is about to become more important than ever. Those who have endured the heartache, challenge, and change are about to discover the real benefit of business process improvement. It’s not that they are enjoying the fruits of a more lucrative and well-oiled law firm today, it’s about having processes and systems in place that will allow their businesses to withstand a period of negative growth.
Regardless of whether your firm is impacted by external factors (the economy) or internal factors (events that impact your key people and functions), business process improvement offers you the opportunity to boost the performance of your organization. Today.
It gives you the best of both worlds. Higher profits per partner in the near-term. A more bullet-proof business model when things get ugly again.
Everyone likes to talk BPI – but have you done it? What did it do for your bottom line? If it didn’t improve your profits, then something went wrong . . . or you didn’t do enough.
What should we focus on now to boost profits today & prepare our firm for stormy seas?
The key to business process improvement is knowing what areas to focus on. To get the most “bang for your buck”, you have to know the precise business processes and systems that impact your key drivers of profit and growth.
While the fundamental drivers of profit and growth may be eternal, the prevailing financial trends that are exerting the most headwinds on your law firm are constantly changing. It’s about knowing where you stand. It’s about knowing what is changing. It’s about identifying what you can do about it.
Business Process Improvement starts with Business Performance Planning
In business, like life, we have to plan to succeed. But at Bridgesphere, we don’t believe planning has to be an arduous and expensive process. Rather, we think getting your ducks in a row has more to do with putting your law firm through an X-Ray machine. It’s the best $599 you’ll ever spend.
We’ll tell you exactly what business processes and functions are exerting the most financial pressure on your law firm. We’ll highlight key financial trends that are changing – before they become full-blown problems. We’ll help you identify the best path forward. How to improve profits today. How to fortify your business for the future.
We can’t predict the future. But we can undertake a thorough examination of ourselves. What’s working inside of your law firm? What financial trend is starting to rear its ugly head?
We can’t improve what we can’t see.
It all starts by looking in the mirror . . .
To learn more about Business Performance Planning, view sample reports & receive a complimentary white paper on mission-based management, click here.
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