The Brand Research Company and Greenfield/Belser have combined for another unique research study that dispels myths surrounding a volcanic chain of law firm failures, such as Brobeck Phleger & Harrison. Among the most compelling findings: Legal excellence is not enough.
“Do excellent work and work will follow” no longer applies. Failed firms were more than four times as likely to report that “legal excellence” was the most important contributor to their success.
Non-lawyer C-Level executives are a great predictor of success
Firms that hired and empowered non-lawyer executives in C-level positions proved to be a remarkable predictor of success-as a rule, successful firms were more than twice as likely to have each type of non-lawyer officer in place.
Communication strategy must travel down the chain of command
Keeping your plans to yourself is not a good idea. The study found that 92 percent of successful firms communicated the firm’s vision and strategy to their entire staff while failed firms did so only 43 percent of the time.
Reinvesting profits is an important planning strategy
Greed kills! On average, successful firms rated their firms as equally investment- and distribution-oriented (4.7 on our 0-to-10 scale), whereas the failed firms were much more distribution-oriented (average 2.7).
Client-hoarding a likely influence in law firm failure
Client-hoarding almost guarantees the failure of cross-selling. Leaders of failed firms reported much greater tendency to hoard vs. share clients than did successful firms’ leaders (3.2 vs. 6.4 on a 0-to-10 scale).
The study is not a collection of opinions but a rigorous data-driven assessment of firm characteristics and behaviors with results firm leaders can use to drive change in their law firms.
“Everyone has opinions about why law firms fail. We found that neither traditional wisdom from the business world nor the ideas of legal industry insiders proved sufficient to provide a complete or balanced answer,” said Dr. Mark Greene, managing director of The Brand Research Company.
The study identified a set of hypotheses based on the suggestions of leading industry pundits plus the most current thinking from the business world about how corporations should be run to maximize their probability of success.
The study tested conventional wisdom against the Malcolm Baldrige criteria for management excellence. Of the 140 hypotheses tested, only 60 proved to be significant. But those 60 paint a new picture of law firm partnership and a new approach to law firm management. This ratio illustrates how misinformation or faulty assumptions are rife in the law firm management decision making process.
“Why Firms Fail? Why Firms Succeed? (TM), outlines a new model for law firm leadership, taking the guesswork out of what issues are really important for successful firms. Leaders can focus on matters that make a real difference,” said Burkey Belser, president and creative director of Greenfield/Belser Ltd.
The study titled, Why Firms Fail? Why Firms Succeed? (TM), includes a virtual census of senior leadership within representative failed and successful large firms. Half of the respondents hailed from firms that have been dismantled or acquired under stress within the last three years. The other half hailed from successful firms, which were defined as firms with a 5 percent or greater increase in gross revenue for two consecutive years (2000- 2001 and 2001-2002 as reported in the AmLaw 200).
The study sheds light on the effectiveness of law firm management strategies by deciphering the methods that are truly indicative of success from those that are not. For more information, please visit http://www.gbltd.com/index.php?stuff=NewsID=197.
The Brand Research Company offers strategic market research capabilities to professional service firms to aid firm management decisions, cement client loyalty and improve client development.
Greenfield/Belser Ltd. is the nation’s leading brand design firm for professional service firms. Founded in 1978, Greenfield/Belser has offices in Washington, DC and Boston. Clients have included more than 200 law firms nationwide.
Together, both firms have developed pioneering studies, such as Finding and Choosing Lawyers, Branding Your Law Firm and Finding and Working With Lawyers on the Web.