STRATEGIC PLANNING CATCHING ON: More law firms taking a look at long-range goalsAuthor(s): Gary A. HengstlerSource: ABA Journal, Vol. 73, No. 9 (JULY 1, 1987), pp. 30-31Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/20759392 .

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News

STRATEGIC PLANNIG CATCHING ON More law firms taking a look at long-range goals

A recent survey of the 155 big gest law firms in the United States and Canada concludes that strategic or long-range planning is an idea whose time has come in the practice of law.

Lawyers' recent interest in this concept is one more indication that firms are willing to try new methods to meet increased competition, ac

cording to John F. Coburn, vice pres ident of Gray-Judson, the Boston

management consulting firm that conducted the study.

The survey concludes that most major law firms either have devel oped strategic plans for long-range growth or will shortly undertake such planning. (See accompanying survey results.)

"The idea of strategic planning is relatively new for law firms," said Coburn. "What we found is that law firms are sticking their toes into these waters. Few are plunging in."

OBSOLITI NOTIONS He explained that lawyers tra

ditionally have viewed strategic planning as a business tool that was not adaptable to the practice of law.

Coburn explained that for most, a strategic plan meant "a thought-out plan, longer term in nature and re

quiring significant participation by the firm's members. Also, the plan is then codified."

He stressed that the process of planning is the most important ele

ment.

Profitability key planning issue

For most firms that have developed long-range plans, the key issues are: firm profitability, firm governance, marketing and the issue of planning itself.

That was one of the findings of a 1986 survey of the 155 largest U.S. and Canadian law firms conducted by Gray Judson^ a Boston management ; consulting firm. Seventy-eight firms

U < William Cobb: 'It is not the plan but the process that is most important."

William Cobb, chairman of the Long Range Planning Committee of the ABA's Section of Economics of Law Practice, agreed that the process is the key to successful planning but

minimized the importance of for

mally drafting the plan.

PLAN AS PROCISS "Planning in a law firm is a proc

ess to let the firm step back from the

day-to-day client requirements and look at who the firm is and where it is going," he said. "Lawyers tend to think in terms of contract.

"They think the plan is what

they draft. In reality, it is not the plan

but the process they go through that is most important."

Cobb, head of the Cobb Consult ing Group and working out of its Houston office, outlined four "levels of increasing focus in the planning process. First there is an assessment of what is out there. Second, assess what the implications are for the firm. Third, decide how your firm will re

spond. And finally, if you respond a cer

tain way, assess what the implica tions are for the next 12 or 36 months. This is translated into a business plan.

"If you write it down, that's called a plan. Sometimes it's not writ

responded to the five-page questionnaire.

Among other results, the survey found that:

Seventy-five percent of the firms do not have a formal strategic plan but more than half of these say they either have planning underway or will begin it soon.

The average firm spent more than six months to develop its plan and invested over $375,000 in lawyer time most of which was partner time?in the process.

Of the firms with formal plans, 95 percent say the planning process went smoothly.

Of the firms with formal plans, three quarters say their implementation was either "extremely" successful or at least "somewhat" successful.

Seven out of 10 firms with strategic plans retained consultants to

help develop the plans. Seventy percent of the large-firm

partners were characterized as at least "positive" toward such planning.

?Gary A. Hengstler

I_?_____-1

30ABA JOURNAL / JULY 1, 1987

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ten down but is incorporated into the overall policy and operation of the firm.

"Partners expect strategic plan ning to be a planning document," Cobb continued. "It's OK to write down what you learn in the process but you should also remember that the document is obsolete the minute you finish."

THI BUSINESS RAP Coburn said law firms have tra

ditionally been reluctant to engage in long-range planning for several rea sons. "Many simply felt they didn't need to plan," he said. "Still others don't know what planning means? some even said it sounded like com munism. And finally, there was the view that equated planning with marketing?which they found dis

tasteful."

Acknowledging that strategic planning is associated with business, Coburn said the "trick is to be more businesslike without becoming a business."

Cobb suggested that law firms will miss the point if they try to equate law firm planning with cor

porate planning. "Too many assume that the plan is equated with stra

tegic plans of corporations, that it projects the future," he said.

"This is inappropriate for law firms. That's just whistling Dixie, be cause you just don't know about the future."

Coburn hypothesized a law firm in which no one practiced in a spec ialized area like health law. "Perhaps in your long-range planning you see a trend, a need to get your firm in

volved in this area of practice. The plan might set out a way to go after this kind of practice within the bounds of professionalism."

Cobb, however, urged caution. "Three or four years ago, I saw firms trying to look at new areas of practice and seeing how they could move into them," he said.

"Now, the trend seems to be firms saying, 'Let's be careful.' First, they try to define the market inter est.

"For example, if the firm has fi nancial institutions as major clients and if they are developing full serv ice across the U.S.A., then you had better understand the nature of the work to serve your clients. That might mean expanding your practice geo graphically to continue serving the institutions." ?GaryA. Hengstler

Competition spurs new tactics

John Coburn, vice president of Gray-Judson, said law firm competition, which he sees as spurring the firms to adopt more business-like tactics, will continue unabated.

"In most parts of the country," he said, there is "no longer enough legal work to go around and maintain past profit levels."

To back up his claim, Coburn cited figures that "revenue growth in the $45 billion legal services market has slowed from nearly 20 percent at the beginning of the decade to around 13 percent currently."

Also, in 1960 there was one lawyer for every 630 persons while today there is one for every 375. And projections point to the lawyer population exceeding one million in eight years, which would lower the ratio to one

lawyer for every 280 persons. Coburn said heightened

competition has resulted in a "dizzying pace" of spin-off law firms. For example, between 1970 and 1980, the number of law firms increased by 50 percent in the United States.

He said that law firm profitability

ABAJ/Wide World

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? John Coburn: Competition will force law firms toward strategic planning.

has also been affected, citing a recent survey of 66 firms which showed net income per partner declining 8.5 percent in real terms during a four-year period.

All in all, Coburn says, "law firms will sooner or later be forced to draft and implement long-range plans simply to anticipate and meet the needs of the firm.'' ?Gary Hengstler

I I ABA JOURNAL / JULY 1, 1987 31

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